Chapter 2

Productivity Ex. A company that processes fruits and vegetables is able to produce 4000 cases of canned peaches in one half hour with 4 workers. What is the labor productivity?

400 cases/ (4 workers x 1/2 hours/worker) = 200 cases per labour hour

What did canada rank in 2012 for productivity?

17th with a ratio of 73.8% in comparison to the US

Gross National Product (GNP)

value of all goods and services produced by a national economy within a given period regardless of production location production of products by the enterprises owned by the residents of the country basis is citizenship focus on production by nationals outlines-how the residents are contributing towards the country economy

real GDP

means GDP has been adjusted, calculated to account for changes in currency values and price changes

Aggregate output

measure economic growth total quantity of goods and services produced by an economic system during a given period

productivity

measure growth compares the output of an economic system with the resources that are needed to produce the output standard of living improves through increases in productivity labour productivity=output produced/labour hours needed

who made the five forcers model and what are they

michael e porter industry rivalry, threat of new entrants, bargaining power of suppliers, bargaining power of consumers, threat of substitutes

positive balance of trade

more exports than imports also called a trade surplus helps economic growth

negative balance of trade

more imports than exports also called a trade deficit hinders economic growth

business process management

moving away form department-orientated organizations toward process-oriented teams

inflation

occurs when there is widespread price in increases in an economic system

outsourcing

paying suppliers and distribution to perform certain business processes

deflation

a period of generally falling prices can lead to economic stagnation and high unemployment this is because consumers will hold off on spending money because things will be cheaper in the future firms will be producing less, needing to layoff workers

national debt

amount of money that a government owes its creditors increases/decreases based on the budget deficit/surplus

An organization's core competencies refers to: A) The company's strategies to increase market share B) The company's product offerings which achieve the highest profit levels C) The training programs used to increase employee productivity D) The skills and resources with which they compete best and create the most value for owners.

d

poison pill

defence to make firm less attractive to an actual or potential hostile suitor in a takeover attempt

4 phases of business cycle in order

depression, recovery -peak- recession (decrease in demand of products), recovery

divestitures and spinoffs

selling part of existing business or setting it up as a new corporation

organizational boundary

separates the organization from its environment

subsidiary and parent corporations

subsidiary corporation owned by another corporation parent corporations own subsidiary corporations

friendly takeover

the acquired company welcomes the acquisition may be because it needs cash or gets other benefits

hostile takeover

the acquiring company buys enough of the other company's stock to take control a poison pill is a defence tactic that management can adopt to make a firm less attractive

unemployment

level of joblessness among people actively seeking work in an economic system

core competencies

the skills and resources with which an organization competes best and creates the most value for owners outsource non-core processes, i.e. pay other firms to perform them

consumer price index (CPI)

tool used to measure inflation

standard of living

total quantity and quality of goods and services that a country's citizens can purchase with their currency

strategic alliances

two or more companies temporarily join forces often called a joint venture

Gross Domestic Product (GDP)

value of all goods and services produced by a national economy within a given period of domestic factors or production productions of products within the country's boundary basis is geographical location focus on- domestic production outlines- the strength of the country's domestic economy

purchase power parity

principle that exchange rates are set so that the prices of similar products in different countries are about the same

Basic research and development

research that does not yet have an immediate market ex. duct tape

threats to economic stability

inflation, deflation, unemployment

acquisition

one firm buys the other

the growing role of social media

social media is now an integral part of daily communication (especially among millennials)

Environmental protection laws, interest rates, societal values, and the emergence of new technologies can significantly impact the profitability of a firm. These types of issues can not be controlled by a business as they are considered to exist in the ________. A) external environment B) internal environment C) organization's boundaries D) global context E) all of the above answers

a

threat of substitutes

are there goods and services that perform similar function?

Inflation typically impacts a country's economic growth A) Positively, because workers earn more wages B) Negatively, because as prices are falling, firms produce less products C) Negatively, because consumers compete for products, and prices of products go up D) Positively, because it increases the standard of living

b

Simon would like to buy a Valentines gift for his girlfriend as a sign of his affection. To his disappointment he discovers that roses cost $75 a dozen. Luckily, he can buy chocolates for $20. According to Porter's Five Forces Model, chocolates are a less costly _________. A) option B) substitute C) replacement D) complement

b

The value of goods and services produced by an economy within its geographical boundaries is called A) Gross National Product (GNP) B) Gross Domestic Product (GDP) C) Balance of Trade D) Standard of Living

b

factors that hinder or help economic growth

balance of trade and national debt

The federal government manages the Canadian economic system through two sets of policies: fiscal and monetary. Fiscal Policy refers to: A) the control of the money supply B) the control of interest rates C) the government's approach to its spending and taxation D) the effective management and control of the national debt

c

The total amount of money that a country owes its creditors. A) National Deficit B) Purchasing Power Parity Index C) National Debt D) Gross Domestic Product

c

economic environment

condition of economic system in which an organization operates

economic stability

condition when the amount of money available and the quantity of goods and services produced are growing at about the same rate

mergers

consolidation of two firms

external environment

everything outside an organization boundaries that might affect it

balance of trade

exports-imports

applied research and development

how a new idea can be put to use in a product or market ex.apply pay

threat of new entrants

how easy is it for new business to enter the industry? what does this look like for the fast food industry?

bargaining power of consumers

how strong are your buyers/consumers?

bargaining power of suppliers

how strong are your suppliers?

industry rivalry

how strong is the competition exist in the industry? size of the closest competitors? how much market share do they have? what is the industry growth rate? ex. pizz hut vs subway vs wends vs kfc

nominal GDP

if GDP is not adjusted, its called nominal GDP, which is GDP that is measured in current dollars or with all components valued at current prices

real growth rates GDP per capita

if growth rate of GDP exceeds the rate of population growth, then standard of living should be GDP per person