Essential Principles of Business, Finance, and Economic Management

Human Needs and Economic Foundations

Maslow's Hierarchy of Needs

Maslow's hierarchy outlines fundamental human needs:

• Basic Needs (Physiological)
• Safety
• Social (Love and Belonging)
• Esteem
• Self-Actualization

Fundamental Economic Questions

Every economic system must address these core questions:

1. What goods and services should be produced within the system?
2. For whom should these goods and services be produced?
3. How should they be produced?

Business Structures and Market Forces

Types of Business Ownership

• Sole Proprietorship: Owned by one individual.
• Partnership: Owned by two or more individuals.
• Corporation: Governed by a board and funded by stocks.
• Co-operative: Owned by workers or members.
• Franchise: Licensed business model.

Factors Influencing Supply and Demand

Key factors affecting market dynamics include:

• Price
• Supply
• Awareness (Marketing)
• Accessibility
• Cost to make or provide

Global Trade and International Commerce

The 5 P's of International Business

1. Product
2. Price
3. Proximity
4. Preference
5. Promotion

International Trade Regulations and Barriers

• Tariffs: Import taxes.
• Landed Cost: The total cost of an imported purchased item, including shipping and duties.

Key Trade Organizations

• WTO (World Trade Organization): Makes global trade rules.
• NAFTA (North American Free Trade Agreement): A trade agreement between North American countries.

Balance of Trade: Ideally, an equal number of imports and exports.

Finance, Banking, and Personal Wealth

Understanding Purchasing Power and Inflation

Purchasing Power: How much money is worth after inflation (e.g., an inflation rate of 2%).

Bank of Canada: Helps the economy by regulating the money supply. Bank rates depend on the rate given by the Bank of Canada.

Personal Income Classification

There are three types of personal income:

1. Gross Income: Total money earned before taxes.
2. Disposable Income: The amount left after taxes are paid.
3. Discretionary Income: The amount left after all necessities have been paid for.

Banking Systems and Services

Canadian Bank Schedules

1. Schedule I: Owned only by Canadians.
2. Schedule II: Have some foreign owners.
3. Schedule III: Only foreign owners.

Common Bank Services

Banks typically offer:

• Loans
• Line of Credit (instant customer credit)
• Credit Cards
• Money Orders
• Night Deposits
• Pre-authorized Payments
• Safety Deposit Boxes

Consumer Behavior and Purchasing Drivers

Six common reasons people buy goods and services:

1. Income
2. Price
3. Status
4. Trends
5. Customs and Habits
6. Promotion

Financial Management and Production

Calculating Interest and Credit Fundamentals

Interest Formulas

• Simple Interest: Borrowed Amount × Rate × Time
• Compound Interest: Borrowed Amount × (1 + Interest / Number of Periods)

RSRP: Registered Retirement Savings Plan.

Conspicuous Consumption: Buying goods primarily to flaunt wealth.

The 3 C's of Credit

Lenders assess creditworthiness based on:

1. Character: Reliability and history of repayment.
2. Capacity: Ability to repay the loan.
3. Capital: Assets or collateral available.

Factors of Production and Saving Strategies

The 6 Factors of Production

1. Natural Resources
2. Raw Materials
3. Labour (Labor)
4. Capital (Financial and Physical)
5. Information
6. Management

How to Save Money

Effective saving strategies include budgeting, utilizing sales, and taking advantage of promotions.

Operations, Management, and Leadership

The Production Process

The typical production process involves:

1. Purchasing
2. Processing
3. Quality Control
4. Grading

Labour Market: The arena where employees meet employers.

Reconciling an Account: The process of balancing an account.

Employee Turnover: The rate at which employees leave a company.

Management Functions

The four core functions of management are:

1. Planning
2. Organizing
3. Leading
4. Controlling

Primary Industry: An industry that takes something directly out of the earth (e.g., mining, agriculture).

Liquid Assets: Assets that are easily turnable into cash.

Leadership Styles, Marketing, and Accounting Basics

Leadership Styles

• Autocratic: The leader makes all decisions.
• Laissez-faire: Leaves employees to do their work with minimal supervision.
• Democratic: Employees have a say in decision-making.

The 4 P's of Marketing

1. Product
2. Price
3. Place
4. Promotion

Owner's Equity: Calculated as Assets minus Liabilities.