Unit 1 - Business Fundamentals Flashcards
What is a Non-Profit/Not-For-Profit Organization?
A non-profit and/or not-for-profit organisation operates strictly to help people in a community.
- Surplus funds are used to improve services for their members (no intention to earn money)
Ex. housing or child-care co-operatives (Salvation Army)
What is the difference between a NEED and a WANT?
Needs - an item that is necessary for survival.
EX: Food, water
Want - an item that is not necessary for survival but adds pleasure or comfort to life.
EX: car, designer clothes
Goods VS Services
Goods - an item that can be seen and touched, tangible (school supplies)
Service - providing assistance to others that does not result in a product, intangible (food deliveries)
Luxury VS Essential
Luxury - Enjoyable but not necessary for survival/home entertainment centers and swimming pools, limousine rides, spa
Essential - Things that we need for survival (food, clothing, shelter, heating, lighting, water)
Why is increased competition good?
With increased competition, consumers buy from businesses that meet their needs and wants.
What are different types of Economic Resources?
Attracting Consumer Interest: Businesses compete for consumers.
- Create something to try a product or service
- Promote the latest trends
- Compete with similar businesses
Making Good Business Decisions: Entrepreneurs face many decisions on a daily basis (deciding how much inventory or stock must be considered carefully due to the financial resources available.
What are the different types of Business Ownership?
Sole proprietorship – One owner, unlimited liability
Partnership – At least two partners, need partnership agreement (verbal/written)
Corporation – National/Multinational shareholders involved, corp., Inc., Ltd., 1+ owners, private; public; crown; non-profit
Co-operation – Owned and operated by people with similar interests, equal shares
Franchise – franchisor and franchisee
What are Crown Corporations?
Provincial or federal government owned business (EX: LCBO, CBC, Canada Post, Bank of Canada, VIA Rail)
What are Ethics?
Rules that help us tell the difference between right and wrong (encourage us to do the right thing).
Values and Morals (Definitions)
Values - Tell us what is important. They help us make decisions about right and wrong.
Morals - Rules we use to decide what is good and bad.
Code of Ethics and Ethical Dilemma (Definitions)
Code of Ethics - a document that explains specifically how employees should respond in certain situations.
Ethical Dilemma - a moral problem with a choice between potential right and wrong.
What is whistleblowing?
When an employee informs officials or the public about an illegal or ethical violation.
What are three different types of fraud?
Bomb threat - a bomb be activated if money is not given to the scammer
Emergency - someone will say that a family member is in jail and needs money to get out
Prize - you will get a prize and have to claim it if you put your email and password
What are accounting scandals?
When accountants or senior executives after accounting records for personal benefit.
What is Forensic Accounting?
When accounting irregularities are uncovered, a forensic accountant investigates legal and financial documents to find evidence of tampering.
What is embezzlement?
A type of accounting fraud happens when an accountant or senior executive creates false accounts and redirects money into them for personal gain.
What is insider trading?
Buying or selling shares of a company based on confidential information (illegal)
What is CSR?
A business exhibits CSR through values, ethics and the contributions it makes to communities. is a form of corporate self-regulation integrated into a business model.
- Providing a safe and healthy work environment
- Adopting fair labour policies
- Protecting the environment
- Being truthful in advertising
- Avoiding price discrimination
- Donating to charity
Describe the relationship between price and quantity demanded.
As price increases, quantity demanded decreases.
Lower price = more demand
–> Law of demand (indirect relationship)
Describe the relationship between price and quantity supplied.
As the price decreases, quantity supplied decreases.
Higher price - more supply
–> Law of supply (direct relationship)
What is Equilibrium?
Shortage?
Surplus?
Qs=Qd (purchasing = supplying)
Qd>Qs
Qd<Qs
When does a surplus occur?
When does a shortage occur?
Surplus - Prices = high, supply exceeds demand
Shortage - Prices = low, demand will exceed supply
What are the different types of businesses?
Service Business - A business that offers a product or service
Merchandising Business - A business that buys completed products and resells them to their customers
Manufacturing Business - A business that changes raw materials and parts to a completed good or final product
Not-for-profit Business - A business that is organized for a specific activity
What are some laws that govern workplace safety?
Domestic VS International Transactions
Domestic: Both the production and the sale of the item take place in the same country.
International: The production of the good takes place in a different country than the sale of the good. (creating, shipping, selling goods and services)
What are some benefits to International Trade?
Product: countries resources determine what goods and services it can produce (canadian climate isn’t suited to growing citrus crops so we purchase our citrus fruits from countries with warmer climates)
Price: Cost of producing a good or service varies from country to country due to wages, taxes and raw materials (less expensive to produce a product overseas and ship it to Canada than for Canada to produce)
Proximity: Certain people live closer to major cities in another country than major cities in their own country (80% of the population lives within 170km of the American border)
Preference: Some countries specialize in certain types of goods or services that have a reputation for quality all over the world (belgian chocolates, swiss watches)
Promotion: Technology makes it very simple to promote products all over the world
What is the WTO (World Trade Organization)?Some benefits?
Organization for trade opening. Deals with the rules of trade between nations. Helps with trade problems they face with each other. A forum for governments to negotiate trade agreements.
Encourage good governance
Transparency - shared information and knowledge - levels the playing field
Help countries develop
More open trade can boost economic growth and help countries develop. Commerce and development are good for each other.
What are some barriers to International Trade?
Prohibiting and Restricting Goods - CANADA narcotics, certain weapons, certain secondhand automobiles and aircraft, obscene print materials
Customs Duties - Countries that import items charge customs duties on these goods
The list or schedule that tells what percent will be charged for different types of a similar item is called a tariff
Tariff and Non-tariff Barriers - Tariff barriers are often negotiated internationally
Canada restricts imports of certain agricultural products: dairy products, poultry, eggs and wheat
Embargoes - When a government wants to completely stop the import or export of a particular type of product it imposes an embargo (ex: to protect Canadian workers from losing their jobs to a less expensive overseas workforce + Preventing countries from dumping goods in Canada + Retaliating against countries that have imposed similar restrictions)
Excise Taxes - A tax on the manufacture, sale or consumption of a product within a country (gov. uses to raise money or to discourage people from using –> Tobacco)
What are some costs of International Trade?
(cheaper amount for trade in other countries)
LAWS THAT GOVERN WORKPLACE SAFETY
Workplace safety - OHSA defines rights and responsibilities of employees to ensure safety
Discrimination - denying a qualified individual an interview, job, or promotion based on religion, gender, sexual orientation or disabilities
Gender discrimination - treating an employee differently based on their sex
Harassment - behaviour that is threatening, disturbing or makes others feel uncomfortable
Accessibility issues - employers obligation to ensure accessibility for all employees
Environmental responsibility - environmental concerns for business (Earth’s air, land and water)
Pay Equity - the non-equal pay for work of equal value
Privacy laws - requires businesses to explain what personal information they need from employees or customers and why they need it
What do you do if you are a victim of fraud?
- you stay calm
- call your financial institutions
- contact the police and report the incident
- make sure to not make the same mistakes in the future
What are 5 Labour Practices?
Hours of work:
- Max hours employees work is 8 hours
- Max hours to work in a week is 48
Service and termination pay:
Compensation that is paid to a qualified employee who has their employment “served”
Compensates an employee for losses that occur when a long-term employee loses their job
Overtime Pay:
- 1 ½ times the employee’s regular rate of pay
- Employee does not earn overtime pay everyday by working more than a set number of hours a day
Notice of termination of employment:
when employer ends the employment of an employee who has been continuously employed for three months, the employer must provide the employee with a written notice of termination
Minimum wage:
Lowest wage rate an employer can pay an employee
What are 5 OTHER Labour Practices?
Pregnancy, parental and other leaves of absence:
- when pregnant employers have the right to take up to 17 weeks of unpaid time off work
Employee benefit plans:
- Group life insurance, accidental death and dismemberment insurance, extended health care, dental care and disability benefit plans
Holidays:
-New years day
-Good friday
-Canada day
-Thanksgiving
Vacations:
- Vacation pay has to be 4% of the grosswages that are earned in a 12-month vacation
Employed who worked for more than 5 years (6% of the gross wages in a 12 month vacation entitlement year)
Equal pay for male and female employees:
- People working in the same career, same establishment and skill with equal amounts of effort and responsibilities are to be paid equally regardless of gender, ethnicity/background
What are some Cultural Differences?
Being late for a meetings is disrespectful in some countries.
What are some pros/cons of Sole Proprietorship?
GOOD:
- Very easy to start up
- Very easy to shut down
- No boss (you are your own)
BAD:
- Unlimited liability (owner has a chance of losing their personal belongings)
- Difficulty financing
- Other ways of business are not recognized by the owner
EX: Debbie’s Party – Time Outlet
What are some pros/cons of a partnership?
GOOD:
- Additional financing
- Responsibilities are held for both owners
BAD:
-Unlimited liability
- Different opinions between both owners, causing disagreements
EX: A & W — Baskin Robbins
What are some pros/cons of a Corporation?
GOOD:
- Limited liability (encourages others to buy shares)
- Company can become greater if profit is earned
- Easy Transfer of ownership
BAD:
- Wonders or shareholders will get the money that they have invested into the stock taken away
- Expensive to start
- Many taxes
EX: Canadian Tire, Krispy Kernels
What are some pros/cons of Co-Operative?
GOOD:
- Goods and services cost less money
- Fairly easy to set up
BAD:
- Making decisions is harder
EX: IGA, I.D.A
What are some pros/cons of a franchise?
GOOD:
- Brand recognition
- Shared marketing
- Support from head office
BAD:
- (franchise fee) monthly payment
- Obligation to buy from the franchiser
- Royalty fees
- Must obey franchise rules
EX: Shoppers Drug Mart and McDonald’s
What are the SIX International Business Structures?
Joint Venture - Two companies coming together. Can match the skills and expertise of two different individuals or businesses to generate more benefits for both parties
International Franchise - A way to achieve an international presence by buying the rights to a chain operation from the franchiser
Strategic Alliance - When two or more businesses agree to commit particular resources to achieve a common set of objectives. Alliance partners remain separate and entirely independent of each other
Merger - When two or more companies join together: ont of the businesses usually wants to purchase a controlling interest in the other company, or bot business have combined interests
Off-Shoring - Relocates some of a company’s operations to another country. Usually this happens to take advantage of lower labour costs, to be closer to large and emerging buyer markets, and to have access to skilled workforces
Multinational - Conducts business in another country or several different countries. Offers different benefits to the country it invests in
- Some positive benefits include new jobs and training for people
- Negative consequences could be less pay and more financial instability for citizens of that country
