LO 1.7, 1.8 & 1.9

Question 1

Standard of Living

Answer 1

A prominent argument used in justifying or supporting the business enterprise system is the standard of living that it provides. Standard of living rise = society views business positively.

Question 2

Decentralized Decision Making

Answer 2

Millions of businesses make decisions independently of one another, ensuring that a wide variety of goods and services are available. This is viewed favourably by consumers.

Question 3

Allocation of resources

Answer 3

• Some argue that efficient allocation of resources is more likely to occur with a business system, as allocation is based on the price and availability of resources.
• Critics argue that enterprises control prices, for example in oligopolistic industries, or that business enterprises control the availability of resources, creating artificial scarcities.

Question 4

Self-Interest

Answer 4

self-interest = motivator and provides the drive for profit that encourages individuals to get things done. It appeals to many as a motivating force, but to others it is a source of negative attitudes toward the business system.

Question 5

Business Cycle

Answer 5

The instability created by business cycles is resented by society.

Question 6

Business Wrongdoing

Answer 6

corporate misdeeds also influence society’s attitudes.

Question 7

Globalization

Answer 7

• Increased competition comes from foreign producers, job loss occurs as production is outsourced to other countries, and businesses must respond to the demands of customers in other nations.

Question 8

Unemployment

Answer 8

Employment is associated with a country’s economic performance, business cycles, and productivity.

Question 9

Technological Innovation

Answer 9

Some criticize continuous and accelerating technology and social change while conceding that technology has improved their material well-being. A problem associated with rapid technological change is alienation, particularly alienation in the workplace

Question 10

Media Coverage

Answer 10

positive or negative portrayals of businesses will influence society’s views

Question 11

Government

Answer 11

Government is always involved in business and the relationship between business and society. They often identify what is unacceptable corporate behaviour and their influence is always changing, at times increasing while at other times declining.

Question 12

3 Groups of persons which are primarily responsible for the operation of Canadian business

Answer 12

Owners, Board of Directors, Managers

Question 13

Direct Individual Owners

Answer 13

Shareholders or investors and entrepreneurs

Question 14

Indirect Owners

Answer 14

when consumers invest in mutual funds, or when employees contribute to pension plans. The managers of these funds have become much more active recently and are influencing corporate decisions frequently now.

Question 15

Boards of Directors

Answer 15

• “shall manage the business and affairs of a corporation” - a process referred to as corporate governance.
• Board members elected by shareholders, that is the direct owners

Question 16

Managers

Answer 16

Managers require a variety of skills to oversee the operations of corporations in today’s dynamic business environment.

Question 17

Social Contract

Answer 17

A set of two-way understandings that characterizes the relationship between 2 major institutions.