COMMERCE 1E03 Complete Class & Textbook Notes For Exam Study
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Course
COMMERCE 1E03 (COMMERCE1E03)
Institution
McMaster University (mcmasteru)
All slide decks and relevant textbook notes. Its a really comprehensive doc at 118 pages, ideal for searching (control f) for when you do the online exams. I used these and got an A. Enjoy!
Week 1 – Chapter 1
Business Fundamentals
● Entrepreneurs learn early on that businesses need a reliable accountant, a good lawyer, and
strong managers
● Entrepreneurs could potentially need to borrow money from financial institutions (banks)
● It is harder to borrow money today than in the past
Goods
● Tangible products such as computers, food, clothing, cars, and appliances
● Often, goods cost more in one country than another because of higher taxes and stricter
government regulations.
Services
● Intangible products (products that can't be held in your hand)
● Ex. Education, health care, insurance, recreation, and travel
Business
● Any activity that seeks to provide goods and services to others while operating at a profit
Entrepreneurship
● Accepting the risk of starting and running a business
Entrepreneur
● A person who risks time and money to start and manage a business
Revenues, Profits, and Losses
Revenue
● The total amount of money received during a given period for goods and services rendered,
and from other financial sources
Profit
, ● The amount of money a business earns above and beyond what it spends for salaries and
other expenses
Loss
● Occurs when a business' expenses are more than its revenues
● If a business loses money over time, it will likely have to close, putting its employees out of
work
Bankruptcy
● Refers to the liquidation of the business debtors asset's and the end of the commercial
entity's operations
Matching Risk with Profit
● Risk: refers to the change of loss, the degree of probability of loss, and the amount of
possible loss
● The change an entrepreneur takes of losing time and money on a business that may not
prove profitable
Standard of Living and Quality of Life
Standard of Living
● The amount of goods and services people can buy with the money they have
● The standard of living in Canada is higher than that of Japan or Germany, although workers
in Japan or Germany make more on the average
○ Canadian workers can buy more with their money because the prices of goods
and services in Canada are lower
Quality of Life
● The general well-being of a society in terms of its political freedom, natural environment,
education, health care, safety, amount of leisure, and rewards that add to the satisfaction
and joy that other goods and services provide.
Responding to Various Business Stakeholders
Stakeholders
● All the people who stand to gain or lose by the policies and activities of a business
● Include many different groups such as customers, employees, financial institutions,
investors, environmentalists, and government
● May have direct and indirect impact upon a business or organization
Offshoring
, ● Sourcing part of the purchased inputs outside of the country
● In Canada, most offshoring occurs with the United States
Outsourcing
● Contracting with other companies to do some or all of the functions of a firm, such as
production or accounting
Insourcing
● Assigning various functions that could go to an outside organization to employees in the
company
Using Business Principles in Non-Profit Organizations
Non-Profit Organization
● An organization whose goals do not include making a personal profit for its owners or
organizers
● Strive for financial gains because revenue is needed to operate, but such gains are used to
meet their social or educational goals rather than personal profit
● Include different levels of government in our country
Social Entrepreneurs
● People who use business principles to start and manage non-profit organizations and help
address
Social Enterprises
● Ventures established by social entrepreneurs and which act as vehicles for addressing social
and/or environmental needs
● New type of organization that have grown during the past 20 years
● Includes a central social or ethical mission as well as income generation for those who work
in the organization through commercial activity
The Five Factors of Production
● The resources used to create wealth
1. Land (natural resources)
a. Used to make homes, cars, and other products
2. Labour (workers)
a. People have always been an important resource in producing goods and services
b. Many people are now being replaced by technology
, 3. Capital
a. Includes machines, tools, buildings, and whatever else is used in the production
of goods
b. Does not include money - money is used to buy factors of production but is not
always considered to be a factor itself
4. Entrepreneurship
a. All the resources in the world have little value unless entrepreneurs are willing
to take the risk of starting business to use those resources
5. Knowledge
a. Information technology has revolutionized business, making it possible to
quickly determine wants and needs and to respond with desired goods and
services
Six Elements of The Business Environment
● The surrounding factors that either help or hinder the development of businesses
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