Week 1: Introduction to Business & Management

1. What is a Business?

A business is an organized effort by individuals or entities to produce and

sell, for a profit, the goods and services that satisfy society’s needs. It
transforms factors of production—which include land (natural resources),
labour (human effort), capital (money, machinery, buildings), and
entrepreneurship (initiative and risk-taking)—into outputs (goods/services)
that have value in the marketplace.

The main objective of a business is to:

1. Satisfy customer needs and wants.

2. Earn a profit (i.e., revenue greater than costs).

A profit is made when revenues exceed expenses. A loss occurs when

expenses are greater than revenues.

2. Core Functional Areas of Business

To succeed, a business must operate across several critical functional areas:

 Marketing – Identifying customer needs and generating demand by

promoting the value of goods/services.

 Operations – Transforming inputs (raw materials, labour, etc.) into

finished products efficiently.

 Accounting – Systematically recording, analyzing, and reporting

financial transactions.

 Finance – Acquiring and managing the funds necessary for business

operation and expansion.

 Human Resource Management (HRM) – Hiring, training,

motivating, and retaining employees.

Each of these areas must be effectively:

 Planned – Set clear goals and actions.

 Organized – Arrange resources and structures.

 Led – Motivate and guide people.

 Controlled – Monitor results and make adjustments.

3. Leadership vs. Management

While often used interchangeably, leadership and management have distinct

roles:

 Leaders set long-term vision, direction, and inspire others to follow.

 Managers implement the leader’s vision by planning and coordinating

resources.

Leadership is about influence and vision; management is about execution

and oversight. They are complementary but can sometimes clash in terms
of strategy versus operations.

Example: In a new tech company,

 The CEO (leader) sets a vision to "revolutionize e-commerce through

AI".

 The department managers ensure teams are hiring the right talent,
building products, managing costs, and meeting deadlines.

4. The Evolution of Management Functions

In 1916, Henri Fayol, a French industrialist, proposed five managerial

activities:

1. Planning – Decide what needs to be done and how.

2. Organizing – Allocate and arrange resources.

3. Commanding – Direct and instruct employees.

4. Coordinating – Ensure activities are harmonized.

5. Controlling – Monitor performance and make corrections.

By 1967, Newman, Summer, and Warren refined these into four functions
still taught today:

1. Planning

2. Organizing

3. Leading (merged from commanding/coordinating)

4. Controlling

These four elements define modern management.

In-depth Look at the 4 Functions:

 Planning: Determines what needs to be done, by whom, when, where,

and how. It involves setting objectives and developing strategies to
achieve them.

o Example: A fashion brand planning a winter product line sets

goals, timelines, and materials needed.

 Organizing: Involves assembling people, finances, equipment, and

other resources to implement plans.

o Example: Allocating tasks to marketing, production, and logistics

teams.

 Leading: The art of motivating and guiding team members to meet

objectives. Leadership may involve setting examples, coaching,
delegating tasks, or issuing directives.

o Example: A supervisor encourages teamwork and demonstrates

how to handle customer complaints.

 Controlling: A two-step process:

1. Establish performance standards (quantitative or qualitative).

2. Measure actual results, compare them with standards, and take

corrective action if needed.

o Example: A restaurant tracks daily sales. If targets aren’t met,

promotions or retraining might be implemented.

5. Leadership Styles

Leadership is about influencing people to strive willingly toward achieving

group goals. There are three classic styles:

 Autocratic Leadership:

o The leader makes all decisions unilaterally.

o Little input is taken from others.

o Advantage: Fast decision-making, useful in crises.

o Disadvantage: May demotivate staff, reduce creativity.

o Example: A construction manager enforcing strict protocols on a

high-risk site.
  Laissez-faire Leadership:

o Employees are given autonomy to decide how to complete tasks.

o The leader sets goals but allows freedom in execution.

o Advantage: Encourages innovation and independence.

o Disadvantage: Can lead to lack of coordination or oversight.

o Example: A software company allowing developers to design

features as they see fit.

 Democratic Leadership:

o Involves group participation in decision-making.

o Advantage: Builds morale, commitment, and ownership.

o Disadvantage: Slower decision-making, risk of groupthink.

o Example: A non-profit leader inviting volunteers to co-create

fundraising plans.

6. Universality of Management

Management principles apply beyond business:

 Parents manage families.

 Generals manage military campaigns.

 Coaches manage sports teams.

 Individuals manage time and goals.

The core management process is thus universally relevant.

7. Business as a System

A system is a set of connected activities working toward a common purpose.

A business functions as a system by managing input-output processes.

Michael Porter introduced the value chain framework:

 Primary Activities: Directly involved in production and delivery (e.g.,

inbound logistics, operations, sales, service).

 Support Activities: Enable primary activities to run smoothly (e.g.,

HRM, finance, strategy, R&D).
Example:

 A smartphone company:

o Primary: assembling devices, marketing, shipping.

o Support: recruiting engineers, managing supplier contracts,

budgeting.

8. Key Definitions (Textbook-Based)

 Business Function: A recurring activity essential to a company’s

operations (e.g., marketing, HR).

 Managing: Coordinated use of planning, organizing, leading, and

controlling to accomplish tasks.

 Manager: A person responsible for applying the management process

to achieve goals.

 Mission: A formal statement that defines why a business exists and its
core objectives.

 System: Interconnected components working toward a goal.

 Value System: The sequence of internal processes required to

transform inputs into customer-ready products.

 Standard: The benchmark used to evaluate performance.

Week 2: Marketing, Market Segmentation & Market Research

1. Introduction to Marketing

Marketing is the business function responsible for identifying, anticipating,

and satisfying customer needs profitably. It includes:

 Planning and organizing product creation.

 Determining the price.

 Making the product known through promotion.

 Making the product available (distribution).

Marketing is not just about advertising—it is about creating exchanges so

that customers receive value and businesses earn profits.

2. The Marketing Concept

The marketing concept (or customer focus) is the philosophy that the
needs of the customer should come before anything else. Instead of trying to
sell what the company already makes, the business finds out what customers
want and then produces it.

Philip Kotler, a pioneer in modern marketing, championed this approach.

 A product-focused business tries to improve existing offerings

assuming customer demand will follow.

 A customer-focused business starts with consumer wants and needs.

Example:

 Product focus: A camera company adds new technical features no one

asked for.

 Customer focus: A phone company finds users want better low-light

photography and focuses on that.

3. Target Market

A target market is a group of customers with similar needs and

characteristics whom the company aims to serve.

Not every product appeals to every person. Businesses must define who is
most likely to buy.
Example: Vegan snacks are targeted at health-conscious and plant-based
lifestyle consumers—not meat lovers.

4. Market Segmentation

Market segmentation is dividing a population into meaningful customer

groups to better target marketing efforts.

Main types:

 Geographic: Based on location (e.g., region, city, climate).

o Example: Snow boots are sold in cold areas, not in tropical

regions.

 Demographic: Based on age, gender, income, education, etc.

o Example: A luxury car brand targets high-income professionals

aged 35–55.

 Psychographic: Based on beliefs, values, lifestyle, personality.

o Example: A mindfulness app targets people who value emotional

well-being.

 Behavioural: Based on occasions, usage patterns, loyalty.

o Example: Wedding planners market services to newly engaged

couples.

Segmentation helps marketers deliver the right product to the right people in
the right way.

5. Market Research

Market research is the systematic study of buyers and markets to inform

better business decisions. It helps answer:

 What do consumers want?

 How much are they willing to pay?

 Which promotional method is most effective?

Two types of research:

 Secondary Research – Uses existing data (e.g., industry reports,

books, websites).

o Pros: Fast and low cost.

 o Cons: Not specific to your product.

 Primary Research – Collects new, original data from customers (e.g.,

surveys, interviews).

o Pros: Tailored to your exact needs.

o Cons: Expensive and time-consuming.

6. Research Methods

Observation:

 Watching customer behaviour in real life.

 Example: A coffee shop observing what products customers pick up.

 Advantage: No interviewer bias.

 Limitation: Doesn’t reveal motivations.

Communication:

 Talking to customers via surveys or interviews.

 Example: An online retailer asking customers what features they want

in their app.

 Advantage: Reveals intentions and emotions.

 Limitation: Subject to bias or dishonesty.

7. Sampling and Data Types

 Census: Data from the entire population. Accurate but expensive.

 Sample: A subset of the population. Needs to be random to avoid

bias.

Two main types of data:

 Quantitative Data: Numbers and statistics. Used for patterns and

averages.

o Example: 80% of users prefer same-day delivery.

 Qualitative Data: Opinions and insights. Used to understand feelings

and motivations.

o Example: Customers say they feel more secure using eco-friendly

packaging.
Week 3: Product Strategy, Product Classification, Product Life Cycle
(PLC), Branding & Intellectual Property

1. What is a Product?

A product is anything offered to a market that can satisfy a need or want. It

can be:

 A physical good (e.g., laptop, chair)

 A service (e.g., haircut, consulting)

 An idea (e.g., a political campaign)

 A combination (e.g., a smartphone with a warranty plan)

Businesses must offer products that not only meet functional needs but also
provide psychological and emotional value.

2. Product Strategy

The goal of product strategy is to determine:

 What to sell

 To whom

 How to differentiate it from competitors

An effective strategy focuses on delivering value to the target market while

aligning with the firm’s resources and brand.

A product should meet customer expectations for quality, functionality, price,

and emotional satisfaction.

3. Product Classification

Products can be classified into consumer products and industrial

products based on the purpose of purchase.
A. Consumer Products – bought for personal use:

 Convenience products: Inexpensive, bought frequently with minimal

effort (e.g., toothpaste, snacks)

 Shopping products: Purchased less often, more expensive, require

comparison (e.g., clothing, furniture)

 Specialty products: Unique characteristics, strong brand preference,

customer makes special effort (e.g., luxury watches)

 Unsought products: Not actively sought until a need arises (e.g., life
insurance, emergency repair services)

B. Industrial Products – bought for use in business operations:

 Raw materials: Basic materials used in production (e.g., lumber,

minerals)

 Component parts: Used directly in the production of final goods (e.g.,

microchips)

 Capital goods: Long-lasting tools and machinery used in production

(e.g., factory equipment)

 Supplies and services: Maintenance items and operational services

(e.g., office paper, cleaning services)

Understanding product classification helps marketers design strategies

tailored to the customer decision-making process.

4. Product Life Cycle (PLC)

All products go through a life cycle that affects how they are marketed. The
four stages are:

1. Introduction:

o Product is launched.

o Sales are low, costs are high.

o Marketing focuses on awareness and trial.

o Risk of failure is high.

o Example: A new fitness tracker entering the market.

2. Growth:
 o Rapid sales increase.

o Profits begin to rise.

o Competitors enter the market.

o Marketing aims to establish brand loyalty.

o Example: Streaming services like Netflix in the mid-2010s.

3. Maturity:

o Sales peak and stabilize.

o Market is saturated; competition is intense.

o Companies focus on differentiation, cost-cutting.

o Example: Smartphones or soft drinks.

4. Decline:

o Sales and profits decline.

o Product may be discontinued or reinvented.

o Example: Landline phones or DVDs.

Strategies at each stage must align with product performance and market
conditions.

5. Branding

A brand is a name, symbol, or design that identifies a seller’s product and

differentiates it from competitors.

Branding is critical for:

 Recognition

 Customer loyalty

 Communicating quality and value

Elements of branding include:

 Brand name (e.g., Nike)

 Logo and design (e.g., the Nike swoosh)

 Brand personality: Human characteristics associated with a brand

(e.g., Apple = innovative)
  Brand equity: The added value from customer perception of the
brand

Example:

 Coca-Cola’s brand identity leads people to choose it over generic colas

even if the taste is similar.

6. Packaging

Packaging is not just about containment. It plays a strategic marketing role:

 Protects the product

 Informs the customer

 Enhances visual appeal

 Aids convenience and usage

Example: Resealable snack bags enhance convenience and freshness,

adding value.

7. Labelling

Labels provide:

 Legal information (e.g., ingredients, warnings)

 Promotional messaging

 Usage instructions

Labelling is governed by regulations to ensure consumer safety and

transparency.

8. Intellectual Property (IP)

IP includes legal rights to protect intangible creations of the mind. In

business, this includes:

 Trademarks: Protect brand names, logos, slogans (e.g., the Adidas

three-stripe logo)

 Patents: Protect inventions and processes (e.g., pharmaceutical

formulas)

 Copyrights: Protect original artistic and literary works (e.g., software

code, advertising jingles)
  Trade secrets: Confidential business practices and formulas (e.g.,
Coca-Cola recipe)

Proper protection of IP is essential to maintain competitive advantage and

prevent imitation.

Example: Dyson’s patented vacuum technology prevents other companies

from copying its cyclone design.

Week 4: Pricing Strategy & Distribution Channels

1. Introduction to Pricing

Pricing is the process of determining the monetary value of a product or

service. It plays a critical role in:

 Determining a company’s revenue and profitability

 Influencing customer perception and demand

 Positioning a product in the market relative to competitors

The price must reflect the value perceived by the customer while being
sufficient to cover costs and provide profit.

Revenue = Price × Quantity Sold

2. Factors That Influence Pricing

Several internal and external factors impact pricing decisions:

A. Internal Factors:

 Costs: Both fixed (rent, salaries) and variable (materials, shipping)

costs must be covered.

 Marketing Objectives: Whether the goal is profit maximization,

market share expansion, or survival.

 Product Life Cycle Stage: Products in the introduction stage may be

priced higher (to recover costs) or lower (to attract users).

B. External Factors:

 Competition: Prices may be influenced by what competitors charge

for similar products.
  Consumer Demand: Prices must reflect what customers are willing
and able to pay.

 Economic Conditions: Inflation, recession, and consumer purchasing

power all affect pricing.

 Government Regulations: Laws may impose price ceilings or require

disclosure of certain fees.

Example: Airlines often change ticket prices based on demand, fuel costs,
and competitor pricing.

3. Pricing Objectives

Pricing decisions align with broader business objectives:

 Profit-Oriented: Maximize profit or return on investment.

 Sales-Oriented: Increase volume or market share.

 Status Quo-Oriented: Maintain existing prices or match competitors.

 Survival: Maintain cash flow in difficult market conditions.

4. Pricing Strategies

A. Cost-Based Pricing:

 Cost-Plus Pricing: Add a standard markup to the cost of the product.

o Example: A chair costs $50 to make; a 30% markup results in a

price of $65.

B. Value-Based Pricing:

 Based on the buyer’s perception of value rather than the seller’s cost.

o Example: Luxury brands like Rolex or Apple charge high prices

due to perceived prestige.

C. Competition-Based Pricing:

 Set prices relative to competitors.

o Example: Gas stations often match each other’s pricing within a

neighbourhood.

D. Psychological Pricing:

 Leverages consumer behaviour.

 o Examples:

 $9.99 instead of $10 (perceived as cheaper)

 "Buy one, get one free"

 Prestige pricing to convey quality

E. Penetration Pricing:

 Set a low price to gain market share quickly.

o Example: Streaming platforms offering $1/month for first-time

users.

F. Price Skimming:

 Set a high initial price to recover R&D costs before lowering it over
time.

o Example: New tech gadgets like gaming consoles or

smartphones.

G. Promotional Pricing:

 Temporarily reduce price to increase short-term sales.

o Example: Black Friday discounts.

5. Break-Even Analysis

Used to determine the sales volume at which total revenue equals total
costs: Break-Even Point (units) = Fixed Costs / (Price - Variable Cost
per Unit)

This analysis helps decide whether a product is financially viable at a certain

price.

Example:

 Fixed costs = $10,000

 Price = $25

 Variable cost per unit = $15

 Break-even = $10,000 / ($25 - $15) = 1,000 units

6. Distribution Channels
A distribution channel (or marketing channel) is the path a product takes
from producer to consumer. It involves intermediaries such as:

 Retailers: Sell directly to end customers.

 Wholesalers: Buy in bulk from producers and resell to retailers.

 Agents/Brokers: Facilitate transactions without taking ownership.

Functions of Intermediaries:

 Help with transportation and logistics

 Provide storage

 Offer sales and marketing support

 Facilitate financing

Channel Length:

 Direct Channel: Producer → Consumer (e.g., online stores, farmer’s

markets)

 Indirect Channel: Producer → Intermediary(ies) → Consumer (e.g.,

manufacturer → wholesaler → retailer → customer)

Example:

 Apple sells iPhones directly via its website (direct channel) and through
Best Buy (indirect channel).

7. Distribution Strategies

A. Intensive Distribution:

 Product is available in as many outlets as possible.

 Used for convenience products (e.g., snacks, soda).

B. Selective Distribution:

 Limited number of outlets in a geographic area.

 Used for shopping products (e.g., electronics, furniture).

C. Exclusive Distribution:

 One or very few intermediaries used.

 Used for specialty products (e.g., luxury cars, designer clothes).

8. Retailing & Wholesaling

Retailing: Selling goods and services directly to consumers for personal use.

 Types: Department stores, online stores, convenience stores.

 Retailers focus on store location, layout, customer service, and

atmosphere.

Wholesaling: Selling goods in large quantities for resale or business use.

 Provide economies of scale and reduce burden on producers.

Trends in Retailing:

 Growth of e-commerce

 Omnichannel strategies (integrating online and physical presence)

 Personalized shopping experiences

9. Logistics

Logistics is the management of the flow of goods between origin and

consumption. Key components:

 Inventory management

 Order processing

 Transportation

 Warehousing

 Customer service

Effective logistics ensures the right product reaches the right customer at the
right time, place, and cost.
Week 5: Promotion, Advertising, and Public Relations

1. What is Promotion?

Promotion refers to the set of marketing activities used to inform, persuade,

and remind customers about products or services. It’s essential for:

 Building awareness

 Generating interest and desire

 Encouraging action or purchase

The ultimate goal of promotion is to influence consumer buying behaviour

and foster brand loyalty.

2. The Promotional Mix

The promotional mix consists of five major tools:

1. Advertising

2. Personal Selling

3. Sales Promotion

4. Public Relations (PR)

5. Direct Marketing

Each tool plays a specific role in communicating with customers. The choice
depends on the target audience, product type, and budget.

3. Advertising
Advertising is any paid form of non-personal communication using mass
media to promote a product, service, or idea. It typically includes:

 Mediums: Television, radio, print, digital, billboards, social media, etc.

 Purpose: Inform, persuade, remind, or reinforce

 Features:

o Standardized message for a large audience

o High reach but impersonal

o Costly but effective for brand awareness

Types of Advertising:

 Informative: Introduces a new product or educates the audience.

 Persuasive: Aims to influence customer preferences and purchases.

 Reminder: Keeps the brand top-of-mind for customers.

Example: A detergent brand advertises on prime-time TV to highlight stain-

removal technology (persuasive).

4. Personal Selling

This involves direct interaction between a salesperson and a potential buyer.

It is:

 Personalized and flexible

 Effective for complex or expensive products

 Labour-intensive and costly

Used often in B2B or high-involvement purchases (e.g., real estate,

insurance).

Example: A car dealership sales rep walks a customer through various

models and offers a test drive.

5. Sales Promotion

Sales promotion includes short-term incentives to boost sales or encourage

trial:

 Examples: Discounts, coupons, samples, contests, rebates, free trials

 Purpose: Drive immediate action, increase short-term sales

Advantages:

 Quick results

 Encourages product trials

Disadvantages:

 May attract price-sensitive buyers who don’t return

 Can erode brand value if overused

Example: Buy-one-get-one-free (BOGO) offers in grocery stores.

6. Public Relations (PR)

PR involves building good relationships with the public through unpaid or

earned media:

 Press releases

 News stories

 Community events

 Crisis communication

Advantages:

 High credibility (appears as news, not an ad)

 Can build goodwill and manage reputation

Example: A company donates to a disaster relief fund and is featured in the

news for its corporate social responsibility.

7. Direct Marketing

This form of promotion communicates directly with specific individuals:

 Channels: Email, catalogs, telemarketing, SMS, direct mail

 Highly targeted

 Results are measurable

Advantages:

 Personal and interactive

 Customizable messages
Example: An online retailer sends a personalized email offering 10% off on
the customer's birthday.

8. Integrated Marketing Communications (IMC)

IMC is the coordination of all promotional tools and messages to ensure

clarity, consistency, and maximum communication impact.

Why IMC Matters:

 Prevents conflicting messages

 Reinforces unified brand image

 Enhances consumer trust and recognition

Example: A travel company aligns its social media ads, influencer content,
website banners, and TV commercials with the same slogan and imagery.

9. The AIDA Model

This model explains the steps a customer goes through before making a
purchase:

 Attention: Grab the customer's attention

 Interest: Hold interest by presenting benefits

 Desire: Build emotional connection and desire

 Action: Motivate purchase

Example: An Instagram ad (attention) leads to a product video (interest),

followed by testimonials (desire), and a call-to-action link (action).

10. Advertising Media Selection

Choosing the right media involves:

 Target audience demographics and media habits

 Budget

 Message complexity

 Reach, frequency, and impact

Media Types:

 Television: High impact and reach, but expensive

  Radio: Inexpensive, local

 Print (newspapers, magazines): Tangible, good for detail

 Digital (social media, websites): Targeted, measurable, cost-

effective

11. Ethical Considerations in Promotion

 Avoid deceptive or misleading claims

 Adhere to truth-in-advertising laws

 Protect vulnerable audiences (e.g., children)

Example: Ads for healthy drinks must not misrepresent sugar content or
health benefits.

12. Trends in Promotion

 Rise of influencer marketing

 Increased use of AI and automation in advertising

 Content marketing and storytelling

 Omnichannel campaigns combining online and offline touchpoints

Week 6: Business Ownership Types, Franchising & Small Business

1. Types of Business Ownership

Businesses can be structured in different legal forms, each with advantages

and disadvantages in terms of control, liability, taxation, and continuity.

A. Sole Proprietorship

 One individual owns and operates the business.

 Advantages:

o Easy and inexpensive to establish

o Full control of decisions

o All profits go to the owner

o Simple tax reporting (taxed as personal income)

 Disadvantages:

o Unlimited personal liability

o Limited access to capital

o Business ceases upon owner’s death or withdrawal

Example: A freelance graphic designer running their own business.

B. Partnership
  Two or more people share ownership.

 Types:

o General Partnership: All partners share management and

liability.

o Limited Partnership: Some partners have limited liability and

no management role.

 Advantages:

o Easy to form

o Shared financial commitment

o Broader skill set and resources

 Disadvantages:

o Joint and several liability (for general partners)

o Potential for conflict

o Profits must be shared

Example: A law firm operated by multiple partners.

C. Corporation

 A separate legal entity owned by shareholders.

 Advantages:

o Limited liability for shareholders

o Perpetual existence

o Easier access to capital (through issuing shares)

o Greater credibility with stakeholders

 Disadvantages:

o More costly and complex to establish

o Subject to double taxation (corporate and dividend taxes)

o Regulated more strictly

Example: Shopify Inc. is a Canadian corporation listed on stock exchanges.

D. Co-operative

 Owned and controlled by its members, who use its services or buy its
goods.

 Members have voting rights, typically on a one-member, one-vote

basis.

 Profits are returned to members as dividends.

 Common in sectors like agriculture, housing, and credit unions.

Example: Mountain Equipment Co-op (MEC), a consumer co-operative.

2. Franchising

Franchising is a method of expanding a business whereby

a franchisor licenses its brand, systems, and intellectual property to
a franchisee in exchange for a fee and ongoing royalties.

Advantages for Franchisor:

 Rapid expansion with minimal capital

 Franchisees are motivated owner-operators

Advantages for Franchisee:

 Established brand and customer base

 Proven business model

 Support with training, advertising, and operations

Disadvantages:

 Franchisee must follow strict operational rules

 High initial fees and royalty payments

 Limited autonomy

Example: Tim Hortons operates using a franchising model across Canada.

3. Small Business

Small businesses are independently owned and operated businesses that

are not dominant in their field. In Canada, the majority of businesses are
small businesses (under 100 employees).

Characteristics:
  Local customer base

 Owner is often directly involved in operations

 Limited capital and resources

Roles in the Economy:

 Job creation

 Innovation

 Support for local economies

Challenges Faced:

 Limited access to financing

 Competition with larger firms

 Regulatory compliance

4. Entrepreneurship

An entrepreneur is someone who starts and operates a business, taking on

financial risks in hope of profit.

Traits of Successful Entrepreneurs:

 Risk-taking and resilience

 Innovation and creativity

 Leadership and initiative

Importance of Entrepreneurship:

 Drives economic growth and job creation

 Fosters innovation and competition

Support for Entrepreneurs in Canada:

 Government grants and loans

 Incubators and accelerators

 Mentorship programs

5. Social Enterprises
Social enterprises operate with the dual goal of earning revenue and
achieving a social or environmental mission.

Key Features:

 Reinvest profits into community initiatives or causes

 Blend business methods with non-profit goals

Example: A company that hires marginalized individuals and uses profits to

fund community programs.

Week 7: Business Environment, Stakeholders & Corporate Social

Responsibility (CSR)

1. Understanding the Business Environment

The business environment includes all external and internal factors that
affect how companies operate. It determines opportunities and threats for a
business and influences decision-making.

A. External Environment (outside the firm’s control):

 Economic: Inflation, interest rates, exchange rates, economic cycles

(boom/recession)

 Political/Legal: Government policies, taxation, regulations, trade

agreements

 Technological: Innovation, automation, digitization, AI

 Sociocultural: Demographics, consumer trends, cultural values

 Environmental: Climate change, sustainability, resource availability

 Global: International competition, global supply chains, geopolitical

events

B. Internal Environment (within the firm’s control):

  Organizational culture, leadership, resources, staff capabilities

Example: A change in Canadian carbon tax legislation (political/legal) may

lead businesses to invest in greener technologies.

2. Stakeholders

Stakeholders are individuals or groups who are affected by or can affect a

company’s operations and decisions.

Types of Stakeholders:

 Internal: Employees, managers, owners

 External:

o Customers: Seek quality, value, service

o Suppliers: Depend on regular orders and payments

o Creditors/Investors: Expect financial returns

o Government: Seeks compliance with laws and taxes

o Community: Expects ethical practices and contributions

o Environment: An emerging stakeholder in terms of

sustainability impact

Balancing stakeholder interests is essential for ethical and sustainable

business operations.

Example: A company reducing packaging waste benefits customers (lower

cost), government (compliance), and the environment.

3. Corporate Social Responsibility (CSR)

CSR is the voluntary commitment of a business to contribute to sustainable

development by delivering economic, social, and environmental benefits.

CSR goes beyond legal compliance—it reflects ethical responsibility and

community involvement.

Four Pillars of CSR:

1. Economic Responsibility – Be profitable to sustain operations and

create jobs.

2. Legal Responsibility – Follow all laws and regulations.

 3. Ethical Responsibility – Go beyond legal obligations to do what is
morally right.

4. Philanthropic Responsibility – Actively contribute to community

well-being (e.g., donations, volunteering).

Example: TELUS runs programs that support health and education initiatives
across Canada.

4. Benefits of CSR

 Enhances brand reputation and customer loyalty

 Attracts and retains employees

 Builds community goodwill

 May reduce regulatory scrutiny

 Encourages innovation and cost savings (e.g., through energy

efficiency)

5. Triple Bottom Line

The Triple Bottom Line (TBL) framework expands the traditional financial
bottom line to include:

 People: Social responsibility

 Planet: Environmental sustainability

 Profit: Economic value

This model helps companies measure impact more holistically.

Example: A company sourcing fair-trade materials (people), reducing plastic

use (planet), and achieving steady revenue growth (profit).

6. Business Ethics

Ethics are moral principles that guide behaviour. In business, ethical conduct
includes:

 Honesty in advertising

 Fair treatment of employees and suppliers

 Avoidance of exploitation or corruption

Unethical Practices:
  False advertising

 Bribery

 Unfair labour practices

 Environmental harm

Code of Ethics: Many organizations adopt formal ethical codes that guide
employee behaviour and decision-making.

7. Whistleblowing

A whistleblower is an employee who exposes unethical or illegal activities

within an organization.

Protection: Canadian laws protect whistleblowers from retaliation.

Example: An employee reporting financial fraud or environmental violations

to authorities.

Week 7: Operations Management – Inputs, Transformation, and

Output (Textbook Chapter 6)

1. Introduction to Operations Management

Operations management is the field concerned with overseeing, designing,

and controlling the process of production and redesigning business
operations for efficiency. It ensures that inputs are transformed into outputs
efficiently and effectively, aligning resources, technology, and people to
deliver value to customers.

Operations form the core of any business, as every organization—whether

manufacturing or service-based—relies on operations to produce and deliver
its value offering.

2. The Operations Process: Input → Transformation → Output

Operations are structured around a universal model:

 Inputs: The resources used to create goods/services. These include:

 o Labour: Employees and their skills

o Capital: Equipment, tools, and buildings

o Materials: Raw materials, components, consumables

o Information: Market data, customer preferences

 Transformation Process: This is the activity or set of activities that

converts inputs into outputs. It could involve manufacturing, assembly,
service delivery, or logistics.

 Outputs: The final products or services delivered to customers.

Outputs must align with customer expectations for quality, timeliness,
and functionality.

Example: In a pizza restaurant:

 Inputs: Dough, sauce, cheese, oven, chef

 Transformation: Cooking, assembly

 Output: Freshly made pizza ready for consumption

3. Value Creation and “Value Added”

Value is added during the transformation process. Value added is the

difference between the cost of inputs and the value of the outputs from the
customer’s perspective.

 Businesses aim to maximize value through:

o Efficient processes (reducing waste)

o Enhanced quality (meeting expectations)

o Speed and responsiveness

o Customization of products/services

Example: A coffee shop turning $1 of ingredients into a $4 specialty

beverage creates $3 of value added.

4. Operations in Manufacturing vs. Services

Operations management applies to both sectors but with differences in

focus:

Manufacturing:
  Tangible products

 Inventory can be stored

 Standardized production

 Physical transformation of materials

Services:

 Intangible outputs (experiences or activities)

 Production and consumption occur simultaneously

 More variability/customization

 Often labour-intensive

Example:

 Manufacturing: Automaker assembling vehicles on a production line

 Services: Bank processing loans, requiring human interaction and

decisions

5. Facility Design and Layout

Facility layout refers to the physical arrangement of resources (equipment,

workspaces, people) to maximize efficiency and safety. Types of layout
include:

 Product layout: Also known as assembly line; best for mass

production.

 Process layout: Grouping similar activities together; ideal for custom

jobs or low volume/high variety.

 Fixed-position layout: Product remains stationary; used in

construction or shipbuilding.

The layout impacts workflow, production time, and employee movement.

6. Capacity Planning

Capacity planning determines the maximum output a business can produce

under normal conditions.

 Underutilization: Resources are idle; leads to inefficiency.

 Overutilization: Can cause delays, stress, and quality issues.

Capacity must match demand forecasts and align with long-term strategy.

Example: A call centre staffing more agents during holiday season due to
higher customer inquiries.

7. Quality Control and Continuous Improvement

Quality management ensures outputs meet standards. It involves:

 Quality control (QC): Inspection at various stages of production.

 Quality assurance (QA): Focus on preventing defects through robust

processes.

 Continuous improvement (Kaizen): Ongoing efforts to enhance all

aspects of operations.

Total Quality Management (TQM) is an organization-wide approach

focused on long-term success through customer satisfaction and employee
involvement.

Example: Toyota’s success with lean manufacturing and continuous process

improvement.

8. Inventory Management

Inventory must be balanced to ensure availability without excessive cost.

 Too much inventory: Increases storage costs and risk of

obsolescence.

 Too little inventory: Leads to stockouts and customer dissatisfaction.

Just-In-Time (JIT): Inventory arrives exactly when needed, reducing waste

and storage costs.

Example: A bookstore using JIT to only order textbooks when courses are
finalized.

9. Technology in Operations

Technology enhances operations through automation, efficiency, and data

integration.

 Examples:

o Robotics in assembly lines

o ERP systems coordinating supply chains

 o AI in demand forecasting

Businesses that adopt technology strategically often gain a competitive

advantage.

1. Introduction to Supply Chain Management (SCM)

Supply Chain Management is the coordination of all activities involved in

sourcing, producing, and delivering products to customers. It encompasses
the entire flow of goods, information, and finances from supplier to final
customer.

An effective supply chain is a competitive advantage and is essential to

delivering value to customers.

2. Components of the Supply Chain

 Suppliers: Provide raw materials and components.

 Manufacturers: Convert raw materials into finished products.

 Distributors and Wholesalers: Handle bulk logistics and storage.

 Retailers: Sell products to end-users.

 Customers: The final point in the chain who receive and use the
product.

Each link must be synchronized to ensure cost-effectiveness and reliability.

3. Logistics Management

Logistics refers to the planning, implementation, and control of the

movement and storage of goods, services, and related information.

Key Functions:

 Transportation (inbound and outbound)

 Warehousing and storage

 Inventory control

 Order fulfillment

 Packaging and handling

Goal: Ensure the right product reaches the right place at the right time, in
the right condition, and at the lowest possible cost.
4. Facility Location Decisions

Choosing the optimal location for manufacturing plants, warehouses, and

distribution centres affects cost and service quality.

Factors Affecting Facility Location:

 Proximity to suppliers and markets

 Transportation access (ports, rail, highways)

 Labour availability and cost

 Utilities and infrastructure

 Government incentives and regulations

 Quality of life (to attract talent)

Example: A tech firm locating its data centre in a cooler climate to reduce
cooling costs.

5. Outsourcing and Offshoring

 Outsourcing: Contracting third-party firms to perform non-core

business functions (e.g., IT services, customer support).

 Offshoring: Moving production or services to another country to

reduce costs.

Advantages:

 Lower costs

 Access to global talent and technology

 Focus on core competencies

Risks:

 Quality control

 Communication barriers

 Political and economic instability

6. Operations Decision Areas

Operations managers make both strategic and tactical decisions across

key domains:
  Product design: What to produce and how it meets customer needs.

 Process selection: What technologies and processes to use.

 Capacity planning: Determining how much output is needed.

 Inventory management: How much inventory to keep and when to

reorder.

 Scheduling: Assigning work to resources over time.

 Quality management: Ensuring outputs meet performance

standards.

7. Just-In-Time (JIT) and Lean Operations

 Just-In-Time (JIT): A system where materials and products arrive

exactly when needed, minimizing waste and storage costs.

 Lean operations: Focus on eliminating all forms of waste (time,

materials, energy) while maximizing customer value.

Example: Dell builds custom laptops only after the order is placed,
minimizing inventory costs.

8. Global Supply Chains and Challenges

Managing global supply chains introduces complexities:

 Longer lead times

 Currency fluctuations

 Tariffs and trade barriers

 Cultural and legal differences

 Risk of disruption (natural disasters, pandemics, geopolitical conflict)

Resilient supply chains use diversification, redundancy, and risk

management to cope with disruptions.

Week 8: Productivity – Doing More With Less (Textbook Chapter 7)

1. What is Productivity?
Productivity is a measurement of how efficiently inputs (resources like
labour, capital, and materials) are transformed into outputs (goods and
services). It is calculated as a ratio:

Productivity = Output / Input

High productivity means more output is produced with fewer resources. It

applies at the national, business, and individual worker levels.

2. GDP per Capita as a Measure of Economic Productivity

 GDP per capita = Real GDP / Population

 It measures the average output per person in a country and is used to

gauge material well-being.

 It is more effective than total GDP in assessing how well-off a country’s

citizens are.

 However, GDP per capita doesn’t reflect distribution of wealth or non-

material aspects of quality of life such as freedom, rights, or health.

Example: A country with high GDP but very high population may have low
GDP per capita, indicating lower average individual prosperity.

3. Why Canada Is Productive

Canada has multiple advantages contributing to national productivity:

1. Natural Resources – Abundant clean water, oil, forests, and fertile

land.

2. Labour – A healthy, highly educated, and skilled workforce. Canada

has the highest post-secondary participation among OECD countries.

3. Capital – Reliable transportation, banking, and communication

systems.

4. Entrepreneurship – Government policies supporting innovation and

business creation.

5. Information & Knowledge – High level of academic research,

patents, and global publications.
4. Labour Productivity

 A key productivity metric: Labour productivity = Real GDP / Total

hours worked

 It measures how much value workers create per hour worked.

 Simply working more hours is not a sign of prosperity. The focus is on

output per hour.

Example:

 In 2014: Canadians worked ~1708 hrs/year (OECD average), Mexicans

~2236 hrs, Norwegians ~1403 hrs. Despite fewer hours, Norwegians
had much higher productivity.

5. Business Productivity

Business productivity measures how effectively an individual business

turns inputs into outputs:

Business Productivity = Value or Quantity of Output / Value or

Quantity of Input

Inputs include labour, capital, and materials. Outputs are goods or services.

Examples by Industry:

 Manufacturing: Units produced per labour hour

 Retail: Sales per square foot

 Restaurants: Revenue per table or per store

Why it matters:

1. People and materials are expensive.

2. Longer production time increases cost.

3. Waste and inefficiency reduce profit.

Operations managers constantly seek to optimize input usage.

6. Improving Productivity

Productivity can be increased by:

  Reducing waste

 Training workers to improve skills and reduce errors

 Investing in better tools/equipment

 Simplifying processes to remove delays and inefficiencies

 Improving morale and motivation (engaged workers perform

better)

7. Role of Quality in Productivity

Quality is defined as meeting or surpassing customer expectations. It does

NOT necessarily mean luxury, expense, or excess features.

Benefits of quality:

 Fewer defects and returns

 Higher customer satisfaction and loyalty

 Lower production and service costs (due to efficiency)

Quality Management:

 Integrated into the production process, not just checked at the end.

 Involves everyone in the organization.

8. Technology’s Role in Boosting Productivity

Technology improves productivity by:

 Automating manual processes

 Reducing errors and rework

 Speeding up production and communication

 Facilitating analysis and decision-making (e.g., data analytics, AI)

Examples:

 Robotics in car manufacturing

 Cloud software in office operations

  Online booking systems in service sectors

9. Challenges to Productivity Growth

 High cost of adopting new technologies

 Employee resistance to change

 Mismatch between worker skills and job requirements

 Poor planning and management decisions

 External shocks like pandemics or supply chain disruptions

10. Productivity and Canada’s Future

Canada’s productivity growth has been slower than other developed

countries. Reasons include:

 Underinvestment in innovation and R&D

 Fragmented markets and fewer large firms

 Slow adoption of advanced technologies

 Geographic challenges (e.g., transportation across vast territory)

Improving productivity is vital to maintaining economic competitiveness,

quality of life, and long-term growth.

Week 9: Accounting, Finance, and the Role of Money (Textbook

Chapter 8)
1. Data, Information, and Knowledge

 Data: Raw facts and figures. Example: Sales numbers.

 Information: Data that is organized, analyzed, and given context.

Example: A comparison of this month’s vs last month’s sales.

 Knowledge: Understanding gained from experience and information;

used for decision-making. Example: A manager predicting future
demand based on past trends.

2. Management Information Systems (MIS)

A Management Information System is a structured way of collecting,

storing, and processing business data into usable information for managers.

Key Purposes:

 Record and store operational data

 Organize and analyze data into decision-ready reports

 Improve control and planning across business functions

Example: A retail chain uses MIS to monitor daily sales, inventory levels,
and reorder needs across all store locations.

3. What is Accounting?

Accounting is the process of collecting, analyzing, and communicating

financial information. It helps businesses track financial health and make
decisions.

Purpose:

 Measure performance (revenue, profit, costs)

 Determine taxes owed

 Inform decisions for management and investors

Stakeholders Who Use Accounting:

 Investors: Should I buy/sell shares?

 Lenders: Can the business repay its loans?

  Managers: How are different units or products performing?

 Government: How much tax is owed?

 Employees: Am I eligible for bonuses or profit-sharing?

4. Managerial vs Financial Accounting

A. Managerial Accounting:

 Internal use only

 Highly detailed

 Used for short-term planning, budgeting, and performance tracking

 Focused on specific units (products, departments)

B. Financial Accounting:

 External use (investors, banks, regulators)

 Summary-level info

 Shows overall financial health

 Reports prepared annually (for tax and legal compliance)

Key Note: All accounting is done in dollar values for consistency.

5. The Fiscal Year

A fiscal year is a 12-month accounting period selected by the organization.

It doesn't have to align with the calendar year.

Examples:

 Government of Canada: April 1 – March 31

 Best Buy: March 1 – February 28

 Tim Hortons: Sunday closest to December 31

6. Key Accounting Terms

 Transaction: Any business event with monetary impact

  Assets: Resources owned (e.g., cash, land, inventory)

 Liabilities: Obligations owed (e.g., loans, accounts payable)

 Equity: Owner’s residual interest (Assets - Liabilities)

 Revenue: Money earned from selling goods or services

 Expenses: Costs incurred in generating revenue

 Profit (Net Income): Revenue – Expenses

7. Three Core Financial Statements

A. Income Statement (Profit and Loss Statement)

 Shows revenues and expenses over a specific period

 Final line = Net Income (profit or loss)

B. Balance Sheet

 Snapshot of financial position at a point in time

 Formula: Assets = Liabilities + Equity

C. Cash Flow Statement

 Tracks inflows and outflows of cash

 Sections: Operating, Investing, and Financing activities

8. What is Finance?

Finance is the management of money and other assets. It involves:

 Budgeting and forecasting

 Managing daily cash flow

 Evaluating investments and risks

 Raising capital (through loans or selling shares)

9. The Role and Functions of Money

Money is anything widely accepted as payment for goods, services, or debt.

Functions of Money:

1. Medium of Exchange: Eliminates the need for bartering

2. Store of Value: Retains value over time

3. Unit of Account: Standard measure of value

4. Standard of Deferred Payment: Facilitates credit

Forms of Money:

 Coins and bills

 Bank deposits

 Electronic payments (credit, debit, e-transfer)

10. Sources of Business Financing

 Debt Financing:

o Borrowing funds (bank loans, bonds)

o Must be repaid with interest

o No ownership dilution

 Equity Financing:

o Selling shares of the company

o No obligation to repay

o Dilutes ownership and control

 Retained Earnings:

o Reinvested profits

o No additional debt or equity required

Week 10: Financial Statements – Income Statement & Balance Sheet

(Textbook Chapter 9)

1. Introduction
Businesses need financial statements to track performance, assess financial
health, satisfy legal requirements, and inform decision-making. The two
foundational statements are:

 Income Statement (shows financial performance over time)

 Balance Sheet (shows financial position at a point in time) These are

prepared under Generally Accepted Accounting Principles
(GAAP).

2. Income Statement (Statement of Earnings)

The income statement shows revenue, expenses, and profit or loss for a
period (like a year). It functions like a movie: it tells the story of what
happened over time.

Components of the Income Statement:

Revenue (Sales):

 Total value of goods/services sold.

 Should grow in line with GDP for healthy growth.

 Sudden or unexplained surges may indicate unsustainable practices or

poor quality control.

Cost of Goods Sold (COGS):

 Also called Cost of Sales.

 Includes only the direct costs of production (materials, labour).

 Does not include admin or overhead costs.

Gross Profit = Revenue – COGS

 Indicates profitability of core product.

 A negative gross profit means the product is underpriced or cost of

production is too high.

 To improve: increase price (risking customer loss) or reduce production

cost (risking quality).

Operating Expenses:
  Indirect costs of running the business (rent, salaries, utilities, admin,
advertising).

 Also called General and Administrative Expenses.

 Critical to monitor, as uncontrolled fixed costs can erode profits.

Operating Profit = Gross Profit – Operating Expenses

 Also called EBIT (Earnings Before Interest and Taxes).

 Negative operating profit with positive gross profit indicates excessive

fixed expenses.

Interest Expense:

 Cost of borrowing funds.

 Principal (loan amount) is not an expense, only the interest is.

Pre-Tax Profit (EBT):

 Earnings Before Taxes.

 Calculated after operating and interest expenses but before tax.

Income Tax:

 Paid by corporations at corporate tax rate.

 Sole proprietors/general partners pay personal marginal tax rate.

Net Profit (Net Income):

 Also known as “The Bottom Line”.

 Profit remaining after all expenses and taxes.

 Represents the owner's return and a major performance measure.

3. Balance Sheet (Statement of Financial Position)

The balance sheet is a snapshot of the business's financial health at a

single moment. It answers:

 What does the business own? (Assets)

 What does it owe? (Liabilities)

 What remains for the owner? (Equity)

Fundamental Equation: Assets = Liabilities + Equity

Key Components:

Assets:

 Current Assets (convertible to cash within 12 months):

o Cash

o Accounts Receivable

o Inventory (raw materials, WIP, finished goods)

 Fixed Assets (not intended for immediate sale):

o Equipment

o Buildings

o Intangibles (patents, copyrights, trademarks)

Depreciation reduces fixed asset value due to use, age, or

obsolescence. Appreciation is an increase in value (e.g., land).

Liabilities:

 Current Liabilities (due within a year):

o Accounts Payable

o Taxes Payable

o Loans Payable

 Long-Term Liabilities:

o Mortgages

o Bonds

o Term Loans

Owner’s Equity:

 Paid-in Capital: Cash owners invest directly.

 Retained Earnings: Profits kept in the business to reinvest, not paid

out as dividends.

 Equity reflects ownership and the value the business has retained.
Investment = capital used to generate future profits.

4. Liquidity and Working Capital

Liquidity is how quickly assets can be turned into cash.

 Most liquid: Cash

 Least liquid: Equipment/buildings

Working Capital = Current Assets – Current Liabilities

 Indicates the firm’s ability to meet short-term obligations.

Current Ratio = Current Assets / Current Liabilities

 Ratio > 1 means more assets than debts (positive liquidity)

 Used to assess short-term financial strength

5. Leverage

Leverage is the degree to which a business is financed by debt.

Debt-to-Equity Ratio = Total Liabilities / Total Equity

 High ratio = high reliance on borrowing

 Canadian banks often limit mortgage lending to a 3:1 ratio

 Most enterprises are not allowed >4:1 ratio

Higher leverage increases financial risk but allows growth with less equity.

6. Return on Investment (ROI)

ROI = (Net Profit / Owner’s Equity) × 100%

 Combines profitability and ownership investment

 Used to assess efficiency of capital usage

7. Summary Definitions (from Textbook)

 Accounts Payable: Amount owed to others (e.g., suppliers)

  Accounts Receivable: Amount expected from customers

 Balance Sheet: Snapshot of assets, liabilities, and equity

 Cost of Sales: Direct cost of producing goods

 Depreciation: Decline in asset value

 Intangible Assets: Non-physical but valuable items (e.g., IP)

 Liquidity: Ease of asset-to-cash conversion

 Operating Expenses: Overheads not tied to production

 Owner’s Equity: Owner’s stake (capital + retained earnings)

 ROI: Return earned relative to capital invested

Week 11: Financial Planning, Forecasting, Investment Appraisal, and

Financial Control (Textbook Chapter 10)

1. What Is Finance?

Finance is the business function that involves locating, collecting, managing,

and redistributing capital. It allows businesses to fund operations, expansion,
and innovation.

Financial Management involves:

  Planning

 Organizing

 Leading

 Controlling the sourcing and usage of capital

CFO (Chief Financial Officer): The senior executive responsible for

financial oversight. One of the most powerful figures in an organization, the
CFO oversees planning, analysis, budgeting, capital raising, and investor
relations.

2. Why Businesses Need Finance

Businesses need money before they can make money:

 Rent office space

 Buy machinery or computers

 Hire employees

Startup challenge: Lenders rarely fund new, unproven businesses. Most

rely on:

 Personal savings

 Friends or family

 Owner’s equity

Break-even: Businesses only start attracting debt funding once they

consistently earn revenue above expenses.

3. Sources of Finance

1. Bank Loans – Interest-bearing loans with set repayment schedules.

2. Friends and Family – Informal, flexible loans but may strain

relationships.

3. Personal Savings – Owner’s funds, high personal risk.

4. Equity Financing (Selling Shares) – Bring in outside investors who

get ownership and possibly decision-making rights.
4. Capital Structure

The mix of debt and equity a company uses is called its capital structure.

 Equity Financing:

o Pros: No repayment, potential for innovation and new

perspectives.

o Cons: Dilution of ownership; risk of conflicting visions.

Dilution occurs when new shares are issued and reduce existing owners’
percentage of control.

 Debt Financing:

o Pros: Keeps control with owners, only obligation is to repay with

interest.

o Cons: Adds risk and fixed financial burden.

Most businesses use a blend of debt and equity to optimize growth and
minimize risk.

5. Financial Planning – Budgeting

A budget is a forecast estimate of the costs of future plans/projects.

 Budget Deficit: Costs > Revenue

 Budget Surplus: Revenue > Costs

6. Investment Appraisal

Used to evaluate and prioritize capital projects.

 Accounting Rate of Return (ARR) = Avg Profit / Avg Investment

 Payback Period: How long it takes to recover the initial investment.

 Net Present Value (NPV): Present value of future inflows minus the
investment cost.

Factors to Consider:
  Size of investment

 Length of time to return

 Return on Investment: Steady small returns may still be valuable

 Risk of Return: Range of possible outcomes; the more variance, the

higher the risk

Scenario Analysis:

 Base Case: Expected outcome

 Best Case: Exceeds expectations

 Worst Case: Falls short

7. Financial Forecasting and Pro Forma Statements

Financial Planning includes preparing pro forma statements (forward-

looking estimates):

1. Identify variables (sales trends, inflation, competitors)

2. Forecast Sales

o Subjective: Based on staff intuition/experience

o Objective: Data-driven models/statistics

3. Forecast Income, Expenses, Cash Flow, etc.

4. Compile projected financial statements

8. Financial Ratio Analysis

Ratios allow quick health checks of a business, unaffected by company size.

Categories & Key Ratios:

 Profitability:

o Gross Profit Margin = Gross Profit / Sales

o Net Income Margin = Net Income / Sales

 Efficiency:
 o Inventory turnover, asset use (not numerically listed)

 Liquidity:

o Current Ratio = Current Assets / Current Liabilities

o Quick Ratio = (Current Assets – Inventory) / Current Liabilities

o Working Capital = Current Assets – Current Liabilities

 Leverage:

o Debt-to-Equity = Total Liabilities / Owner’s Equity

 Investment:

o Return on Investment (ROI) = Net Income / Owner’s Equity

Steps:

1. Identify key indicators

2. Calculate appropriate ratios

3. Interpret and evaluate

9. Time Value of Money, Risk, and Inflation

 Interest Lost: You lose returns you could’ve earned elsewhere.

 Risk: Outcomes may differ from expectations.

 Inflation: Erodes purchasing power over time.

Conclusion: A dollar today is worth more than a dollar tomorrow.

10. Investor Relations

Maintaining strong relationships with:

 Shareholders

 Lenders

 Suppliers

Activities:

 Share performance updates

  Roadshows to pitch to investors

 Earnings calls after quarterly results

Investor confidence is essential for future fundraising.

11. Financial Control

Financial control is ensuring performance meets expectations. It involves:

1. Setting Standards – Often through budgets.

2. Measuring Performance – Quarterly statements.

3. Taking Action – Correct underperformance or reward excellence.

Examples:

 Cancel ads to stay within budget

 Reward outperforming teams with bonuses

The goal: Align people, resources, and capital to achieve financial and
strategic goals.

12. Key Terms from Textbook

 Budget: Estimated costs of future plans

 Capital Structure: Mix of debt and equity used for growth

 CFO: Senior executive managing financial strategy

 Dilution: Loss of ownership share from issuing new equity

 Financial Control: Planning, measuring, and adjusting capital

 Investor Relations: Communication with investors/lenders

 Payback Period: Time to recover investment

 Risk of Return: Uncertainty in projected gains

 Investment Appraisal: Evaluation of projects for capital allocation

✅ Week 12: Human Resource Management (HRM)

📘 Based on Lecture Notes + Textbook Chapter 11

1. What is HRM (Human Resource Management)?

Human Resource Management is the strategic and administrative

function responsible for acquiring, developing, managing, and retaining the
people an organization needs to succeed.

🧠 In simple terms: HRM is about managing your company’s most important

asset — the people.

2. Why is HRM Important?

Modern workplaces rely on skilled, motivated, and diverse talent.

Especially in Canada’s service-driven economy, where over 80% of jobs are
in services (like health care, finance, education), businesses need strong HR
practices to succeed.

💡 HRM helps companies:

• Hire the right people

• Train and develop them

• Keep them motivated

• Make sure they feel safe, respected, and fairly compensated

3. Core Functions of HRM (Explained)

Function What it Means

Recruiting Finding and attracting the right candidates

Selecting Choosing the best person for the job

Training &
Teaching skills, building careers
Development

Motivating Encouraging productivity and engagement

Function What it Means

Checking how well employees are doing (performance

Evaluating
reviews)

Compensating Paying and rewarding employees

Managing when and how people work (e.g., shifts,

Scheduling
hybrid work, vacation plans)

4. The 3 Phases of Hiring (Fully Explained)

📍 Phase 1: Recruitment

This phase is about attracting potential candidates.

✅ Steps:

• Job Analysis: Study the job’s duties and responsibilities.

• Person Specification: Describe the ideal candidate (skills, experience).

• Job Advertisement: Public posting of the job using online boards,

newspapers, or internal platforms.

📘 Why it matters: Clear recruitment brings in better, more suitable applicants

and avoids wasting time later.

📍 Phase 2: Selection

Now we choose the best candidate.

✅ Selection Tools:

1. Application Forms – Screen basic qualifications.

2. Interviews – Assess personality, fit, and communication skills.

3. Testing – Evaluate technical or cognitive ability.

4. Background Checks – Verify credentials, experience, references.

5. Probation Period – Trial run before full commitment.

🧠 Think of this like a dating process before committing to a long-term

relationship.

📍 Phase 3: Training & Development

Once hired, the employee must be equipped to perform well and grow.

✅ Types of Training:

• Orientation: Welcome to company culture, policies, team.

• On-the-Job Training: Learn by doing, with supervision.

• Apprenticeship: Paid work + classroom learning (e.g., electricians).

• Off-the-Job Training: Conferences, workshops.

• Vestibule Training: Simulated environments (e.g., flight simulators).

• Job Simulation: Replicating real work tasks in a safe setting.

📘 Why it’s important: Training reduces mistakes, improves productivity, and

helps people feel confident and supported.

5. Modern HR Challenges in Canada

🔻 These issues make HRM more complex:

• Skill shortages (especially in trades & tech)

• Aging workforce (retirements)

• Younger employees want purpose, flexibility, not just a paycheck

• Employee loyalty is declining (job-hopping culture)

• Diverse workforce needs inclusive policies

6. Diversity, Equity, and Inclusion (DEI)

HRM must ensure fair hiring and inclusive culture:

✅ Key Definitions:

• Equity = Fair access and support for all employees

• Diversity = Differences in race, gender, age, abilities, background

• Inclusion = Making everyone feel valued and respected

📘 Why it matters: Diverse teams perform better and reflect the customer
base.

7. Evaluating Performance

This step is about formally reviewing how well employees are doing.

✅ Tools:

• Performance reviews

• Manager assessments

• Peer and self-evaluations

📘 Why it matters: Helps with promotions, identifying training needs, and
giving feedback.

8. Motivation & Retention

To keep employees engaged:

✅ Strategies:

• Incentives: Bonuses, performance pay

• Recognition: Awards, public praise

• Growth: Training, promotions

• Work-life balance: Flexible hours, mental health support

📘 Happy employees are more productive and stay longer.

9. Compensation and Benefits

Compensation = What you give employees in exchange for their work.

✅ Includes:

• Base pay (salary/hourly wage)

• Bonuses and commissions

• Stock options (for higher roles)

• Health, dental, retirement plans

• Paid time off (vacation, sick days)

• Perks (e.g., gym memberships, wellness days)

📘 Compensation is one of the top reasons people stay — or leave.

10. Scheduling and Flexibility

Modern HR supports flexible arrangements like:

• Flextime (choose start/end times)

• Compressed workweeks (e.g., 4 days of 10 hours)

• Remote work or hybrid models

📘 This supports work-life balance and improves retention.

11. Summary: Key Terms (Explained)

Term Meaning

Study of a job’s responsibilities and

Job Analysis
requirements

Job Description List of job tasks and responsibilities

Person Desired traits, skills, and qualifications in a

Specification candidate

Recruitment Finding and attracting job applicants

Selection Evaluating and choosing from applicants

Initial training to introduce new hires to the

Orientation
company

On-the-Job
Learning by doing while working
Training

Vestibule Training in an environment that mimics the

Training actual job

Job Simulation Practicing work tasks in a safe, controlled

Term Meaning

setting

Paid structured training combining work +

Apprenticeship
study

Equity Fair treatment regardless of background

A workforce that reflects many groups and

Diversity
perspectives

Ensuring everyone feels respected, safe, and

Inclusion
heard

Week 13: Motivation in the Workplace (Lecture Notes)

1. Introduction: Why Motivation Matters

Motivation refers to a person's internal desire or drive to do their best and
achieve goals. In business, motivation is a critical factor because it directly
affects performance, productivity, satisfaction, and retention.

✅ Key Point: Of all the factors of production (land, labour, capital,

entrepreneurship), labour — the human element — is the only one that
requires constant care, motivation, and engagement.

If you misuse a machine, you can often repair or replace it. But if you
neglect, abuse, or waste human resources (people), they may never fully
recover, and the business suffers long-term.

2. The Cost of Poor Motivation

 Hiring and training employees is expensive.

 Losing a good employee means losing not just their work but also
their knowledge and experience.

 Replacing them is costly and time-consuming.

📊 Real Stats (from U.S. research):

 40% of employees report working under a bad boss.

 39%: supervisors failed to keep promises

 37%: bosses didn’t give credit

 27%: bosses made negative comments

 23%: bosses blamed others for their mistakes

✅ Lesson: Poor leadership = low morale and high turnover.

3. Intrinsic vs Extrinsic Motivation

These are the two main types of motivation:

 Intrinsic Motivation: Comes from within. It’s the personal satisfaction

you feel from doing a great job.

o 🧠 Example: Finishing a difficult project and feeling proud.

 Extrinsic Motivation: Comes from outside sources like recognition or

rewards.
 o 💸 Example: Getting a raise, a bonus, a promotion, or praise.

Effective managers use BOTH to build a motivated workforce.

4. Classical Theory of Motivation

This theory believes that money is the only motivator.

 If you want more productivity → pay more.

 If you want less absenteeism → penalize financially.

🧠 Problem: People are not machines. They care about purpose, growth,
respect, and flexibility — not just pay.

5. Scientific Management / Taylorism

Developed by Frederick Winslow Taylor, this method aimed to maximize

productivity through efficiency and control.

📘 His 1911 book: “The Principles of Scientific Management”

Core Ideas:

1. Use time and motion studies to measure the most efficient way to
do a task.

2. Break jobs into simple, repetitive steps.

3. Train workers to do just one task extremely well.

4. Remove delays and distractions.

✅ Example: Henry Ford applied this at Ford Motor Company.

 Assembly line workers each had one task.

 Standardized tools, routines, and movements.

🎯 Goal: Maximize speed, standardize output.

6. Real-World Example: UPS

UPS applies Taylorist methods even today:

 Drivers must walk three feet per second.

  Deliver ~400 packages per day.

 Hold keys with the teeth facing up using the third finger.

✅ Why? These rules were tested to be the most time-efficient.

7. Problems With Scientific Management

🔻 While productivity improves short-term, this method has serious long-term

drawbacks:

 Workers feel like machines, not people.

 Leads to boredom, alienation, burnout, and absenteeism.

 Kills creativity and limits individual growth.

📘 Takeaway: Efficiency is important, but respecting human needs is

essential.

8. Introduction to the Hawthorne Studies (Next Topic)

The Hawthorne Studies explored the psychological and social factors

behind employee performance. They marked a shift in management thinking
from treating workers like machines to treating them as complex human
beings.

✅ Teaser: These studies showed that people work harder when they
feel seen, valued, and part of a supportive group.

Week 13: Motivation in the Workplace (Lecture Notes) – Part 2

9. The Hawthorne Studies – Turning Point in Management Thought

🔬 Conducted at the Western Electric Hawthorne plant (Chicago, 1920s–30s)

🧠 Purpose: To find out how different conditions (light, breaks, hours) affected
worker productivity.

✅ Surprise Finding:

 Productivity increased no matter what was changed (more light, less

light, longer breaks, shorter breaks).

 Eventually researchers realized it wasn't the physical changes — it was

the attention given to workers that made them feel valued.
📘 Conclusion: Workers perform better when they feel seen, important, and
part of a team.

➡️This became known as the “Hawthorne Effect.”

10. Maslow’s Hierarchy of Needs (1943)

Maslow proposed that people are motivated by a hierarchy of needs. Each

level must be satisfied before the next becomes motivating.

Levels of Maslow’s Pyramid:

1. Physiological Needs: Food, water, shelter, basic salary.

2. Safety Needs: Job security, safe working conditions.

3. Social Needs: Friendships, teamwork, belonging.

4. Esteem Needs: Recognition, promotions, respect.

5. Self-Actualization: Achieving full potential, personal growth.

🎯 Business Application: To motivate employees, companies must address

their needs at each level.

🧠 Example:

 A bonus may not work for someone who feels excluded or insecure.

 A team retreat can meet social/esteem needs.

11. Herzberg’s Two-Factor Theory (1959)

Frederick Herzberg studied workers to understand what made them

feel satisfied vs dissatisfied at work.

He found 2 sets of factors:

✅ Motivators (cause satisfaction):

 Achievement

 Recognition

 Responsibility

 Personal growth
  Meaningful work

🔻 Hygiene Factors (prevent dissatisfaction):

 Salary

 Job security

 Company policies

 Working conditions

 Supervision

📘 Insight: Fixing hygiene factors won’t make people happy —

just not unhappy. Motivators are what truly drive passion and performance.

12. Theory X and Theory Y (Douglas McGregor, 1960s)

McGregor proposed that managers hold assumptions about workers that

shape their leadership style.

Theory X (Negative View) Theory Y (Positive View)

People enjoy work and seek

People are lazy and dislike work
responsibility

Need to be controlled, punished, Thrive with autonomy, trust, and

watched personal goals

Motivation = threats and monetary Motivation = meaning, growth, internal

incentives satisfaction

📘 Modern companies favour Theory Y to build innovation-driven,

collaborative cultures.

13. Job Enrichment & Empowerment

Job Enrichment: Adding more meaning, responsibility, and

creativity to jobs.

 Encourages autonomy

 Promotes personal growth

 Helps workers feel connected to outcomes

Job Enlargement: Expanding the variety of tasks in a job to reduce
boredom.

Empowerment: Giving employees more decision-making authority and

control.

🎯 Benefits:

 Boosts engagement

 Sparks innovation

 Builds trust and loyalty

14. Modern Motivation in Practice

Companies today use a mix of tools to keep people motivated:

✅ Recognition Programs

 Employee of the Month

 Shout-outs on internal platforms

✅ Wellness Initiatives

 Mental health days

 Gym reimbursements

✅ Flexible Work Options

 Hybrid or remote work

 Choice over schedules

✅ Growth Opportunities

 Leadership training

 Tuition reimbursement

✅ Purpose-Driven Culture

 Employees today want to work at companies that reflect their values.

Master Formula & Numerical Reference Sheet (Updated)

🧮 Marketing & Pricing (Weeks 2–5)

 Value Package = Benefits + Features + Function

 Markup Price = Variable Cost + Markup

 Selling Price = Variable Cost + Markup

 Contribution Margin (%) = Markup / Selling Price

 Break-Even Quantity (Units) = Fixed Costs / (Selling Price – Variable

Costs per Unit)

📈 Productivity & GDP (Weeks 7–8)

 GDP per Capita = Country’s GDP / Country’s Population

 Productivity = Output / Input

 Labour Productivity = Output / Labour Hours

 Working Capital = Current Assets – Current Liabilities

 Current Ratio = Current Assets / Current Liabilities

💵 Financial Statements & Accounting (Weeks 9–10)

 Gross Profit = Revenue – Cost of Sales

 Operating Profit = Gross Profit – Operating Expenses

 Net Profit (Net Income) = Revenue – Total Expenses

 Net Profit Margin (%) = (Net Profit / Revenue) × 100

 Accounting Equation = Assets = Liabilities + Owner’s Equity

 Debt-to-Equity Ratio = Total Liabilities / Owner’s Equity

 Return on Investment (ROI) = (Net Profit / Owner’s Equity) × 100

📊 Investment Appraisal (Week 11)

 ARR (Accounting Rate of Return) = Average Profit / Average

Investment

 Payback Period = Initial Investment / Annual Return

 NPV (Net Present Value) = PV of Inflows – Initial Investment

📝 Practice Questions with Answers

Q1. Break-Even Analysis

 Fixed Costs = $12,000, Selling Price = $30, Variable Cost = $18

→ Break-Even Units = 12,000 / (30 – 18) = 1,000 units

Q2. Contribution Margin %

 Markup = $10, Selling Price = $40

→ Contribution Margin % = 10 / 40 = 25%

Q3. GDP per Capita

 GDP = $2 trillion, Population = 50 million

→ GDP per Capita = 2,000,000,000,000 / 50,000,000 = $40,000

Q4. Working Capital

 Current Assets = $150,000, Current Liabilities = $90,000

→ Working Capital = 150,000 – 90,000 = $60,000

Q5. Net Profit Margin

 Revenue = $400,000, Net Profit = $50,000

→ Net Profit Margin = (50,000 / 400,000) × 100 = 12.5%

Q6. ROI Calculation

 Net Profit = $80,000, Owner’s Equity = $320,000

→ ROI = (80,000 / 320,000) × 100 = 25%

Q7. Payback Period

 Investment = $100,000, Annual Return = $20,000

→ Payback = 100,000 / 20,000 = 5 years

Q8. ARR

 Avg Profit = $10,000, Avg Investment = $50,000

→ ARR = 10,000 / 50,000 = 20%

Q9. Current Ratio

 Assets = $70,000, Liabilities = $35,000

→ Current Ratio = 70,000 / 35,000 = 2.0

Q10. Debt-to-Equity Ratio

 Liabilities = $180,000, Equity = $90,000
→ Debt-to-Equity = 180,000 / 90,000 = 2.0