Business Fundamentals

🧭 Overview

🧠 One-sentence thesis

Obtaining a college or university credential and committing to lifelong learning provide increased job prospects, higher wages, and essential employability skills that help workers adapt to changing workplace demands and succeed throughout their careers.

📌 Key points (3–5)

• Why credentials matter: College or university credentials lead to increased job prospects, higher wages, greater job security, life satisfaction, and better benefits.
• Lifelong learning defined: Ongoing, voluntary, self-motivated pursuit of knowledge for personal or professional reasons that helps employees adapt and improve performance.
• Employability skills are essential: Soft skills (transferable skills) like communication and teamwork are required across all jobs, not just job-specific hard skills.
• Four skill categories: The Conference Board of Canada organizes employability skills into communication, teamwork, and two other broad categories (not fully detailed in excerpt).
• Common confusion: Hard skills vs. soft skills—hard skills are job-specific (e.g., software for web design), while soft skills are transferable across roles and industries.

💼 Benefits of Postsecondary Credentials

💰 Financial and career advantages

The excerpt lists five concrete benefits of obtaining a college or university credential:

1. Increased Job Prospects: Canadian employers recognize Canadian schools; credential evaluations (e.g., World Education Services) help compare international education to Canadian standards for employers, licensing boards, and immigration authorities.

2. Higher Wages: Workers with four-year degrees earn more and experience lower unemployment than those with only high school diplomas; generally, higher education levels correlate with higher earnings in Canada.

3. Increased Job Security: Credentials may better equip workers for economic turmoil.

4. Greater Life Satisfaction: People with bachelor's degrees tend to be happier than those without.

5. Easier Access to Benefits: College and university graduates are more likely to work for companies offering health insurance and other benefits.

🎓 Credential evaluation context

• If you attended school outside Canada, credential evaluation helps employers compare your education to Canadian standards.
• Organizations like World Education Services (WES) perform these evaluations for schools, employers, licensing boards, and immigration authorities.

📚 Lifelong Learning as a Workplace Necessity

🔄 What lifelong learning means

Lifelong learning: the ongoing, voluntary, and self-motivated pursuit of knowledge for either personal or professional reasons.

• It is a workplace necessity for most employees, not optional.
• Helps employees adapt to changing work demands, improve performance, and increase job satisfaction.

🏢 How organizations support it

• Many organizations provide professional development funds for employees' learning and growth.
• Some companies require employees to commit to a set number of months or years with the company after completing company-funded professional development programs.
• Example: An organization might fund a training program but ask the employee to stay for two years afterward.

🛠️ Building Employability Skills

🔧 Hard skills vs. soft skills distinction

Skill Type	Definition	Example	Transferability
Hard skills	Job-specific technical abilities	Web Designer using software to build websites	Limited to specific roles
Soft skills	Communication, teamwork, self-management abilities	Working in teams, communicating well	Transferable across jobs and industries

• Don't confuse: Hard skills are what you need for a specific job; soft skills (employability skills) are what you need to enter, stay in, and progress in any workplace.

👥 Why teamwork and communication matter

• 90% of projects require team participation rather than individual responsibility.
• 31% of companies say miscommunications about project objectives is the number one reason projects fail.
• This explains why soft skills like teamwork and communication are considered essential employability skills.

📋 Employability skills definition

Employability skills: the skills you need to enter, stay in, and progress in the world of work, whether you work on your own or as part of a team.

• These are transferable skills that apply across different jobs and industries.
• The most important include: ability to work well with others, be a productive team member, and communicate well.

📊 Conference Board of Canada Framework

📦 Four broad categories

The Conference Board of Canada organizes employability skills into four broad categories (Figure 1.1 referenced but only two detailed in excerpt):

1. Communication Skills
2. Teamwork Skills
3. (Two additional categories mentioned but not detailed in this excerpt)

💬 Communication skills breakdown

The Conference Board identifies these fundamental communication skills:

• Read and understand information in different formats (words, graphs, charts, diagrams).
• Write and speak so others pay attention and understand.
• Listen and ask questions to understand and appreciate others' points of view.
• Share information using different technologies (phone calls, e-mail, social media, Internet).
• Use relevant knowledge and skills to explain or clarify ideas.

🤝 Teamwork skills context

• Every job requires working with people.
• In college and university, students practice through group projects.
• Everyday workplace communication involves interacting with colleagues, managers, customers, and suppliers.
• The excerpt notes teamwork skills are identified by the Conference Board but details are cut off.

🧰 The Employability Skills Toolkit

The Conference Board of Canada provides a downloadable Toolkit that includes:

• Explanations and descriptions of employability skills and ways to build them.
• Information on becoming job-ready with exercises to practice and apply learning.
• Activities to identify which skills you have and which need improvement.
• New content on digital skills and social and emotional skills (responding to technology and automation impacts).
• A section on developing a change-ready, lifelong learning mindset essential for navigating job transitions.

🧭 Overview

🧠 One-sentence thesis

Beyond formal credentials, developing both hard and soft employability skills—especially communication, teamwork, and business fundamentals—is essential for entering, staying in, and advancing in the workplace.

📌 Key points (3–5)

• Hard skills vs soft skills: specific jobs require hard skills (e.g., software for web design), but soft skills like communication and teamwork are transferable and considered employability skills across all roles.
• Employability skills definition: the skills needed to enter, stay in, and progress in the world of work, whether working independently or in teams.
• Why teamwork matters: 90% of projects require team participation, and 31% of companies cite miscommunication about objectives as the top reason projects fail.
• Four broad categories: the Conference Board of Canada organizes employability skills into Communication, Teamwork, and two other categories (the excerpt shows these two prominently).
• Common confusion: employability skills are not just about getting hired—they are also about retaining your position and growing your career over time.

💼 What employability skills are

💼 Core definition

Employability skills: the skills you need to enter, stay in, and progress in the world of work, whether you work on your own or as part of a team.

• These are not limited to technical or job-specific abilities.
• They include both hard skills (technical, job-specific) and soft skills (transferable, interpersonal).
• Soft skills are often called "transferable skills" because they apply across different roles and industries.

🔧 Hard skills vs soft skills

Type	Description	Example from excerpt
Hard skills	Specific technical abilities required for particular jobs	Web Designer using software to build websites
Soft skills	Transferable abilities for communication, teamwork, and professional self-management	Communicating well with others, being a productive team member

• Hard skills are job-specific; soft skills are universal.
• Both are necessary: hard skills get you the job, soft skills help you keep it and advance.

📊 Why these skills matter

• Team participation is the norm: 90% of projects require team participation rather than individual responsibility.
• Communication failures are costly: 31% of companies say miscommunications about project objectives is the number one reason why projects fail.
• These statistics show that soft skills directly impact project success and organizational performance.

🗣️ Communication skills

🗣️ What communication skills include

The Conference Board of Canada identifies these as fundamental employability skills:

• Reading and understanding: information presented in different ways (words, graphs, charts, diagrams).
• Writing and speaking: so others can pay attention and understand.
• Listening and questioning: to understand and appreciate the points of view of others.
• Sharing information: using different technologies (phone calls, e-mail, social media, the Internet).
• Explaining and clarifying: using relevant knowledge and skills to explain or clarify ideas.

🎯 Why communication is foundational

• Communication is listed as one of the four broad categories of employability skills.
• It is not just about talking—it includes reading, writing, listening, and using technology effectively.
• Example: A team member who can read a chart, explain it clearly in an email, and listen to feedback is demonstrating multiple communication skills at once.

🤝 Teamwork skills

🤝 Working with others

The Conference Board of Canada identifies these teamwork skills under "Work with Others":

• Understand and work within group roles.
• Make sure team purpose and aims are clear.
• Respect and support the thoughts, opinions, and contributions of others.
• Recognize and respect people's diversity and perspectives.
• Accept and provide feedback in a useful and kind manner.
• Add to a team by sharing information and skills.
• Lead or support when appropriate.
• Understand the role of conflict in reaching solutions.
• Manage and settle conflicts.

📋 Participating in projects and tasks

The Conference Board also identifies these skills under "Participate in Projects and Tasks":

• Design or carry out a project with well-defined outcomes.
• Develop a plan, ask for feedback, and apply it.
• Work to shared standards of quality.
• Choose and use the right tools for a task or project.
• Adapt to changing information and conditions.
• Monitor project success throughout and find ways to improve.

🔄 Everyday teamwork reality

• In every job you will be required to work with people.
• In college and university, you often work with peers on group projects—this is practice for the workplace.
• Interacting with colleagues, managers, customers, and suppliers is part of everyday communication.
• Don't confuse: teamwork is not just "getting along"—it includes managing conflict, adapting to change, and monitoring quality.

📚 Business fundamentals every professional should know

📚 Seven core areas

According to a blog post by Matt Gavin at Harvard Business School Online, every professional should know these business fundamentals:

1. Analytics: demand is rising for professionals who understand business analytics and data science.
2. Financial Accounting: understanding the meaning behind numbers on financial statements can boost your career, regardless of your profession.
3. Economics: beyond market demands, economics equips you with skills to craft successful business strategy and help your firm compete.
4. Leadership: the ability to lead and mobilize others is vital for all professionals.
5. Negotiation: knowledge of effective bargaining tactics helps resolve deadlocked conflicts and maximize value in agreements.
6. Strategy: understanding strategy formulation and execution helps professionals meet business goals and adapt to new challenges and opportunities.
7. Global Business: in an age of globalization, knowledge of international business is highly beneficial (examples: Apple and Walmart are multinational corporations conducting business worldwide).

🌍 Why these fundamentals matter

• These are not just for business majors—they apply across all industries.
• Example: A professional in any field who understands financial statements can make better decisions and communicate more effectively with management.
• The excerpt emphasizes that these skills help you "succeed against competitors" and "adapt to new challenges and opportunities."

🎓 Resources and lifelong learning

🎓 The Conference Board of Canada Employability Skills Toolkit

• The Toolkit is a guide to the skills needed to adapt and succeed in the world of work.
• It includes explanations, descriptions, and ways to build employability skills.
• It includes exercises to practice and apply what you have learned.
• Activities encourage thinking about which skills you have, which you need to work on, and how to improve them.
• The updated version includes:
  • Information on preparing for and succeeding in the future of work.
  • New content on digital skills and social and emotional skills.
  • A new section on developing a change-ready, lifelong learning mindset (essential for navigating job transitions given the impacts of technology and automation).

🔄 Lifelong learning mindset

Lifelong learning: the ongoing, voluntary, and self-motivated pursuit of knowledge for either personal or professional reasons.

• Lifelong learning is a workplace necessity for most employees.
• It helps employees adapt to changing work demands, improve performance, and increase job satisfaction.
• Many organizations provide professional development funds for employees' learning and growth.
• Some companies may require employees to commit to a set number of months or years with the company after completing a company-funded professional development program.

📊 Four broad categories of employability skills

The excerpt references Figure 1.1, which shows the Conference Board of Canada organizes employability skills into four broad categories. The excerpt details two of them:

• Communication Skills
• Teamwork Skills (subdivided into "Work with Others" and "Participate in Projects and Tasks")

(The other two categories are mentioned but not detailed in this excerpt.)

📖 Study strategies mentioned

📖 Study tips overview

The excerpt provides 10 study tips to help get through long study sessions:

1. The Pomodoro Technique: set a timer for 25 minutes, work, then take a five-minute break; repeat four times, then take a longer break (proven to boost focus and prevent study fatigue).
2. Block Distracting Apps: set phone to Do Not Disturb to silence notifications.
3. Learn by Chunking: break down complex information into bite-sized pieces; focus on one section at a time (makes information more manageable and enhances recall).
4. Study After Exercising: physical activity increases blood flow, delivering more oxygen and nutrients to your brain (enhances memory, problem-solving, and attention).
5. Listen to Recorded Lectures at 2x Speed: re-listen to lectures at double speed to reinforce what you've heard and cover more material in less time.
6. Reward Yourself: incorporating a reward system can enhance motivation and productivity.
7. Study with All of the Lights On: a well-lit environment improves concentration and alertness; natural light is associated with improved energy levels and mood.
8. Study in Groups: share different perspectives, quiz each other, and fill in gaps in each other's knowledge.
9. Teach to Learn: the best way to deeply learn anything is to teach it to someone else (many colleges and universities have tutoring positions for high-achieving students).
10. Use Mnemonics: memory aids that help recall complex information through simple associations (acronyms, rhymes, or visual imagery).

📖 SQ4R reading system

SQ4R reading system: designed to help you study your textbook and apply reading and notetaking skills.

• The letters stand for five steps: Survey, Question, Read, Reflect, Recite, and Review.
• These steps help you gain more from what you read and be better prepared for quizzes and exams.
• The goal is to maximize the return on your time investment for reading.

📖 Learning styles

Learning styles: the different methods of learning or understanding new information, the way a person takes in, understands, expresses, and remembers information.

• There are 4 predominant learning styles: Visual, Auditory, Read/Write, and Kinaesthetic.
• Colleges and universities often offer assessments to help you identify your learning style, strengths, and abilities.
• The majority of people have one dominant learning style, although most people benefit from multiple approaches.
• Example: Identifying whether you learn best by doing, observing, listening, or watching helps you choose the most effective study methods.

🧭 Overview

🧠 One-sentence thesis

Effective studying and academic success require strategic time management, understanding your learning style, utilizing institutional support, and maintaining academic integrity to maximize your educational investment and achieve your goals.

📌 Key points (3–5)

• Study techniques: Methods like the Pomodoro Technique, chunking, and mnemonics help boost focus and retention while preventing fatigue.
• Learning styles matter: Identifying whether you learn best visually, auditorily, through reading/writing, or kinesthetically helps you adapt when teaching methods don't match your style.
• Institutional support exists: Colleges offer tutors, accessibility services, library resources, and learning strategists—you must proactively seek help when needed.
• Academic integrity is non-negotiable: Using friends' work, hiring others, or misusing AI tools without permission violates integrity policies and constitutes plagiarism.
• Common confusion: GPA vs. individual grades—your GPA is cumulative across all courses and affects graduation, future enrollment, and transfer credit eligibility.

📚 Effective study techniques

⏱️ The Pomodoro Technique

A time-management method: work for 25 minutes, then take a 5-minute break; repeat four times, then take a longer break.

• Why it works: Proven to boost focus and prevent study fatigue by breaking work into manageable intervals.
• How to apply: Set a timer, dive into work until it rings, earn your break.
• Don't confuse: This is not about working longer—it's about working with structured breaks to maintain concentration.

🧩 Chunking information

Breaking down complex information into bite-sized pieces or "chunks," focusing on one section at a time.

• Why it works: Makes information more manageable and less intimidating; helps your brain form patterns and connections, enhancing recall and understanding.
• Example: Instead of reading an entire chapter at once, break it into 3–4 subsections and master each before moving on.

🎯 Other proven techniques

Technique	What it does	Key benefit
Block distracting apps	Set phone to Do Not Disturb	Silences notifications during study
Study after exercising	Physical activity increases blood flow	Delivers more oxygen/nutrients to brain, enhancing memory and problem-solving
Listen at 2x speed	Re-listen to recorded lectures faster	Reinforces material and covers more content in less time
Study with lights on	Well-lit environment, especially natural light	Improves energy levels, mood, and concentration
Study in groups	Share perspectives and quiz each other	Deepens understanding and fills knowledge gaps
Teach to learn	Explain concepts to others	Deepens your own learning; many institutions offer paid tutoring positions
Use mnemonics	Memory aids like acronyms, rhymes, or visual imagery	Transforms hard-to-remember data into easier-to-recall formats

🎁 Reward yourself

• Incorporating a reward system into your study routine significantly enhances motivation and productivity.
• Example: After completing a study session or assignment, treat yourself to something you enjoy.

📖 The SQ4R reading system

📋 What SQ4R is

The SQ4R reading system: a technique designed to help you study textbooks and apply reading and notetaking skills through five steps—Survey, Question, Read, Reflect, Recite, and Review.

• Purpose: Help you gain more from what you read and be better prepared for quizzes and exams.
• Key benefit: Maximizes the return on your time investment for reading.
• The letters stand for the five steps you follow when approaching textbook material.

🔍 Why it reduces reading time

• By following a structured approach, you avoid passive reading and engage actively with the material.
• Each step builds on the previous one, creating a systematic way to process and retain information.

🎨 Understanding your learning style

🧠 What learning styles are

Learning styles: the different methods of learning or understanding new information—the way a person takes in, understands, expresses, and remembers information.

• Four predominant styles: Visual, Auditory, Read/Write, and Kinaesthetic.
• Most people have one dominant style but benefit from several different styles.
• Why it matters: When learning is presented in a way consistent with your dominant style, you learn more quickly and with less frustration.

🔧 What to do when teaching doesn't match your style

• Be proactive: If the professor teaches in lecture format but you need examples and videos, search online for supplementary materials after class.
• Ask for help: Request additional exercises, ask questions, or schedule a meeting with the professor.
• Consider a tutor: If you're struggling, obtaining a tutor can help.
• Form learning-buddy relationships: Peer collaboration may help both of you understand lessons better.
• Don't confuse: Your learning style is not an excuse—it's information you use to adapt and take responsibility for your education.

🎓 How institutions can help identify your style

• Many colleges and universities offer assessments to help you identify your learning style, strengths, and abilities.
• These assessments guide you in understanding how you learn best—by doing, observing, listening, watching, or a combination.

🆘 Utilizing student support services

🏫 What support institutions provide

The excerpt lists questions to ask yourself about available support:

• Tutoring: Does the school provide tutors at no charge?
• Subject-specific help: Extra math or English tutoring beyond the classroom?
• Accessibility: Does the Accessibility Office provide accommodations?
• Technology: Does the school loan laptops or other learning devices?
• Library resources: Access when off campus? Lessons on researching, citing, and using resources?
• Study spaces and clubs: Student association clubs for studying? Study spaces available?
• Basic needs: Information on housing, used books, clothing, food?
• Financial aid: Open educational resources? Student scholarships?
• Learning support: Learning strategists for time management, stress management, and study tips?

🔎 How to find answers

• Use the college or university website: read about student experience, student support, and student services.
• When you need support, ask for it: Your academic advisor, international advisor, professor, program coordinator, and service areas can help.
• Key principle: Everyone working at the institution is there to support your learning journey and provide tools and resources for success.

📊 Managing grades and GPA

📋 Understanding the course outline

Course outline (also called course syllabus): a document that provides a breakdown of what you can expect to be taught, course learning outcomes (or objectives), and how you will be assessed.

• What to do in the first week: Review the outline and ask your professor questions if you don't understand how you will be graded.
• Assessment due dates: Often provided in advance—record these in a calendar and always work ahead of due dates.
• Don't confuse: The course outline is not just a schedule—it's your roadmap for success in the course.

⏰ Why working ahead matters

• Avoid last-minute disasters: Technology failures, unclear instructions, or time-consuming assignments can derail you if you wait until the night before.
• Best practice: Plan to have assignments completed a day or two ahead of the due date.
• This buffer gives you time to use another device if technology fails or to clarify instructions with the professor.

📈 What GPA is and why it matters

GPA score (Grade Point Average): a cumulation of grades across courses throughout your program.

Aspect	What the excerpt says	Why it matters
Graduation	Institution has a minimum GPA you must achieve	You cannot graduate without meeting this threshold
Future education	GPA may factor into acceptance at specific colleges/universities	Affects your ability to pursue further education
Transfer credit	Most institutions have minimum grade requirements (often a C)	Determines whether your credits will be accepted elsewhere
Calculation	Many schools calculate GPAs differently	Check your institution's website for specific information

🎯 How to keep grades high

• Plan your time well and keep a calendar.
• Work ahead of due dates.
• Ask questions when you need help.
• Complete assigned learning tasks: do the readings, watch the videos, attend and participate in class.
• Key principle: Students who do the assigned work often achieve high grades.

🎓 Academic integrity and proper citation

✅ What academic integrity is

Academic integrity: a commitment to acting with honesty, trust, fairness, respect, and responsibility in academic work and studies.

❌ What you cannot do

The excerpt poses four questions with the answer generally being NO:

1. Can I ask a friend to share their work with me? No.
2. Can I hire someone to do the work for me? No.
3. Can I have generative AI, such as ChatGPT, do the work for me? No (unless permitted).
4. Can I use an assignment mill such as Course Hero to find answers posted by someone else? No.

🤖 When and how to use generative AI

• Permitted use: Your professor may allow you to use generative AI to help research or get started with a writing assignment.
• Citation requirement: When you use ChatGPT or other AI tools, cite it as a source in the same way you would cite a website, video, or book.
• Key rule: You may only use resources permitted by the professor; otherwise, your work may be identified as plagiarized or in breach of the academic integrity policy.
• Don't confuse: AI as a tool vs. AI doing your work—using AI for help is different from having AI complete the assignment for you.

📝 Citation styles and avoiding plagiarism

Citation style: dictates the information necessary for a citation and how the information is ordered, as well as punctuation and other formatting.

• Why citation matters in education: For professionalism, crediting other people's words and ideas to avoid plagiarism, and describing others using inclusive, bias-free language.
• Why citation matters in business: Companies have documentation standards for all correspondence (letters, reports, flyers, brochures, marketing media, website media, social media) to portray a consistent image.
• Popular styles: APA and MLA provide guidelines to authors.
• Resources: Most college and university libraries provide style guides; the Online Writing Lab (OWL) Purdue offers citation charts and comprehensive APA formatting guidelines.

🔍 What plagiarism is

• Using other people's words and ideas without proper citation.
• Submitting work that is not your own (from friends, hired services, AI, or assignment mills).
• Consequence: Work may be identified as plagiarized or in breach of the academic integrity policy.
• Action required: Familiarize yourself with your institution's policies, specifically the academic integrity policy.

🌟 Habits for long-term success

📚 The 7 Habits of Highly Effective People

The excerpt references Stephen R. Covey's book, based on the belief that the way we see the world is entirely based on our own perceptions.

Core principle: To change a given situation, we must change ourselves, and to change ourselves, we must be able to change our perceptions.

The seven habits:

1. Be Proactive: Control your environment rather than have it control you.
2. Begin with the End in Mind: Envision the desired outcome and concentrate on activities that help achieve it.
3. Put First Things First: Manage time and effort so that required tasks are prioritized.
4. Think Win-Win: Cooperative effort, so there are no losers.
5. Seek First to Understand, Then to Be Understood: Listen to others first, let them know they have been heard before you speak.
6. Synergize: People cooperating can often achieve more than one person could alone.
7. Sharpen the Saw: Take time to think, learn, and analyze.

🎯 Building a successful career

🧭 Define success for yourself

• Career success is highly subjective—each person gets to define what success looks like for them.
• For some: a career that provides the most enjoyment.
• For others: a career that provides certain financial benefits.
• Key principle: Achieving your goal of a successful career can be an exciting and empowering experience.

📋 Practical steps

1. Identify your goals: What are your personal and professional goals? Have you identified your career interests?
   • Schedule an appointment with a career advisor.
   • Most colleges and universities provide a Careers office with advisors who help you determine career interests, search for employment, develop resumes and cover letters, and practice interview skills.
2. Keep track of progress: Set SMART goals (Specific, Measurable, Attainable, Relevant, Time-based).
   • This structure supports your success and allows you to make adjustments if needed.
3. Make a plan: Identify your skills and abilities, then search for a career that aligns with them.

🧭 Overview

🧠 One-sentence thesis

Building a successful career requires developing intentional habits—such as setting clear goals, managing time effectively, practicing mindfulness, and changing perceptions—that align your actions with your desired outcomes.

📌 Key points (3–5)

• The 7 Habits framework: success starts with changing your perceptions, being proactive, prioritizing effectively, and continuous self-improvement.
• Career success is subjective: each person defines success differently (enjoyment vs. financial benefits vs. other criteria), requiring personalized goal-setting.
• SMART goals and reflection: tracking progress through specific, measurable, attainable, relevant, and time-based goals helps you adjust and stay on course.
• Mindfulness benefits: practicing present-moment awareness reduces stress, improves decision-making, and enhances productivity in academic and business settings.
• Common confusion: mindfulness is not just relaxation—it is intentional focus on the present without judgment, with measurable benefits for well-being and performance.

🎯 The 7 Habits Framework

🔄 Changing perceptions to change outcomes

The way we see the world is entirely based on our own perceptions.

• Stephen R. Covey's framework argues that to change a situation, you must first change yourself.
• To change yourself, you must change how you perceive the world.
• This foundational belief underpins all seven habits.

🛠️ The seven habits explained

Habit	Core principle	What it means
1. Be Proactive	Control your environment	Don't let circumstances control you; take initiative
2. Begin with the End in Mind	Envision desired outcomes	Focus on activities that help achieve your vision
3. Put First Things First	Prioritize time and effort	Manage tasks so the most important ones come first
4. Think Win-Win	Cooperative effort	Seek solutions where there are no losers
5. Seek First to Understand, Then to Be Understood	Listen before speaking	Let others know they've been heard before you share your perspective
6. Synergize	Collaborative achievement	People working together can achieve more than individuals alone
7. Sharpen the Saw	Continuous learning	Take time to think, learn, and analyze

🔍 Proactive vs. reactive mindset

• Be Proactive means controlling your environment rather than being controlled by it.
• This is the foundation: without taking initiative, the other habits cannot be effectively implemented.
• Example: Instead of waiting for circumstances to improve, a proactive person identifies what they can control and acts on it.

🎯 Beginning with clarity

• Begin with the End in Mind requires envisioning the desired outcome first.
• Then concentrate activities on what helps achieve that outcome.
• Don't confuse this with rigid planning—it's about direction, not detailed prediction.

⚖️ Prioritization in action

• Put First Things First addresses time and effort management.
• The required tasks must be prioritized, not just scheduled.
• This habit ensures that urgent matters don't crowd out important ones.

🚀 Building a Career You Enjoy

📋 Defining your own success

Career success can be highly subjective, meaning each person gets to define what success looks like for them.

• For some, success means maximum enjoyment.
• For others, it means certain financial benefits.
• There is no single correct definition; you must identify what success means to you personally.

🎯 Identifying and tracking goals

• Identify Your Goals: Determine both personal and professional goals and career interests.
• Career advisors at colleges and universities can help you determine interests, search for employment, develop resumes and cover letters, and practice interview skills.
• Keep Track of Progress: Use SMART goals (specific, measurable, attainable, relevant, time-based) to support success and make adjustments as needed.

🗺️ Planning and skill development

• Make a Plan: Identify your current skills and abilities, then search for careers you may like.
• Ask: Do you have the skills you need? If not, how will you get them?
• Career assessments can help identify strengths, weaknesses, opportunities for growth, and preparation needs.
• Example: If a desired career requires skills you lack, the plan should include how and when you will acquire them.

🌟 Maintaining positive momentum

• Stay Positive: A positive outlook keeps your mind open to new possibilities and career paths.
• Practice interrupting negative thoughts and replacing them with positive alternatives when possible.
• Spending time with other positive people can reinforce these thought patterns.

🔄 Reflection and self-awareness

• Reflect Often: Frequently reflecting on career progress, current circumstances, and future options helps build a successful career.
• Know Your Strengths: Understanding your strengths allows you to tailor your job search and focus professional development efforts.
• Use strength awareness to find positions that suit your unique skills and expand those strengths accordingly.

🤝 Networking and growth mindset

• Network Effectively: Connections with other industry professionals help you grow, make you aware of new career paths, and make your career more enjoyable.
• Keep a Growth Mindset: This refers to the belief that anything can be learned if you give enough effort to learning it.
• Don't confuse growth mindset with natural talent—it emphasizes effort and learning over innate ability.

🧘 Mindfulness for Academic and Business Success

🧘 What mindfulness is

Mindfulness is a practice in which you focus your awareness on the present without judgment.

• You create an intention to be conscious of your thinking, feeling, and sensations within the current situation.
• You fully engage in the present moment.
• It is not just relaxation; it requires intentional focus and awareness.

📊 Research-backed benefits

• Mindfulness has been researched extensively with measurable positive outcomes.
• According to research published in the British Journal of Health Psychology (global study):
  • Reduced depression by 19%
  • Reduced anxiety by 13%
  • Improved well-being by 7%

💼 Business applications

• In business, mindfulness can improve:
  • Productivity
  • Biases (reducing them)
  • Decision-making
  • Behavior
  • Creativity
  • Well-being
• Mindfulness programs help leaders and employees reflect effectively, focus sharply, master peak stress levels, and recharge quickly.

🏢 Organizational adoption

• Many big organizations have begun investing in mindfulness in recent years.
• Examples: Google, Nike, and Procter & Gamble provide meditation rooms and classes for employees.

🛠️ Five practical applications

The excerpt identifies five ways to practice mindfulness for academic and business benefits:

1. Reduce Distraction: Focus attention on one thing at a time
2. Avoid Multi-Tasking: Single-task for better quality and presence
3. Reduce Procrastination: Present-moment awareness helps overcome avoidance
4. Reduce Emotional Reactivity: Observe emotions without immediate reaction
5. Avoid Team Issues: Mindful awareness improves interpersonal dynamics

⏰ Time Management Essentials

⏰ What time management is

Time management is the practice of planning and controlling how you use your time to be more productive and efficient.

• It involves prioritizing tasks, setting deadlines, and avoiding distractions.
• The goal is to complete important tasks on time while balancing personal, professional, and academic responsibilities.

🎁 Benefits of effective time management

• Less stress
• More time for creative or strategic projects
• Better work quality
• More self-confidence

💼 Professional practice

• Managing time is an essential part of every busy business professional's job.
• Most professionals use an electronic calendar to track appointments, meetings, events, etc.
• This is a fundamental life skill that makes a huge difference in your career.

😰 Understanding Stress

😰 What stress is

Stress is a physical, mental, and emotional [response]

• The excerpt acknowledges that stress is a part of everyone's life.
• It has physical, mental, and emotional dimensions.
• (Note: The excerpt cuts off before completing the definition or providing stress management strategies.)

🧭 Overview

🧠 One-sentence thesis

Effective time management—planning and controlling how you use your time—enables you to complete important tasks on time while balancing multiple responsibilities and reducing stress.

📌 Key points (3–5)

• What time management is: the practice of planning and controlling time use to be more productive and efficient.
• Core techniques: prioritizing tasks, setting deadlines, and avoiding distractions.
• Benefits: less stress, more time for creative/strategic work, better work quality, and increased self-confidence.
• Common confusion: time management is not just about tracking appointments—it's about balancing personal, professional, and academic responsibilities while completing important tasks on time.
• Why it matters: it is an essential life skill that makes a huge difference in your career; most professionals use electronic calendars to manage their schedules.

📋 What time management means

📋 Definition and scope

Time management: the practice of planning and controlling how you use your time to be more productive and efficient.

• It is not simply "being busy" or "filling your calendar"—it is about controlling how time is used.
• The excerpt emphasizes both planning (deciding what to do) and controlling (executing that plan).
• The goal is dual: productivity (getting more done) and efficiency (using less time/effort per task).

🎯 The ultimate goal

• Complete important tasks on time.
• Balance three domains simultaneously: personal, professional, and academic responsibilities.
• Example: A student must allocate time for coursework, part-time work, and personal life without letting any area fail.

🛠️ How to manage time effectively

🛠️ Prioritizing tasks

• Identify which tasks are "important" versus less critical.
• The excerpt does not specify a method, but prioritization is listed as a core technique.
• Don't confuse: prioritizing means deciding what to do first, not just doing everything faster.

⏰ Setting deadlines

• Establish clear time limits for when tasks must be completed.
• Deadlines create structure and prevent tasks from dragging on indefinitely.

🚫 Avoiding distractions

• Distractions pull attention away from the task at hand.
• The excerpt lists this as one of the three core techniques, alongside prioritizing and deadlines.
• Example: Reducing phone use and screen time (mentioned in the stress management section) can support time management by minimizing interruptions.

📅 Using tools

• Most busy business professionals use an electronic calendar to track appointments, meetings, and events.
• This is described as an "essential part" of the job for professionals.

🎁 Benefits of effective time management

🎁 Four key outcomes

Benefit	What it means
Less stress	Better control over time reduces anxiety about deadlines and overload
More time for creative/strategic projects	Efficiency frees up capacity for higher-value work
Better work quality	Focused time and clear priorities improve output
More self-confidence	Successfully managing time builds belief in one's abilities

🔗 Connection to other skills

• The excerpt notes that "planning your time effectively is a good way to ensure you are spending enough time on your studies."
• Example: A full-time student who works part-time must manage time well to avoid failing courses and having to pay to retake them.
• Time management supports the balance between earning income and prioritizing studies (since tuition has already been paid).

🧘 Related practices that support time management

🧘 Mindfulness

• Mindfulness (paying attention to your internal and external state without judgment) can improve focus and reduce distractions.
• The excerpt states mindfulness can "improve productivity" and help people "focus sharply on the task at hand."
• Five ways mindfulness supports time management: 1) Reduce Distraction, 2) Avoid Multi-Tasking, 3) Reduce Procrastination, 4) Reduce Emotional Reactivity, 5) Avoid Team Issues.

😰 Stress management

• Stress is a physical, mental, and emotional response to difficult events.
• The excerpt lists "Avoid procrastination" as one of 16 evidence-based ways to relieve stress.
• Don't confuse: managing stress and managing time are separate but related—poor time management can increase stress, and high stress can make time management harder.

🧭 Overview

🧠 One-sentence thesis

Stress management combines evidence-based techniques like physical activity, mindfulness, and time management to help individuals reduce stress and improve well-being in academic and business settings.

📌 Key points (3–5)

• What stress is: a physical, mental, and emotional response to difficult events that affects everyone.
• Mindfulness benefits: practicing mindfulness can reduce depression and anxiety while improving well-being, productivity, decision-making, and creativity in business contexts.
• Time management connection: planning and controlling how you use time reduces stress, improves work quality, and helps balance personal, professional, and academic responsibilities.
• Evidence-based relief methods: 16 research-supported techniques range from physical activity and balanced diet to social connection and nature exposure.
• Common confusion: stress management is not just about relaxation—it includes proactive planning (time management, budgeting) and skill-building (mindfulness practices) to prevent stress.

🧘 Mindfulness as a stress reduction tool

🧘 What mindfulness achieves

Mindfulness: a practice that helps individuals reflect effectively, focus sharply, master peak stress levels, and recharge quickly.

Research published in the British Journal of Health Psychology shows measurable benefits:

• 19% reduction in depression
• 13% reduction in anxiety
• 7% improvement in well-being

💼 Mindfulness in business

In business settings, mindfulness can improve:

• Productivity
• Decision-making and behavior
• Creativity and well-being
• Reduction of biases

Example: Major organizations like Google, Nike, and Procter & Gamble provide meditation rooms and classes for employees, recognizing these benefits.

🎯 Five mindfulness practices for students and professionals

The excerpt recommends these specific applications:

1. Reduce distraction
2. Avoid multi-tasking
3. Reduce procrastination
4. Reduce emotional reactivity
5. Avoid team issues

Don't confuse: Mindfulness is not passive relaxation—it actively trains focus and stress mastery for academic and business careers.

⏰ Time management for stress reduction

⏰ What time management means

Time management: the practice of planning and controlling how you use your time to be more productive and efficient.

Core components:

• Prioritizing tasks
• Setting deadlines
• Avoiding distractions
• Balancing personal, professional, and academic responsibilities

The goal: complete important tasks on time while maintaining balance across life areas.

📈 Benefits of effective time management

Benefit	How it reduces stress
Less stress	Direct stress reduction through better control
More time for creative/strategic projects	Reduces pressure from urgent tasks
Better work quality	Reduces anxiety about poor performance
More self-confidence	Reduces self-doubt and worry

🗓️ Practical application

Most business professionals use electronic calendars to track appointments, meetings, and events—this is an essential part of every busy professional's job.

Example: A student who plans study time effectively ensures they spend enough time on studies, avoiding the stress of failing courses and paying to re-take them.

🛡️ Sixteen evidence-based stress relief methods

🛡️ Physical and lifestyle approaches

The excerpt lists 16 evidence-based ways to relieve stress, organized by category:

Physical health:

1. Get more physical activity
2. Eat a balanced diet
3. Reduce caffeine intake
4. Take a yoga class

Digital and time boundaries: 3. Minimize phone use and screen time 9. Avoid procrastination

Self-care and reflection: 4. Practice self-care 5. Try journaling 11. Practice mindfulness 14. Practice deep breathing

Social connection: 7. Spend time with friends and family 8. Create boundaries and learn to say no 12. Cuddle 15. Spend time with a pet

Environment and support: 13. Spend time in nature 16. Consider supplements

🎯 Activities that support self-care

Stress management: offers a range of ways to help you better deal with stress and difficulty in your life.

The excerpt emphasizes that engaging in activities supporting self-care may help reduce stress and anxiety, with exercise and mindfulness practices highlighted as key examples.

Don't confuse: These are not one-time fixes—they are ongoing practices that "support self-care" and help you "better deal with" stress over time.

💰 Financial management as stress prevention

💰 Why finances cause student stress

Students become stressed when they need to pay bills and don't have enough funds. The excerpt notes that colleges and universities understand students have complex lives and often need part-time jobs, but institutions expect students to prioritize studies since they've paid tuition fees.

The risk: If students don't focus on studies, they may fail courses and have to pay to re-take them—creating more financial and academic stress.

💵 What a budget is

Budget: a financial plan that estimates how much money you'll make and spend over a specific period of time.

Can be used by individuals, families, businesses, and governments.

📋 Money management strategies for students

The excerpt provides specific suggestions:

Spending control:

• Set up a self-enforced budget and manage credit cards responsibly
• Distinguish between essential and non-essential purchases
• Investigate economic ways to buy essential items and supplies

Food and housing:

• Utilize meal plans or make meals rather than eating out
• Share expenses with roommates
• Investigate off-campus housing and sharing options

Income and savings:

• Take advantage of scholarships and grant awards
• Get a paid part-time job if schedule permits (but don't work full-time hours)
• Take advantage of free on-campus or low-priced options for food, clothing, and furniture

Practical tips:

• Request practical gifts for birthdays and special occasions
• Buy used books when possible and resell them, or borrow from the library
• Investigate remaining on parents' health insurance plan

🎓 Why budgeting matters beyond tight money

The excerpt emphasizes that creating and using a budget is not just for those who need to closely monitor cash flows because money is tight—almost everyone can benefit from budgeting.

Building the right budget helps students:

• Stay on track for financial life after graduation
• Learn an important skill to carry for the rest of life

Don't confuse: Budgeting is not only a crisis tool—it's a foundational life skill that reduces stress through proactive planning, regardless of current financial pressure.

🧭 Overview

🧠 One-sentence thesis

College students can gain valuable business work experience in their field of study through volunteering, internships, freelance projects, experiential courses, leadership roles, and institutional support resources, which help them build skills and networks for post-graduation employment.

📌 Key points (3–5)

• The challenge: Many students work entry-level service jobs for minimum wage, but need experience in their field of study to get jobs after graduation.
• Eight pathways to experience: volunteering, internships/co-ops, freelance work, experiential course projects, student clubs/societies, workshops/labs, student-run businesses, and online learning platforms.
• Why these matter: They help you meet people (potential references), build professional networks, learn and apply new skills, and demonstrate character to employers.
• Common confusion: Work experience doesn't only mean paid employment—volunteering and course projects count and can be added to resumes and LinkedIn profiles.
• Institutional support: Careers and Co-op offices provide resources to help find part-time work and co-op placements.

🤝 Volunteering and character building

🤝 What volunteering offers

• Volunteering is described as "a great way to gain work experience."
• You meet people who could become references when job searching.
• You gain skills and knowledge applicable to future jobs.

💡 Why employers value it

• Employers like to see community involvement or time spent helping others.
• The excerpt states it "says good things about your character."
• Example: An organization reviewing your resume sees volunteer work and interprets it as evidence of positive personal qualities.

🎓 Structured learning pathways

🎓 Internships and co-op placements

• These are "good ways to gain work experience, build your professional network, learn new skills, and apply what you have learned in school."
• They provide formal, structured opportunities to work in your field.

📋 Experiential course projects

Experiential course projects: real business projects completed as part of your course that provide real business experience.

• Many institutions offer these projects.
• The excerpt mentions Riipen as "a work-based learning platform to help educators, organizations, and learners collaborate on real industry projects to bridge the gap between education and employment."
• Particularly effective for tech-oriented fields.
• Important: These projects can be added to your resume and LinkedIn profile—they count as legitimate work experience.
• Don't confuse: These are not just academic exercises; they are real industry projects that demonstrate practical skills.

💼 Freelance projects

• Described as "a flexible way to build expertise."
• Platforms mentioned: Upwork and Fiverr offer numerous opportunities to work on real-world projects.
• Example: A student takes on a freelance project through one of these platforms, completes it, and gains both experience and portfolio material.

🏆 Leadership and skill development

🏆 Student clubs and societies

• Joining these organizations helps you "gain leadership experience."
• Specific examples mentioned:
  • Enactus (entrepreneurship) chapters
  • Toastmasters (public speaking) clubs
• Some institutions offer badges, micro-credentials, specialized academic certificates, or stackable credentials for:
  • Leadership
  • Indigenous Knowledges
  • Entrepreneurship
  • Global perspectives
  • Sustainability

🛠️ Practical skills acquisition

Pathway	What it offers
Workshops and lab sessions	Practical, hands-on experience
Student-run businesses or start-ups	Direct business experience through involvement
Online platforms	New skills; some institutions provide free LinkedIn Learning access with many courses on various subjects

🏢 Institutional support resources

🏢 Careers and Co-op offices

• These offices exist within your institution.
• They provide support and resources to help you:
  • Find part-time work while studying
  • Find co-op placements (if available in your program)
• Don't overlook: This is a formal support system designed specifically to help students gain work experience.

🎭 Business etiquette fundamentals

🎭 What business etiquette means

Business etiquette: a type of social and business behaviour that team members (whether at school or work) are expected to exhibit, including how people communicate, dress, and conduct themselves in meetings and social events.

• It applies both at school and at work.
• Adhering to it helps "foster positive relationships and a harmonious work environment."

✅ Key behaviors

The excerpt lists several examples of business etiquette:

• Treating others with courtesy and consideration
• Controlling your emotions and actions
• Being accountable for your actions and obligations
• Meeting deadlines
• Admitting mistakes

🚫 Pet peeves and annoyances

Pet peeves: the things that annoy you, often things other people do that bother you.

• The excerpt mentions "87 Common Things That Annoy People" as a reference.
• Guideline: Try not to be the one who is annoying others, especially when working on a team or taking a potential customer out for lunch.
• Example mentioned by students: "I don't want to sit beside that person because they have bad body odour."
• Don't confuse: Business etiquette is not just formal rules; it includes being aware of how your behavior affects others in everyday interactions.

🧭 Overview

🧠 One-sentence thesis

Business etiquette and professionalism are essential workplace behaviors that foster positive relationships and harmonious environments, requiring awareness of cultural norms and respect for differences while adhering to local standards.

📌 Key points (3–5)

• What business etiquette is: expected social and business behaviors including communication, dress, and conduct in meetings and events.
• Why it matters: helps foster positive relationships and harmonious work environments through courtesy, accountability, and meeting obligations.
• Common confusion: cultural norms vs. local etiquette—what is acceptable in one culture may be rude in another, but you should practice the etiquette of the location you are in.
• Connection to professionalism: business etiquette is a key component of broader professionalism, which includes attitude, work ethic, punctuality, and positive outlook.
• How to gain work experience: volunteering, internships, co-op placements, freelance projects, experiential courses, leadership roles, and online learning platforms.

🤝 Understanding business etiquette

🤝 What business etiquette includes

Business etiquette: a type of social and business behaviour that team members (whether at school or work) are expected to exhibit, including how people communicate, dress, and conduct themselves in meetings and social events.

• It is not just about formal rules; it encompasses everyday interactions and behaviors.
• The excerpt emphasizes treating others with courtesy and consideration.
• Key behaviors: controlling emotions and actions, being accountable, meeting deadlines, and admitting mistakes.

😤 Pet peeves and annoyances

Pet peeves: the things that annoy you, often things other people do that bother you.

• The excerpt lists common student annoyances: bad body odor, bathroom etiquette issues, constant interruptions, nose-picking, elevator rudeness, chronic lateness.
• A good guideline: try not to be the one annoying others, especially when working on teams or with potential customers.
• Example: A team member who is always late or doesn't show up signals they don't care, which frustrates others.

🌍 Cultural norms and etiquette

🌍 What cultural norms are

Cultural norms: the standards we live by; the shared expectations and rules that guide the behavior of people within social groups.

• These are learned from parents, friends, teachers, and others while growing up.
• Norms often differ across cultures, contributing to cross-cultural misunderstandings.
• They are not universal—what is polite in one place may be rude in another.

🔄 How cultural norms differ

Behavior	Some cultures	Canada/U.S. business settings
Belching after meals	Customary in certain parts of China and India	Considered rude
Punctuality	Not a concern in Greece, Brazil, or Mexico	Being on time is important
Toilet seat use	Some cultures don't sit on seats (shoe prints may appear)	Seats expected to be clean and dry

⚖️ Balancing respect and local standards

• Don't confuse: respecting others' cultural norms vs. following the etiquette of your current location.
• The excerpt advises: respect the cultural norms of other people, exercise professionalism, and practice business etiquette at the location you are in.
• Example: If you are studying or working in Canada, follow Canadian bathroom etiquette even if your home culture has different practices.

💼 Professionalism and etiquette

💼 What professionalism encompasses

Professionalism: a broad concept that includes a person's attitude, work ethic, and conduct; it also involves being punctual, dressing appropriately, and having a positive attitude.

• Business etiquette is a key component of professionalism—not separate from it.
• Traits of professionalism include: being dependable and accountable, demonstrating etiquette, making ethical decisions, being a team player, and maintaining a positive outlook.

🎯 Five zones of professional etiquette

• The excerpt references a video titled "The Five Zones of Professional Etiquette" for learning about professional etiquette in detail.
• This suggests etiquette can be broken down into specific areas or contexts for practice.

🎓 Gaining work experience while studying

🎓 Why work experience matters

• College and university students often work entry-level service jobs paying minimum wage.
• Some students have no work experience or have never worked in Canada.
• Most students hope to work in their field of study after graduation, making relevant experience important.

🛠️ Ways to gain business experience

Method	What it offers
Volunteering	Meet people for references, gain skills, show good character to employers
Internships and co-op placements	Build professional network, learn new skills, apply school learning
Freelance projects	Flexible way to build expertise (platforms: Upwork, Fiverr)
Experiential course projects	Real business projects as part of coursework (e.g., Riipen platform); can be added to resume and LinkedIn
Student clubs/societies	Leadership experience (e.g., Enactus for entrepreneurship, Toastmasters for public speaking)
Workshops and lab sessions	Practical, hands-on experience
Student-run businesses/start-ups	Direct business involvement
Online learning platforms	Skill-building (some institutions offer free LinkedIn Learning access)

🏢 Institutional support

• Careers and Co-op offices within institutions may provide support and resources.
• They can help find part-time work while studying and/or co-op placements if available in your program.

🧭 Overview

🧠 One-sentence thesis

North American business evolved from agricultural production through industrial mass production to today's focus on digital engagement and sustainability, with each era reflecting changing priorities from output maximization to customer relationships and societal responsibility.

📌 Key points (3–5)

• Nine distinct eras: business history progresses from colonial agriculture through industrialization, sales focus, marketing orientation, relationship building, digital transformation, and sustainability emphasis.
• Shift from production to customer focus: early eras prioritized affordability and output; later eras shifted to understanding what customers wanted and building relationships with them.
• Technology as a driver: machines enabled mass production in the Industrial Revolution; the Internet and smartphones transformed customer engagement in recent decades.
• Common confusion: the Production era vs. the Sales era—both focused on pushing products, but Production emphasized efficiency and low cost, while Sales emphasized aggressive promotion despite competition.
• Current dual focus: businesses today simultaneously pursue digital/social engagement (2010s–Present) and sustainability/ESG goals (2010s–Present).

🏭 Early business periods: agriculture to industrialization

🌾 Colonial Period (prior to 1776)

• What it was: rural and agricultural production dominated colonial society.
• The economy centered on farming and land-based output.

🛠️ Early Trade and Craftsmanship era (1776–1850s)

• What it was: localized trade and craftsmanship with small-scale production.
• Artisans and merchants dominated; workers built products individually using specialized skills.
• Production was independent and skilled, not factory-based.

⚙️ Industrial Revolution (1850s–1920s)

The Industrial Revolution: the shift from independent skilled workers building products one by one to a factory system with mass production aided by machines.

• Core change: businesses moved away from individual craftsmanship to factory systems.
• Business belief: customers valued affordability and availability over other factors.
• Result: efforts centered on maximizing output rather than improving quality.
• Technology advancements increased demand for manufactured goods, creating enormous entrepreneurial opportunities.
• Example: instead of one artisan building a chair, a factory with machines could produce hundreds of chairs at lower cost.

🏗️ Production and sales focus: 1920s–1960s

📦 Production era (1920s–1940s)

• Focus: mass production and efficiency—producing large quantities at the lowest possible cost.
• Marketing approach: centered on achieving broad distribution.
• Why promotion was limited: high demand and minimal competition made aggressive marketing unnecessary.
• Don't confuse with later eras: companies made products first, then distributed them widely, but didn't yet focus on persuading customers or understanding their preferences.

📣 Sales era (1940s–1960s)

• What changed: competition for customers intensified among companies.
• Business belief: success resulted from aggressive promotional efforts.
• What was NOT prioritized: customer experience and product or service quality.
• Tactics: flashy sales promotions, radio ads, and door-to-door selling to push products and encourage purchases.
• Example: a company would manufacture a product, then use aggressive door-to-door tactics to convince people to buy it, regardless of whether it met their needs.

Era	Time period	Primary focus	Marketing intensity
Production	1920s–1940s	Efficiency and low cost	Limited (high demand, low competition)
Sales	1940s–1960s	Aggressive promotion	High (intense competition)

🎯 Customer-centered approaches: 1960s–Present

🔍 Marketing era (1960s–1990s)

The Marketing era: the period when companies shifted from persuading consumers to buy existing products to making products that customers wanted to buy.

• Core shift: instead of making products and then pushing them, businesses focused on understanding customer wants first.
• New tools: rise of market research and consumer behaviour studies.
• Framework introduced: the 4Ps of marketing—product, price, place, promotion.
• Example: a company would research what features customers wanted in a product before designing and manufacturing it.

🤝 Relationship era (1990s–Present)

• What enabled it: growth in technology, especially CRM (customer relationship management) systems.
• Goal: engage with customers more personally.
• Technology allowed companies to track individual customer preferences and interactions, building ongoing connections rather than one-time transactions.

💻 Contemporary dual focus: digital and sustainability

📱 Digital and Social era (2010s–Present)

• What transformed business: the rise of the Internet and social media changed how businesses and consumers connect and exchange information.
• Key technology: widespread use of smartphones and other smart devices fueled digital marketing growth.
• Reach: companies can engage a broader audience than ever before.
• Relationship support: this shift supports stronger, continuous relationships with customers, employees, suppliers, and other businesses.
• Example: an organization can use social media to respond to customer questions in real time, share updates, and build community around its brand.

🌱 Sustainability and ESG era (2010s–Present)

The Sustainability and ESG era: the period when businesses prioritize ethical and sustainable practices, emphasizing green energy, ethical sourcing, and community impact.

• Three-way balance: businesses aim to balance customer satisfaction, profitability, and societal well-being.
• Integration approach: sustainability is integrated into core operations, not treated as a separate initiative.
• Key concerns addressed: climate change, fair labour, and social responsibility.
• Examples from the excerpt: green energy, ethical sourcing, community impact.
• Don't confuse with earlier eras: this is not just marketing or relationship-building—sustainability is embedded in how the business operates day-to-day.

🏛️ The role of government in Canadian business

🗂️ Canadian government structure

• System basis: based on the British parliamentary model, distinct from the U.S. presidential system.
• Jurisdiction division: legislative and executive authority is constitutionally divided between the federal government and ten provincial governments.
• Three regulatory levels: a business may be regulated at federal, provincial, and municipal levels.
• Businesses are also affected by policies and decisions of regulatory and administrative bodies and tribunals.

🛡️ Regulator

Regulator role: when the government controls many aspects of business activity through administrative boards, tribunals, and commissions.

• Purposes: promote competition between businesses, protect consumers, achieve social goals, and protect the environment.
• Example: the Canadian Food Inspection Agency regulates dairy, egg, fish, and other food products.

💡 Provider of incentives

• What it means: the government offers programs that help stimulate economic development.
• Examples from the excerpt:
  • Funding for waste diversion initiatives
  • Rebates for solar heating installations
  • Tax credits (in some provinces) for employers who hire university and college students enrolled in co-operative education programs

🏥 Provider of essential services

• What it means: the government supplies services that create the stability encouraging business activity.
• Examples: law enforcement (police) and health care (hospitals).
• These services create a stable environment in which businesses can operate.

💰 Taxation agent

• What it means: taxes are imposed and collected by the three levels of government.

Government level	Tax type	Collection agency/method
Federal	Income tax	Canada Revenue Agency (CRA)
Provincial	Sales tax; share of income tax	Provincial agencies
Municipal	Property tax	Municipal agencies

🛒 Customer

• What it means: the government buys from businesses.
• Range of purchases: the Government of Canada buys many kinds of products and services, from aircraft to paper clips, from training services to scientific research.
• This makes the government a significant market participant.

🏢 Competitor

• What it means: the government competes with businesses through its Crown corporations.
• Examples of Crown corporations: Canada Post, Canadian Broadcasting Corporation (CBC), SaskTel, SaskEnergy, BC Hydro, Liquor Control Board of Ontario.
• Don't confuse with the regulator role: as a competitor, the government operates businesses that may compete directly with private-sector companies; as a regulator, it sets rules for all businesses.

🧭 Overview

🧠 One-sentence thesis

The Canadian government influences business activity through multiple roles—regulator, incentive provider, essential service provider, taxation agent, customer, and competitor—shaping the environment in which businesses operate.

📌 Key points (3–5)

• Multi-level regulation: businesses in Canada may be regulated at three levels (federal, provincial, municipal) plus regulatory bodies and tribunals.
• Six government roles: regulator, provider of incentives, provider of essential services, taxation agent, customer, and competitor.
• Regulation purposes: promote competition, protect consumers, achieve social goals, and protect the environment.
• Common confusion: government as customer vs. competitor—government buys from businesses (customer) but also competes with them through Crown corporations (competitor).
• Constitutional structure: Canada's parliamentary system divides legislative and executive jurisdiction between federal and ten provincial governments, distinct from the U.S. presidential system.

🏛️ Government structure and regulatory framework

🏛️ Constitutional division of power

Canada's system of government is based on the British parliamentary model and is quite distinct from the presidential system operating in the United States.

• Legislative and executive jurisdiction is constitutionally divided between the federal government and the ten provincial governments.
• This division means a business may face regulation at multiple levels simultaneously.

📜 Three levels of regulation

A business in Canada may be regulated at:

• Federal level
• Provincial level
• Municipal level

Additionally, businesses are affected by:

• Policies and decisions of regulatory and administrative bodies
• Tribunals

Don't confuse: the three levels of government regulation with the separate layer of regulatory bodies and tribunals, which also influence business activity.

🎭 Six roles government plays in business

🛡️ Regulator

The government becomes a regulator when it controls many aspects of business activity through administrative boards, tribunals, and commissions.

Why regulate?

• Promote competition between businesses
• Protect consumers
• Achieve social goals
• Protect the environment

Example: The Canadian Food Inspection Agency regulates dairy, egg, fish, and other food products.

💰 Provider of incentives

The government becomes a provider of incentives when it offers programs that help stimulate economic development.

How incentives work:

• Funding for waste diversion initiatives
• Rebates for solar heating installations
• Tax credits for employers who hire university and college students enrolled in co-operative education programs (in some provinces)

Purpose: stimulate economic development by reducing costs or providing financial support for specific activities.

🏥 Provider of essential services

The government becomes a provider of essential services when it supplies services that create the stability that encourages business activity.

What services:

• Law enforcement (police)
• Health care (hospitals)

Why it matters: these services create a stable environment that encourages business activity—businesses rely on public safety and a healthy workforce.

💸 Taxation agent

The government becomes a taxation agent when taxes are imposed and collected by the three levels of government.

Government level	Tax type	Collection agency/method
Federal	Income tax	Canada Revenue Agency (CRA)
Provincial	Sales tax; share of income tax	Provincial agencies
Municipal	Property tax	Municipal agencies

Don't confuse: all three levels collect different taxes; the federal government collects income tax, but provinces receive a share of income tax plus their own sales tax.

🛒 Customer

The government becomes a customer when it buys from businesses.

What government buys:

• Wide range of products: from aircraft to paper clips
• Wide range of services: from training services to scientific research

Implication: The Government of Canada is a major purchaser, creating business opportunities across many sectors.

🏢 Competitor

The government becomes a competitor when it competes with businesses through its Crown corporations.

Examples of Crown corporations:

• Canada Post
• Canadian Broadcasting Corporation (CBC)
• SaskTel
• SaskEnergy
• BC Hydro
• Liquor Control Board of Ontario (LCBO)

Common confusion:

• As customer, government buys from private businesses
• As competitor, government operates its own businesses (Crown corporations) that compete with private firms in the same markets

💼 Business fundamentals (context from excerpt)

💼 What is a business

A business is an organization that strives for a profit by providing goods and services desired by its customers.

Two types of offerings:

• Goods: tangible items manufactured by businesses (e.g., laptops)
• Services: intangible offerings that can't be held, touched, or stored (e.g., physicians, lawyers, hairstylists, car washes, airlines)

Who businesses serve:

• Consumers (medical care, automobiles, countless goods and services)
• Other organizations (hospitals, retailers, governments—providing machinery, goods for resale, computers, etc.)

📊 Revenue, costs, profit, and loss

Term	Definition
Revenue	Money a company receives by providing services or selling goods to customers
Costs	Expenses including rent, salaries, supplies, transportation, and many other expenses from creating and selling goods and services
Profit	Money left over after a company pays all costs
Loss	When costs are greater than revenues

Example: Microsoft's costs for developing software include salaries, facilities, and advertising. If Microsoft has money left after paying all costs, it has a profit.

⚠️ Risk in business

Risk is the potential to lose time and money or otherwise not be able to accomplish an organization's goals.

• Not all companies earn profits—that is the risk of being in business.
• When a company uses its resources intelligently, it can often increase sales, hold costs down, and earn a profit.
• Don't assume: profit is guaranteed; businesses face the risk of loss and failure to achieve goals.

🧭 Overview

🧠 One-sentence thesis

Successful businesses generate profits that benefit not only owners but also employees, consumers, governments, and the broader economy through employment, goods and services, tax revenue, and economic stimulus.

📌 Key points (3–5)

• What a business is: an organization that strives for profit by providing goods and services desired by customers.
• Profit vs. loss: profit occurs when revenue exceeds costs; loss occurs when costs exceed revenue; risk is the potential to fail to meet goals.
• Who benefits from business profits: owners/shareholders, employees (jobs), consumers (goods/services), government (taxes), and the economy (resource purchases).
• Common confusion: not-for-profit vs. for-profit—not-for-profits still generate revenue and manage costs but pursue goals other than profit; they increasingly apply business principles.
• Broader impacts: businesses raise standard of living (output people can buy) and quality of life (happiness factors like health, education, leisure).

💼 What businesses do and how they earn profit

💼 Definition of a business

A business is an organization that strives for a profit by providing goods and services desired by its customers.

• Businesses serve consumers (medical care, automobiles, etc.) and other organizations (hospitals, retailers, governments).
• They meet needs by offering goods (tangible items like laptops) and services (intangible offerings like legal advice, car washes, airlines).

💰 Revenue, costs, and profit

• Revenue: money a company receives by providing services or selling goods to customers.
• Costs: expenses including rent, salaries, supplies, transportation, and other expenses from creating and selling goods and services.
• Profit: money left over after paying all costs.
• Loss: when costs are greater than revenues.

Example: Microsoft incurs costs (salaries, facilities, advertising) to develop software; if revenue exceeds these costs, Microsoft earns a profit.

⚠️ Risk and the risk-profit relationship

Risk: the potential to lose time and money or otherwise not be able to accomplish an organization's goals.

• All businesses face risk (e.g., Microsoft may fall short of revenue/profit goals; Canadian Red Cross may not meet blood demand).
• Direct relationship: greater risks → greater potential for profit (or loss).
• Not all companies earn profits; that is the risk of being in business.

🌍 Who benefits when businesses earn profits

👥 Beyond owners and shareholders

The excerpt emphasizes that owners/shareholders are not the only people who benefit from earned profits. A successful business provides:

• Employment opportunities: jobs for workers.
• Goods and services: products people need and want.
• Tax payments: revenue for government.
• Economic stimulus: spending money to buy resources, which stimulates the economy.

🌱 Socially responsible firms

• Socially responsible firms contribute even more by adopting policies that promote the well-being of society and the environment.
• They lessen negative impacts on society and the environment.

🏛️ Not-for-profit organizations

🏛️ What makes them different

A not-for-profit organization is an organization that exists to achieve some goal other than the usual business goal of profit at all costs.

• They serve communities through social, educational, or political means.
• Examples: universities, colleges, hospitals, environmental groups, charities (Habitat for Humanity, United Way, Canadian Cancer Society, World Wildlife Fund), zoos, arts organizations, civic groups, religious organizations.
• Government is the largest and most pervasive not-for-profit group.

🎯 Goals and resources

• Not-for-profits set goals and require resources, but goals are not focused solely on profits.
• Example goals: feeding the poor, preserving the environment, increasing ballet attendance, preventing drunk driving.
• They compete for talented employees, volunteer time, and donations (not directly for customers like Ford vs. Honda).

🔄 Blurred boundaries with for-profit

• Boundaries between not-for-profit and for-profit have blurred.
• For-profit businesses now address social issues; not-for-profits apply business principles to operate more effectively.
• Not-for-profit managers focus on: strategy, budgeting, performance measurement, innovation, productivity, accountability, ethical workplace.

Example: A museum director manages both artistic goals and business side (human resources, finance, legal). Ticket revenues cover only a fraction of costs, so the director seeks major donations and memberships. Museum boards include art patrons and business executives who want sound fiscal decision-making.

📈 Standard of living and quality of life

📈 Standard of living

Standard of living: measured by the output of goods and services people can buy with the money they have; the ease with which people satisfy their needs and wants.

• Generally measured by: income per person, poverty rate.
• Other measures: access to and quality of health care, income-growth inequity, employment availability, environmental quality, educational standards.
• Human Development Index (HDI): developed by the United Nations; Canada ranked #18 out of 193 countries/territories in 2023/2024.

Country	HDI Rank (2023/2024)
Switzerland	1
Norway	2
Hong Kong	4
Germany	7
Finland	12
United Kingdom	15
Canada	18
United States	20
China	75
India	134
Pakistan	164
Yemen	186
Somalia	193

• Successful businesses help raise a country's standard of living by creating the goods and services that form the basis of that standard.

🌟 Quality of life

Quality of life: the general level of human happiness based on factors including life expectancy, educational standards, health, sanitation, and leisure time.

• Takes into account not only material standard of living but also intangible aspects that make up human life.
• Building high quality of life is a combined effort between businesses, government, and not-for-profit organizations.
• Businesses play a key role by providing jobs, goods, and services to society.

Mercer Insights 2023 quality of life rankings:

• Highest: Vienna, Austria; followed by Zurich, Switzerland; Auckland, New Zealand; Copenhagen, Denmark.
• Seven of the top 10 are in western Europe, two in Australia/New Zealand, one in Canada (#8).
• No U.S. cities in the top 10.
• Lowest: Baghdad, Iraq.

📊 Business trends

📊 Why trends matter

• Businesses must observe trends, as many stem from consumer demands and preferences.
• Companies must keep up with competitors, observe changes in the business environment, and meet consumer demands to stay in business.

🤖 Current trend: Artificial Intelligence

• Organizations are moving beyond hype and integrating generative AI into business strategy.
• Previous AI wave: companies like Google, Amazon, Netflix rethought strategy around deep learning, transforming business models (online advertising, retail, media streaming).
• Future: generative tools integrated into products/services, not just chatbots bolted on.

🧭 Overview

🧠 One-sentence thesis

Businesses must continuously observe and adapt to evolving consumer demands, technological innovations, and market shifts to remain competitive and meet changing preferences across demographics and regions.

📌 Key points (3–5)

• Why trends matter: businesses must keep up with competitors, observe environmental changes, and meet consumer demands to survive.
• Technology reshaping strategy: artificial intelligence is moving beyond hype to fundamentally transform business models across industries like healthcare, manufacturing, and education.
• Shifting consumer behavior: brand loyalty is weakening across all age groups, with consumers increasingly willing to explore new brands and trade down to private labels.
• Demographic spending patterns: young consumers in emerging markets (ages 15–34) and retirement-age consumers show strong willingness to spend on discretionary items, creating distinct market opportunities.
• Common confusion: sustainability and wellness are not niche trends—they represent trillion-dollar markets with 5–10% annual growth driven by both regulation and consumer demand.

🤖 Technology transformation

🤖 Artificial intelligence integration

• Organizations are moving beyond adding chatbots to existing products toward rethinking entire business strategies around AI.
• The excerpt cites how companies like Google, Amazon, and Netflix centered their strategies around deep learning, transforming online advertising, retail, and media streaming.
• Next wave: generative AI will enable entirely new possibilities rather than just enhancing current offerings.
• Example: Instead of a healthcare app with a chatbot feature, entirely new diagnostic or treatment tools built from the ground up using generative AI.

🛒 Social commerce expansion

Social commerce: consumers browse and buy directly through social media and content creation platforms.

• China has led adoption for several years; India's market continues to mature.
• Emerging markets (Brazil, Saudi Arabia, UAE) are close behind.
• Consumers in these countries consistently spend more through social media platforms compared to Europe and the United States.
• Don't confuse: this is not just advertising on social media—it's completing the entire purchase within the platform.

👥 Demographic spending shifts

👶 Young consumer dominance in emerging markets

• By 2030, 75% of consumers in emerging markets will be ages 15–34.
• Young consumers aged 18–24 in Asian and Middle Eastern nations (India, Saudi Arabia) will be particularly important.
• These groups show pent-up demand and strong willingness to spend.

👴 Retirement spending power

• Aging consumers across all income levels are willing to spend on discretionary items despite financial constraints.
• Travel: older consumers' intent to splurge is even higher than millennials, who have historically been big travel spenders.
• High-income segment: baby boomer and Silent Generation consumers with household incomes exceeding $100,000 make up 30% of the US market.
• They are more likely to spend on discretionary purchases (home improvement, gardening) compared to lower-income consumers their age.

🔄 Consumer behavior evolution

🏷️ Weakening brand loyalty

• Brand loyalty is declining across all age groups, not just younger consumers.
• Older consumers, who previously remained consistently loyal, are now just as likely to embrace new brands and retailers.
• In Europe and the United States, Gen Zers and millennials are only slightly more likely than older consumers to trade down to lower-priced brands.

🛍️ Private label growth

• 36% of consumers plan to purchase private-label products more frequently.
• 60% believe private brands offer equal or better quality.
• This represents a major beneficiary of widespread downtrading behavior.

🌍 Sustainability and wellness markets

♻️ Sustainable business and circular economies

• Driven by both regulatory pressure and consumer demand.
• Move toward environmentally friendly and sustainable practices is a key driver of change.

Circular economies: systems focused on reusing materials and recycling resources in a "closed loop" to reduce waste and minimize environmental footprint.

• This is a core focus area, not an optional add-on.

💪 Wellness market expansion

• Global wellness market is worth approximately $1.8 trillion.
• Growing 5–10% annually.
• Health and wellness products have been in high demand in advanced economies for several years.
• Emerging markets: these categories are now growing quickly, and in some cases, intent to spend on health and wellness in emerging markets is outpacing growth in advanced markets.

🎯 Experience and location trends

👑 Customer experience as differentiator

Customer experience (CX): the key differentiator between competing providers of goods and services.

• As markets mature and buyers become more discerning, CX becomes critical.
• Businesses that excel in delivering friction-free, hyper-personalized, and memorable experiences will rise above competition.
• The excerpt emphasizes this will "increasingly" be seen as the differentiator, indicating a growing trend.

🏙️ Quality of life migration

Advanced markets (e.g., United States):

• Consumers moving away from larger cities in Pacific Northwest and Northeast.
• Moving to "secondary cities" with populations between 50,000 and 500,000 people.
• Two-thirds of fastest-growing US cities are in the South and West.
• Lower cost of living and plentiful remote work opportunities drive this trend.
• Millennials, Gen Xers, and boomers are all propelling this movement.

Emerging markets:

• People are moving to seek out new opportunities and better quality of life.
• Pattern mirrors advanced markets but with different specific drivers.

🧭 Overview

🧠 One-sentence thesis

Businesses are categorized into three main sectors—public, private, and non-profit—based on who controls them, how profits are managed, and their primary purpose, though some organizations can cross sector boundaries.

📌 Key points (3–5)

• Three main sectors: public (government-controlled), private (profit-driven), and non-profit/voluntary (mission-driven with community focus).
• Public sector purpose: provides services that benefit the public as a whole, often at lower prices than for-profit companies could offer.
• Private sector range: includes everything from single-owner small firms to large multinational corporations; publicly traded companies are still part of the private sector despite the confusing terminology.
• Common confusion: some organizations (hospitals, universities) can exist in different sectors depending on ownership and funding structure—not all hospitals are public, and not all universities are non-profit.
• Non-profit flexibility: these organizations can respond to community needs more quickly than government and receive support from citizens, government, and businesses.

🏛️ Public business sector

🏛️ What it includes

Public business sector: goods and services produced, delivered, and allocated by the government and public sector organizations (publicly controlled government business enterprises).

• Encompasses all levels of government: federal, provincial, municipal, and territorial ministries and departments.
• Also includes public institutions: school boards, universities, colleges, health and social service institutions.
• Public sector organizations (Crown corporations) can operate in the marketplace, sometimes competing with privately owned organizations.

💡 Why government provides these services

• Services benefit the public as a whole.
• Two main reasons for government provision:
  • Difficult to charge people individually for the goods/services.
  • People may not be able to afford them from for-profit providers.
• Government can provide at lower prices than for-profit companies.
• Example: public utilities (water, sewage, electricity, gas) and nationalized industries (coal, steel).

🏢 Private business sector

🏢 Core definition

Private business sector: goods and services produced and delivered by private individuals or groups as a means of enterprise for profit.

• Not controlled by government.
• Wide range of sizes: from single-person firms to large multinational businesses operating globally.

📊 Don't confuse: "public company" vs "public sector"

Term	What it means	Sector
Public sector	Government-provided services and government-owned organizations	Public
Public company (publicly traded)	Private sector company that can sell shares to the general public	Private

• A publicly traded company (Microsoft, Apple, Proctor & Gamble) is still part of the private sector.
• "Public" in "publicly traded" refers to share availability, not government ownership.

🤝 Non-profit or voluntary sector

🤝 What defines this sector

Non-profit or voluntary sector: non-governmental, non-profit organizations that receive support from individual citizens, government, and businesses.

• Multiple names used globally (inconsistently):
  • Non-profit organizations (NPOs)
  • Private voluntary organizations (PVOs)
  • Not-for-profit organizations (NFPOs)
  • Non-governmental organizations (NGOs)

🏗️ Two main organizational structures

• Not-for-profit corporation: created with a specific purpose; could be a foundation, charity, or other non-profit type.
• Private voluntary association: group of volunteers who form an organized body to accomplish a purpose.

⚡ Key advantages and challenges

Advantages:

• Can respond to issues more quickly than government.
• Usually formed in reaction to unmet community needs.
• Canadian government recognizes them as key partners and supports through funding, partnerships, and knowledge development.

Challenges:

• Planning for the future.
• Recruiting the right types of volunteers.
• Obtaining board members and funding.

🌐 Where they operate

• Variety of areas: sports, religion, arts, culture, fundraising, housing.
• Organizations include: hospitals, universities, colleges, research organizations, business and professional associations, unions.
• Staffed by paid employees or unpaid volunteers.

🔀 Cross-sector confusion

🔀 Why confusion exists

Some organization types can exist in multiple sectors depending on ownership and funding structure.

🏥 Hospital example from Ontario

Hospital type	Ownership	Funding	Sector
Public hospitals	Government-owned	Government funding	Public
Private hospitals	Privately owned (for-profit company)	Patient payments, insurers, grants, donations, embassies	Private, for-profit
Private hospitals	Privately owned (non-profit organization)	Patient payments, insurers, grants, donations, embassies	Private, non-profit
Federal hospitals	Federal government	Federal funding	Public

• Don't assume: not all hospitals are public sector; not all universities are non-profit.
• The key is to look at who owns the organization and how it manages profits/funding.

🧭 Overview

🧠 One-sentence thesis

Businesses across three sectors—public, private, and non-profit—are classified by industry (goods-producing or service-producing) and involve participants and stakeholders whose interests must be balanced to achieve organizational goals.

📌 Key points (3–5)

• Three sectors: public (government-controlled, serving public benefit), private (for-profit or privately owned), and non-profit/voluntary (non-governmental, supported by citizens/government/businesses).
• Common confusion: some organizations (hospitals, universities) can cross sectors—a hospital may be public, private for-profit, or private non-profit depending on ownership and funding.
• Industry classification: businesses are grouped into goods-producing (e.g., agriculture, manufacturing) and service-producing (e.g., retail, health care) using NAICS.
• Participants vs stakeholders: participants conduct the work (owners, employees, customers, suppliers); stakeholders are affected by decisions (includes participants plus community, competitors, government, environment).
• Balancing interests: stakeholders often have conflicting interests (e.g., lenders want high margins; customers want low prices), requiring careful management.

🏛️ The three business sectors

🏛️ Public sector

Public sector organizations: government-controlled entities that aim to provide services benefiting the public as a whole, often at lower prices than for-profit companies.

• Why public provision: difficult to charge individuals for certain goods/services, or people may not afford them.
• Examples: public utilities (water, sewage, electricity, gas), nationalized industries (coal, steel), school boards, public universities/colleges, public health and social service institutions.
• Key feature: may operate in the marketplace, sometimes competing with private organizations; also called Crown corporations.

🏢 Private business sector

Private business sector: goods and services produced and delivered by private individuals or groups for profit, not controlled by government.

• Range: from small single-owner firms to large multinational businesses with many owners.
• Don't confuse: a "public company" (publicly traded, e.g., Microsoft, Apple) is not part of the public sector—it is a private sector company that offers shares to the general public.
• Key feature: profit motive and lack of government control distinguish it from public sector.

🤝 Non-profit or voluntary sector

Non-profit or voluntary sector: non-governmental, non-profit organizations supported by individual citizens, government, and businesses.

• Terminology: also called private voluntary organizations (PVOs), not-for-profit organizations (NFPOs), or non-governmental organizations (NGOs); definitions vary globally.
• Types: not-for-profit corporations (foundations, charities) or unincorporated associations (volunteer groups).
• Why they exist: respond more quickly than government to unmet community needs; Canadian government recognizes them as key partners and supports through funding, partnerships, and knowledge development.
• Areas of operation: sports, religion, arts, culture, fundraising, housing, hospitals, universities/colleges, research, business/professional associations, unions.
• Challenges: planning for the future, recruiting needed volunteers, obtaining board members and funding.
• Workforce: may include paid employees or unpaid volunteers.

🔀 Cross-sector confusion

🏥 Hospitals example

• The confusion: Is a hospital public, private, or non-profit?
• Reality: In Ontario, four types exist—public (government-owned, government-funded), private (privately owned by for-profit company or non-profit organization, funded by patient payments/insurers/grants/donations/embassies), federal, and Cancer Care Ontario hospitals.
• Canada's mix: many people think Canadian hospitals are public because services are publicly delivered, funded, governed, and accountable to the public; in fact, many provinces deliver hospital services largely through private sector, non-profit organizations.
• International context: private for-profit and private non-profit hospitals/clinics are common in the United States and Australia.

🎓 Universities and colleges example

• The confusion: Is a private university for-profit or non-profit?
• Reality: Canada has private sector for-profit and private sector non-profit colleges/universities, plus many public non-profit institutions.
• Key distinction: private institutions are not government-operated, though many receive public subsidies and may face government regulations depending on province.
• Example: Harvard, Stanford, MIT are private sector, non-profit universities.

📊 Industry classification

📦 Goods-producing industries

Businesses classified using the North American Industry Classification System (NAICS):

• Agriculture, forestry, fishing, and hunting
• Mining, oil, and gas extraction
• Utilities
• Construction
• Manufacturing

🛒 Service-producing industries

• Wholesale trade
• Retail trade
• Transportation and warehousing
• Information and cultural industries
• Finance and insurance
• Real estate, rental, and leasing
• Professional, scientific, and technical services
• Management of companies
• Administrative and support, waste management, and remediation services
• Educational services
• Health care and social assistance
• Arts, entertainment, and recreation
• Accommodation and food services
• Other services, except public administration
• Public administration

👥 Participants and stakeholders

👥 Business participants

Business participants: the people who participate in conducting the work of the business.

• Always include: employees and managers.
• Often include: suppliers, customers, and shareholders.
• Owners' role: invest money, polish the business idea, bring together resources (money and people), hire employees.
• Employees' role: work for the company and help it reach goals.
• Customers' role: the ultimate goal is to satisfy customer needs to generate profit for owners.
• Dependency: owners and employees depend on customers; other participants can include suppliers and competitors.

🎯 Stakeholders

Stakeholders: those affected by the business's operations and its decisions.

Category	Examples
Internal	Employees, managers, owners, shareholders
Market	Customers, suppliers, vendors, competitors, bankers
Community	The general public, the community, the environment
Government	Various government departments, governmental agencies, policy makers
Financial	Investors, funders, lenders

• Legitimate interest: all stakeholders have a stake in the success or failure of the business and the policies it adopts.
• Example: If a restaurant fails, employees need new jobs, vendors need new customers, banks may write off loans.

⚖️ Balancing conflicting interests

• The challenge: stakeholders do not always see things the same way; their interests sometimes conflict.
• Example: Lenders appreciate high profit margins (ensures loan repayment) while customers prefer lowest possible prices.
• Management task: pleasing stakeholders is a real balancing act for any company.

🧩 Functional areas of business

🧩 What functional areas are

Functional areas in a business: different departments or sections that perform specific tasks.

• Examples: human resources, operations, accounting, and finance.
• Unique roles: each functional area has a specific role in achieving overall business objectives.
• Cooperation requirement: functional areas need to work together to ensure the company operates smoothly and effectively.
• The excerpt mentions "six functional areas" but does not list all six in detail.

🧭 Overview

🧠 One-sentence thesis

Businesses operate through participants who conduct the work, stakeholders who are affected by business decisions, and six functional areas that organize specialized tasks to achieve business objectives.

📌 Key points (3–5)

• Participants vs stakeholders: participants actively conduct business work (employees, managers, owners), while stakeholders are affected by business operations and decisions (broader group including community, government, competitors).
• Six functional areas: human resources, operations, marketing, accounting, finance, and information technology—each performs specialized tasks that must cooperate for smooth operation.
• Stakeholder interests can conflict: different stakeholders (e.g., lenders wanting high profit margins vs customers wanting low prices) may have competing interests that businesses must balance.
• Common confusion: the number of functional areas varies by how a business is structured—small businesses may combine functions under one person, while large businesses separate them into departments.
• Why it matters: understanding these distinctions helps clarify how businesses organize work, manage relationships, and balance competing demands.

👥 Business participants

👥 Who participates in business

Business participants: the people who participate in conducting the work of the business.

• Always include employees and managers.
• Often include suppliers, customers, and shareholders.
• Every business must have one or more owners whose primary role is to invest money in the business.

💼 What owners do

• Polish the business idea when starting.
• Bring together resources (money and people) to turn the idea into a business.
• Hire employees to work for the company and help reach goals.

🎯 The customer connection

• Owners and employees depend on customers (a third group of participants).
• Ultimate goal: satisfy customer needs to generate profit for owners.
• Other participants can include suppliers and even competitors.

Don't confuse: participants actively conduct business work; stakeholders (covered next) are those affected by the business but may not directly conduct its work.

🌐 Stakeholders

🌐 What stakeholders are

Stakeholders: those affected by the business's operations and its decisions.

• Examples include: shareholders, investors, suppliers, the community, customers, employees, competitors, governmental agencies, the general public, the environment, and various government departments.
• All have a legitimate interest in the success or failure of the business and the policies it adopts.

🍽️ Restaurant example

The excerpt uses a restaurant (whether a national chain franchise or local "mom and pop shop") to illustrate stakeholders:

• Customers, vendors, employees, suppliers, landlords, competitors, bankers all have a keen interest in how the business operates.
• If the business fails: employees need new jobs, vendors need new customers, banks may write off loans.

⚖️ Conflicting interests

• Stakeholders do not always see things the same way—their interests sometimes conflict.
• Example: lenders appreciate high profit margins (ensures loan repayment) while customers prefer the lowest possible prices.
• Balancing act: pleasing stakeholders can be challenging for any company.

🏢 Six functional areas of business

🏢 What functional areas are

Functional areas in a business: different departments or sections that perform specific tasks, such as human resources, operations, accounting, and finance.

• Each has a unique role in achieving overall business objectives.
• They need to work in cooperation to ensure smooth and effective operation.
• The number varies (four, five, six, or seven) depending on how the business is structured.

📏 How structure affects functional areas

• Small businesses: the owner may do finance, accounting, and human resources along with overseeing operations.
• Large businesses: functions are broken down into departments with large groups of people working within each function.

Don't confuse: functional areas organize work by type of work, not by product or customer segment.

🧑‍💼 Human resources and operations

🧑‍💼 Human Resources (HR)

Human Resources functional area: an organizational function about searching for, selecting, training, and maintaining workers.

What HR managers do:

• Ensure the organization has all necessary skills and capabilities to run the business.
• Develop staffing plans.
• Recruit and select new employees.
• Monitor the performance management process.
• Develop succession plans for advancement and replacement.
• Develop standards for compensation and benefits.
• Assist managers with staff issues.

⚙️ Operations

Operations: the organizational function focused on producing the goods and/or services of the business.

What operations involves:

• Managing processes and resources that create goods and services.
• Ensuring efficiency, quality, and cost-effectiveness in production, distribution, and delivery.
• Meeting customer demand and achieving organizational objectives.

Key concept: All companies must convert resources (labour, materials, money, information) into goods or services.

Type	Example	Output
Tangible products	Apple	iPads, iPhones
Intangible products	Hospitals	Health care

Operations manager role:

• Designs and oversees the transformation of resources into goods or services.
• Ensures products are of high quality.
• In many organizations, manages the supply chain (controls delivery of raw materials and distribution of finished goods).

📢 Marketing and accounting

📢 Marketing

Marketing: everything a company does to identify customers' needs and ensure products are designed to meet those needs.

What marketing does:

• Identify, create, and satisfy customer needs and wants through promotion of products or services.
• Market research and consumer analysis.
• Develop benefits and features of products, including price and quality.
• Decide on the best method of delivering products.
• Decide on the best means of promoting products to attract and keep customers.
• Manage relationships with customers.
• Make customers aware of the organization's desire and ability to satisfy their needs.

Why it matters: effective marketing helps businesses differentiate from competitors, build brand awareness and loyalty, increase sales and revenue, and achieve business goals.

📊 Accounting

Accounting: the organizational function focused on recording, keeping, analyzing, and communicating financial information.

Purpose: provide managers with accurate, relevant, and timely financial information.

Two fields of accounting:

Field	Purpose	Users
Financial accounting	Prepare financial statements to assess financial strength	Inside and outside the organization
Managerial accounting	Prepare reports (e.g., cost of materials in production)	Internal use only

What accountants do: measure, summarize, and communicate financial and managerial information; advise other managers on financial matters.

💰 Finance and information technology

💰 Finance

Financial functional area: responsible for managing the company's financial resources, including budgeting, accounting, financial reporting, cash flow management, and investment decisions.

Role: ensure financial stability and growth by optimizing financial performance and minimizing risks.

Core activity: planning for, obtaining, and managing a company's funds while maintaining the financial health of the business.

Questions financial managers address:

• How much money does the company need?
• How and where will it get the necessary money?
• How and when will it pay the money back?
• What investments should be made in plant and equipment?
• How much should be spent on research and development?

When it's particularly important: good financial management is especially critical when a company is first formed, because new business owners usually need to borrow money to get started.

💻 Information Technology (IT)

Information technology: the organizational function that aims to understand the information and data needs of the company in terms of obtaining, analyzing, and protecting information.

Key concept: information is one of the critical assets of most businesses (some businesses like Facebook are entirely information-based).

What IT managers do:

• Build computer and network infrastructure.
• Implement security and privacy protocols.
• Develop user interfaces and apps for customers.
• Integrate the business's website or application with other departments (finance, marketing, operations).
• Develop interfaces to send and receive information from other companies (suppliers, logistics and shipping providers).

🔒 Security and privacy concerns

• The global pandemic made it necessary for businesses to establish and improve virtual presences.
• As technology use increases, so do threats and vulnerabilities.
• Rising potential risks create a security gap between user expectations and technology suppliers' ability to meet those expectations.
• Data privacy concerns, protection, and security now play an important role.
• Cybersecurity is changing the way things are done today more than ever before.

🧭 Overview

🧠 One-sentence thesis

Organizations require five key inputs—natural resources, human resources, capital, entrepreneurs, and knowledge—to produce goods and services efficiently and achieve business success.

📌 Key points (3–5)

• What factors of production are: inputs in the form of resources that all organizations need to provide goods and services, whether for-profit or not-for-profit.
• The five factors: natural resources (renewable and non-renewable), human resources (labor), capital (tools and equipment), entrepreneurs (decision-makers and risk-takers), and knowledge (workforce talents and skills).
• Common confusion: capital vs. money—capital refers to physical tools, machinery, and buildings, not money itself; money is only a means of acquiring inputs, not a productive input.
• Why knowledge is now included: many experts now recognize knowledge as a fifth factor because it has become a primary driver of economic growth in today's competitive environment.
• The goal: using factors of production efficiently allows a company to produce more goods and services with the same resources.

🌍 Natural Resources

🌱 What natural resources include

Natural resources: commodities that are useful inputs in their natural state.

• The excerpt notes that natural resources are sometimes simply called "land," though the term means more than just land.
• They encompass land, mineral deposits, oil deposits, trees, water, air, and sources of power like solar and wind energy.

♻️ Renewable vs non-renewable

Type	Definition	Examples
Renewable	Can grow again or never run out	Trees, water, air, solar energy, wind energy
Non-renewable	Found in the ground; limited availability; cannot be replaced or renewed	Land, mineral deposits, oil deposits

🏭 How companies use them

• Different companies use natural resources in different ways depending on their industry.
• Example: A paper company uses wood pulp to make paper; an energy company may use water, oil, or coal to produce electricity.
• Don't confuse: natural resources are the raw materials themselves, not the finished products made from them.

⚠️ Current concerns

• Urban sprawl, pollution, and limited resources have raised questions about resource use.
• Conservationists, environmentalists, and government bodies are proposing laws requiring land-use planning and resource conservation.

👥 Human Resources and Entrepreneurs

💪 Human resources (labor)

Labor, or human resources: the economic contributions of people working with their minds and muscles.

• This input includes the talents of everyone who performs tasks of manufacturing and selling goods and services.
• The excerpt emphasizes both mental and physical contributions.
• Example: from a restaurant cook to a nuclear physicist—all human work counts as this factor.

🚀 Entrepreneurs as decision-makers

Entrepreneurs: people who combine the inputs of natural resources, labor, and capital to produce goods or services with the intention of making a profit or accomplishing a not-for-profit goal.

• They make the decisions that set the course for their businesses.
• They create products and production processes or develop services.
• Key characteristic: they are risk-takers because they are not guaranteed a profit in return for their time and effort.

💰 Rewards and risks

• If their companies succeed, the rewards may be great.
• Many individuals are attracted by the opportunity to be their own boss and reap financial rewards.
• Example: Many start their first business from dorm rooms or while living at home, so their cost is almost zero.
• The excerpt mentions individuals like Mark Zuckerberg (Facebook), Bill Gates (Microsoft), Sergey Brin and Larry Page (Google) as examples.
• Many thousands of individuals have started companies that, while remaining small, make a major contribution to the economy.

🏗️ Capital

🔧 What capital means

Capital: the tools, machinery, equipment, and buildings used to produce goods and services and get them to the consumer.

• Sometimes the term is also used to mean the money that buys machinery, factories, and other production and distribution facilities.
• The excerpt clarifies that in the context of factors of production, capital refers to physical assets, not money.

💵 Why money is NOT capital (common confusion)

• Critical distinction: Because money itself produces nothing, it is not one of the basic inputs.
• Money is a means of acquiring the inputs, not an input itself.
• Don't confuse: capital in this context does not include money—it refers only to the physical tools and structures used in production.

🧠 Knowledge as the Fifth Factor

📚 What knowledge means

Knowledge: the combined talents and skills of the workforce.

• A number of outstanding managers and noted academics are beginning to emphasize knowledge as a fifth factor of production.
• It has become a primary driver of economic growth.

🎯 Why knowledge matters now

• Today's competitive environment places a premium on knowledge and learning over physical resources.
• The excerpt suggests a shift in what drives economic success: from physical resources to intellectual capabilities.
• This represents a recognition that workforce skills and expertise are now as important as traditional factors.

🔄 How it differs from human resources

• Human resources refers to people working with minds and muscles (the labor itself).
• Knowledge refers specifically to the talents and skills those people possess (the intellectual capital).
• Don't confuse: knowledge is about what workers know and can do, not just their physical presence or effort.

🔗 Efficiency and Integration

⚙️ Using factors efficiently

• By using the factors of production efficiently, a company can produce more goods and services with the same resources.
• This is the ultimate goal: maximizing output from given inputs.
• The excerpt emphasizes that all five factors are required regardless of whether organizations operate in the for-profit or not-for-profit sector.

🧭 Overview

🧠 One-sentence thesis

Organizations must analyze and manage both their internal controllable factors (culture, management, resources) and external uncontrollable factors (micro-environment relationships and macro-environment conditions) to achieve strategic goals and maintain competitive advantage.

📌 Key points (3–5)

• Internal environment: encompasses controllable elements within the organization (management, materials, machinery, money, employees) that influence operations and decision-making.
• Two layers of external environment: micro-environment includes direct relationships (suppliers, competitors, customers), while macro-environment covers broader economic conditions (GDP, policy, inflation).
• Analysis tools differ by scope: internal analyses use SWOT (strengths/weaknesses focus), micro uses Porter's Five Forces, macro uses PESTEL framework.
• Common confusion: internal vs. external control—management can change internal factors in response to goals, but has little influence over macro-environment factors and must adapt to them.
• Purpose of environmental analysis: enables organizations to leverage strengths, mitigate threats, and develop strategies that compensate for weaknesses.

🏢 Internal Business Environment

🎯 What the internal environment includes

Internal business environment: the elements within the organization that influence its operations and decision-making, encompassing factors like company culture, management practices, employees, and work processes.

• These are the areas management has control over and can make changes to in response to strategic goals.
• The excerpt identifies five key components (the "5 Ms"):
  1. Management
  2. Materials
  3. Machinery
  4. Money
  5. Employees

📋 Strategic foundation elements

A well-managed internal environment requires communicating purpose through:

• Mission statement: who we are, what we value
• Vision statement: who we want to become
• Strategy: how to achieve the mission and vision
• Goals and objectives: metrics to gauge the company's degree of success

These elements guide decision-making and provide direction for the organization.

🔍 Internal analysis methods

Internal business analysis: evaluation conducted by management or consultants to assess the company's strengths and weaknesses.

SWOT analysis connection:

• Internal analysis is generally more concerned with strengths and weaknesses
• Opportunities and threats fall more under external business analysis
• Important principle: analyze strengths and weaknesses in light of their impact on customers, since the customer's view ultimately matters most

Other internal analysis tools mentioned:

• Process mapping (identify process issues)
• Skills inventory tracking (determine missing or needed skills)
• Succession planning (ensure employees can move into positions when others retire)
• Gap Analysis, Core Competencies Analysis, VRIO Analysis, McKinsey 7S Framework

💡 Purpose and outcomes

What internal analysis enables:

What it reveals	What management can do
Where the organization excels	Leverage strengths and expertise
Where it's doing okay	Identify improvement opportunities
Current deficits and gaps	Develop strategies to compensate for weaknesses
Threats	Create mitigation strategies

Example: An organization discovers through skills inventory that it lacks certain technical capabilities → management can develop training programs or hire to fill the gap.

🌐 External Business Environment: Micro-level

🤝 What the micro-environment includes

Micro-environment: groups and organizations that have a direct relationship with the business.

Key characteristic: these entities deal with the firm regularly and have a direct interest in the company's activities because they are clearly affected by its actions.

Who is included:

• Suppliers
• Distributors
• Competitors
• External customers

🔧 Analysis tools for micro-environment

The excerpt identifies specific frameworks for different micro-environment elements:

Element	Analysis method	Purpose
Competitive environment	Porter's Five Forces model	Thorough analysis of competition
Suppliers	Kraljic Matrix	Assess supplier relationships
Consumers	Ferrell's 6W model	Conduct consumer analysis

📍 Relationship to the organization

Don't confuse: The micro-environment sits between the internal environment and the macro-environment—it's external to the organization but involves direct, regular interactions rather than broad economic forces.

🌍 External Business Environment: Macro-level

🏛️ What the macro-environment includes

Macro-environment: the broader condition of an economy as opposed to specific markets.

Key factors that affect the macro-environment:

• GDP (Gross Domestic Product)
• Fiscal policy
• Monetary policy
• Inflation
• Employment rates
• Consumer spending

⚖️ Limited organizational control

Critical distinction: The business has little influence over the macro-environment.

Example: If the government enacts mandatory regulations on waste management, businesses must comply with these regulations to remain open—they cannot change the regulation itself.

Real-world manifestations:

• Safety conditions on products, foods, buildings (laws and regulations)
• Consumer trends (e.g., pressure on fast food restaurants to offer healthier choices)
• Technological innovations (when one company adopts new technology, others must adapt to remain competitive)

📊 PESTEL analysis framework

The macro-environment can be analyzed using PEST, PESTLE, or PESTEL analysis:

Letter	Factor	Type of impact
P	Political	Government policies, regulations
E	Economic	GDP, inflation, employment
S	Sociocultural	Consumer trends, demographics
T	Technological	Innovation, automation
E	Environmental	Sustainability, climate
L	Legal	Laws, compliance requirements

Process:

1. Create a list of trends
2. Identify positive and negative impacts on the business
3. Involves brainstorming and extensive research

🎯 Vulnerability varies by business type

The excerpt explains: "To what degree is a business vulnerable to macroeconomic factors? It depends on the extent to which a company is dependent on the health of the economy and external factors for its success."

Example: Banks, financial institutions, and credit card companies are heavily reliant on macroeconomic factors—if the economy is struggling, these businesses are more vulnerable than others.

👥 Working in Teams

🤝 Team definition and types

Team: a group of people with certain skills who share a common purpose, approach, and performance goals, where all members hold themselves responsible and accountable for reaching the team's objectives.

Five common types of teams:

1. Problem-solving teams
2. Self-managed teams
3. Cross-functional teams
4. Virtual teams
5. Work teams

Teams are widely used in business and not-for-profit organizations (hospitals, government agencies) and are frequently discussed in employee training programs because they require people to learn how to work well together.

✨ Seven characteristics of effective teams

Characteristic	What it means	Why it matters
1. Clear Leadership	One or several members act as team leaders	Unifies the team toward same goals; provides guidance, motivation, focus
2. Defined Goals	Team establishes goals before working on tasks	Ensures common objectives align with organizational goals
3. Assigned Roles	Each member has a specific role	Members make effective contributions; roles may change throughout project
4. Open Communication	Members discuss ideas and feel input matters	Welcomes diverse thoughts; involves active listening before responding
5. Collaboration	Continuous work throughout project lifetime	Encourages innovation through exchange of ideas and collective expertise
6. Trust	Members rely on each other	Contributes to open communication, problem-solving, and collaboration
7. Conflict Resolution	Effective methods for resolving disagreements	Members speak calmly, respect ideas, focus on compromise; view disputes as improvement opportunities

🔗 Team cohesiveness factors

Team cohesion: the strength and extent of interpersonal connection existing among the members of a group—the interpersonal bond that causes members to participate readily and remain motivated to accomplish set goals.

Cohesive teams have an attitude of "we-ness."

Five important factors contributing to cohesiveness:

1. Size: Bigger teams → less satisfaction; harder to interact closely; a few members dominate; more conflict
2. Similarity: People get along better with those who share their attitudes and experience
3. Success: Successful teams → satisfied members → more people attracted to join
4. Exclusiveness: Harder to get into a group → happier members; higher team status increases satisfaction
5. Time: More time together → stronger bonds; members learn each other's strengths, weaknesses, skills

Additional factors:

• Competition: Motivation to achieve common goals and outperform other teams increases membership value
• Equitable and inclusive practices: Members value and celebrate each person's authenticity, identity, and unique perspectives; create inclusive practices in day-to-day teamwork

⚠️ Maintaining organizational focus

Important caution: If members get too wrapped up in immediate team goals, the whole team may lose sight of the larger organizational goals toward which it is supposed to be working.

Don't confuse: Team success with organizational success—teams must balance their specific objectives with broader company goals.

🎯 Skills and talent in teams

The excerpt uses a sports analogy: Average players occasionally win championships through coaching, teamwork, and determination, but this is newsworthy because it's an exception to the rule.

Typically, a team performs well because:

• Members possess some level of talent
• Talents are managed in a collective effort to achieve a common goal

Final principle: A team can succeed only if its members provide the skills needed for managing (excerpt ends before completing this thought).

🧭 Overview

🧠 One-sentence thesis

Effective teams succeed by combining clear structure, open communication, diverse skills, and strong interpersonal bonds while actively managing conflicts and avoiding common pitfalls like groupthink and lack of motivation.

📌 Key points (3–5)

• Seven characteristics of effective teams: clear leadership, defined goals, assigned roles, open communication, collaboration, trust, and conflict resolution.
• Team cohesion factors: size, similarity, success, exclusiveness, time together, competition, and equitable/inclusive practices strengthen interpersonal bonds.
• Four essential skill sets: communication, technical, decision-making/problem-solving, and interpersonal skills must be balanced for team success.
• Common confusion: Team roles split into task-facilitating (goal accomplishment) vs. relationship-building (group cohesiveness)—both are needed, but individuals often excel at one type.
• Factors that erode performance: groupthink, lack of motivation, unwillingness to cooperate, lack of managerial support, and failure to delegate authority.

🎯 What makes teams effective

🎯 Seven core characteristics

Effective teams share seven defining traits that work together:

1. Clear leadership provides focus and direction
2. Defined goals align team objectives with organizational goals
3. Assigned roles ensure each member contributes effectively; roles may evolve throughout a project
4. Open communication welcomes diverse ideas and involves active listening
5. Collaboration happens continuously, encouraging innovation through shared expertise
6. Trust enables open communication and problem-solving; often built through team exercises
7. Conflict resolution uses calm discussion, respect, and compromise; disputes become opportunities to improve decision-making

Team cohesion: the strength and extent of interpersonal connection existing among the members of a group; this bond causes members to participate readily and remain motivated to accomplish set goals.

🤝 The "we-ness" attitude

Cohesive teams develop an attitude of "we-ness"—a shared identity that drives participation and motivation.

🔗 Building team cohesiveness

📏 Size matters

• Bigger teams → less member satisfaction
• Large teams make close interaction harder
• A few members tend to dominate
• Conflict becomes more likely

👥 Similarity and time

• People generally get along better with similar others (shared attitudes and experience)
• More time together → stronger bonds
• Through interaction, members learn each other's strengths, weaknesses, and skills

🏆 Success and exclusiveness

• Successful teams have satisfied members who attract others
• Harder entry requirements → happier existing members
• Higher team status → greater member satisfaction

🎯 Competition and motivation

• Motivation to achieve common goals increases membership value
• Outperforming other teams strengthens cohesion

🌈 Equitable and inclusive practices

• Members value and celebrate each person's authenticity and identity
• Unique perspectives are recognized
• The team creates inclusive and equitable day-to-day practices

Warning: Teams must maintain focus on broad organizational goals; getting too wrapped up in immediate team goals can cause the whole team to lose sight of larger organizational objectives.

🛠️ Essential team skills

💬 Communication skills

The ways members communicate affect relationships both inside and outside the team (with managers, customers, vendors, etc.).

Example: How a team member explains a delay to a customer can either preserve or damage that relationship.

🔧 Technical skills

Teams must perform certain tasks, so they need people with the right skills.

Example: If your project requires extensive math work, having someone with strong quantitative skills is essential.

🧩 Decision-making and problem-solving skills

• Every task faces problems
• Handling problems means deciding on solutions
• Valuable members can identify problems, evaluate alternatives, and decide on best options

🤝 Interpersonal skills

Teams need direction, motivation, and communication, so they benefit from members who can:

• Listen actively
• Provide constructive feedback
• Resolve conflict
• Communicate team goals and needs to outsiders

⚖️ The right mix

The key is having the right balance of these four skill sets. Teams don't need all skills from day one—members often gain skills by volunteering for tasks and perfecting abilities through practice. Effective teamwork develops over time as a work in progress.

👥 Team roles framework

✅ Task-facilitating roles

Task-facilitating roles: help the team accomplish goals.

These include:

• Providing information when others need it
• Asking for information when you need it
• Monitoring (checking on progress)
• Enforcing (ensuring team decisions are carried out)

Task facilitators are especially valuable when assignments aren't clear or progress is too slow.

💞 Relationship-building roles

Relationship-building roles: help team members understand their roles, support them in their roles, and maintain or improve group cohesiveness.

These activities improve team "chemistry," from empathizing to confronting.

⚖️ Three key points about roles

Point	Explanation
Balance is crucial	Teams work best with good balance between task facilitation and relationship-building
Individual strengths vary	It's hard for one person to perform both types; some focus better on tasks, others on relationships
Overplaying backfires	Overdoing any role facet becomes counterproductive (e.g., elaborating when quick decisions are needed)

Don't confuse: Blocking roles—behavior that inhibits team or individual performance—with these productive roles. Teams must recognize and confront dysfunctional behavior to avoid destroying morale and hindering progress.

⚠️ What erodes team performance

🔄 Groupthink

Groupthink: the tendency to conform to group pressure in making decisions, while failing to think critically or consider outside influences.

• Some conformity helps leaders direct members toward goals
• Too much conformity makes groups ineffective
• Teams may resist fresh ideas
• Dysfunctional tendencies become "the way we do things"

😞 Lack of motivation and frustration

• Teams are composed of people subject to psychological ups and downs
• Low motivation → low effectiveness and productivity
• Maintaining high motivation is difficult
• This is a chief cause of frustration and ineffective teamwork
• Employers now look for motivation-building ability when hiring managers

🚫 Unwillingness to cooperate

Failure to cooperate occurs when members don't commit to common goals or activities.

Example: Half a product development team wants to create a brand-new product while the other half wants to improve an existing one—the team may get stuck on this contention for weeks or months.

Lack of cooperation between teams can also harm the organization.

📉 Lack of managerial support

• Every team requires organizational resources (funding, key personnel)
• If management won't commit needed resources, the team will likely fall short of goals

🔒 Failure to delegate authority

• Team leaders often come from successful supervisor ranks
• Supervisors give day-to-day instructions and expect them carried out
• This approach doesn't work well for leading teams
• Team success depends on building consensus and letting people make their own decisions

📚 Class team projects

📋 Draw up a team charter

At the project start, create a charter including:

• Goals of the group
• Ways to ensure each member's ideas are considered
• Timing and frequency of meetings

Alternatively, set ground rules everyone agrees to. Your instructor may require signing an existing team contract.

🎯 Best practices from experienced students

Practice	Why it matters
Contribute your ideas	Share ideas; worst case is they won't be used (same as staying quiet)
Never miss meetings/deadlines	Schedule weekly meetings like a class; never skip
Be considerate	Be patient, listen, involve everyone, avoid infighting, build trust
Create conflict resolution process	Establish rules before conflict arises
Use each member's strengths	All students bring different strengths; utilize unique value
Don't do all the work yourself	Work with your team; the experience often matters more than the output

🔥 Resolving team conflict

Team conflict: the breakdown of interpersonal relationships between members of a team.

🔍 Common reasons for conflict

• Misunderstandings or poor communication skills
• Differing opinions, viewpoints, or personalities
• Biases and stereotypes
• Variations in learning and processing styles
• Perceptions of unfairness

🛠️ Conflict resolution approach

When conflict arises:

• Speak to one another calmly
• Respect each other's ideas
• Focus on finding compromise
• Seek to understand the other person
• Move toward win-win outcomes

Reframe disputes: Effective teams view disagreements as opportunities to improve decision-making and problem-solving strategies, not just as obstacles.

🧭 Overview

🧠 One-sentence thesis

The four management functions—planning, organizing, leading, and controlling—work together as interdependent pillars that enable organizations to achieve goals through both efficiency and effectiveness.

📌 Key points (3–5)

• POLC framework: Planning, organizing, leading, and controlling are the four core functions that describe a manager's job and classify management knowledge.
• Efficiency vs effectiveness: Efficiency means using minimal resources to complete work; effectiveness means producing the desired result—managers need both.
• Three management levels: Top managers set objectives and make strategic decisions; middle managers allocate resources and oversee implementation; first-line managers coordinate daily operations.
• Common confusion: Management level determines planning scope—top-level decisions affect organizational survival, while lower-level decisions impact departments but are less likely to threaten the entire firm.
• Timeless relevance: Despite environmental changes and new tools, these four functions remain essential to management practice.

📋 Planning function and process

📋 What planning involves

Planning: the function of management that involves setting objectives and determining a course of action for achieving those objectives.

• Planning requires awareness of environmental conditions and the ability to forecast future conditions.
• Managers must be good decision-makers to plan effectively.
• This is the first function in the POLC framework and sets the foundation for other functions.

🔄 The planning process steps

The excerpt describes planning as a multi-step process:

1. Environmental scanning: Planners assess critical contingencies—economic conditions, competitors, and customers.
2. Forecasting: Predict future conditions based on environmental data.
3. Setting objectives: Create statements of what needs to be achieved and when.
4. Identifying alternatives: Determine different courses of action for achieving objectives.
5. Evaluating and deciding: Assess alternatives and choose the best courses of action.
6. Implementation: Formulate necessary steps and ensure effective execution.
7. Evaluation and correction: Constantly assess plan success and take corrective action when needed.

Example: An organization scans the market, forecasts demand, sets sales objectives, evaluates different marketing approaches, chooses one, implements it, and monitors results.

🏢 Management levels and responsibilities

🏢 Three-tier hierarchy

The excerpt identifies three distinct management levels, each with specific responsibilities:

Level	Who they are	What they do	Reporting structure
Top-level managers	Strategic leaders	Set objectives, scan business environment, make decisions affecting overall organizational health	Highest level
Middle-level managers	Implementation coordinators	Allocate resources, oversee first-line managers, develop and implement activities	Report to top managers
First-line managers	Front-line/customer-facing	Coordinate activities, supervise employees, handle day-to-day operations	Report to middle managers

🎯 How level affects planning

• The management level determines the type of planning and decision-making a manager performs.
• Higher levels focus on broader, more strategic planning; lower levels focus on operational planning.
• Don't confuse: All levels plan, but the scope and impact differ significantly.

🧠 Managerial decision-making

🧠 What decision-making means

Decision-making: the action or process of thinking through possible options and selecting one.

• Managers continually make decisions throughout their work.
• Decision quality significantly impacts organizational effectiveness and stakeholders.
• Stakeholders: all individuals or groups affected by an organization (customers, employees, shareholders, etc.).

⚖️ Decision impact by level

The excerpt emphasizes that decision impact varies by management level:

Top management decisions:

• Affect the future of the organization and all stakeholders.
• Example: Deciding whether to pursue a new technology or product line.
• Good decisions enable long-term survival and thriving; poor decisions can lead to bankruptcy.

Lower-level management decisions:

• Smaller impact on organizational survival but significant impact on departments and workers.
• Example: A first-line supervisor scheduling workers and ordering raw materials.
• Poor decisions unlikely to drive the entire firm out of existence but can harm departmental performance.

🔍 Why decision quality matters

• Decision-making quality has "sometimes quite significant" impact on organizational effectiveness.
• The stakes are highest at top management levels where decisions affect organizational survival.
• Even lower-level decisions matter tremendously for specific departments and their workers.

🎯 Efficiency and effectiveness

🎯 Two essential outcomes

The excerpt distinguishes between two critical management outcomes:

Efficiency: using the least possible amount of resources to get work done.

Effectiveness: the ability to produce a desired result.

🔗 Why both matter

• Managers need to be both efficient and effective to achieve organizational goals.
• The POLC functions help managers increase both organizational efficiency and effectiveness.
• Don't confuse: Efficiency is about resource minimization; effectiveness is about achieving the desired outcome—you can be efficient without being effective, or vice versa.

Example: An organization might efficiently use minimal resources but fail to produce the desired result (efficient but not effective), or achieve the goal while wasting resources (effective but not efficient).

🌟 The POLC framework's enduring relevance

🌟 Why POLC persists

The excerpt emphasizes the framework's lasting importance:

• POLC is "widely considered to be the best means of describing the manager's job."
• It provides "the best way to classify accumulated knowledge about the study of management."
• The four functions are interdependent and equally important for smooth business operation.

🔄 Stability amid change

• "Tremendous changes" have occurred in the environment managers face and the tools they use.
• Despite these changes, managers still perform these essential functions.
• The framework adapts to new contexts while maintaining its core structure.

🧭 Overview

🧠 One-sentence thesis

Planning enables organizations to achieve their objectives by systematically scanning the environment, forecasting conditions, setting goals, and determining the best courses of action.

📌 Key points (3–5)

• What planning is: setting objectives and determining a course of action to achieve them, requiring environmental awareness, forecasting, and decision-making.
• Planning hierarchy: three management levels (top, middle, first-line) each handle different planning types—strategic (long-term), tactical (intermediate), and operational (short-term).
• Planning process steps: environmental scanning → forecasting → setting objectives → identifying alternatives → evaluating and deciding → implementing → evaluating success and correcting.
• Common confusion: strategic vs tactical vs operational planning—they differ in time frame (years vs months), scope (organization-wide vs department-specific), and who does them (top vs middle vs first-line managers).
• Why planning matters: quality of planning and decision-making significantly impacts organizational effectiveness, stakeholder outcomes, and long-term survival.

🎯 What planning involves

🎯 Core definition and requirements

Planning is the function of management that involves setting objectives and determining a course of action for achieving those objectives.

Planning requires managers to:

• Be aware of environmental conditions facing their organization
• Forecast future conditions
• Be good decision-makers

Why awareness matters: planners cannot set realistic objectives or choose effective actions without understanding the context (economic conditions, competitors, customers).

🔄 The planning process steps

Planning is a multi-step process, not a one-time event:

1. Environmental scanning: be aware of critical contingencies (economic conditions, competitors, customers)
2. Forecasting: attempt to predict future conditions; these forecasts form the basis for planning
3. Establish objectives: create statements of what needs to be achieved and when
4. Identify alternatives: list alternative courses of action for achieving objectives
5. Evaluate and decide: assess alternatives and make decisions about the best courses of action
6. Formulate steps: detail necessary steps and ensure effective implementation
7. Evaluate and correct: constantly evaluate plan success and take corrective action when necessary

Don't confuse: planning is not just "setting a goal"—it includes the entire cycle from scanning to correcting.

🏢 Planning across management levels

🏢 Three levels of management

The excerpt identifies three levels, each responsible for specific planning, decision-making, and activities:

Level	Who	Planning responsibility	Activities
Top-level managers	Senior executives	Set objectives, scan business environment, plan and make decisions affecting overall organizational health	Strategic planning (long-term, organization-wide)
Middle-level managers	Mid-tier managers	Allocate resources, oversee first-line managers, report to top-level, develop and implement activities	Tactical planning (intermediate-range)
First-line managers	Front-line/customer-facing supervisors	Coordinate activities, supervise employees, report to middle managers, involved in day-to-day operations	Operational planning (short-range)

Key insight: the level you work in determines the type of planning and decision-making you will do.

📊 Strategic planning (top-level)

Strategic planning involves analyzing competitive opportunities and threats, as well as the strengths and weaknesses of the organization, and then determining how to position the organization to compete effectively in its environment.

Characteristics:

• Time frame: long (often three years or more)
• Scope: generally includes the entire organization
• Includes: formulation of objectives
• Based on: the organization's mission (its fundamental reason for existence)
• Who does it: top management most often conducts strategic planning

Strategic planning process steps:

1. Write a mission statement (tells customers, employees, and others why the organization exists)
2. Identify core values or beliefs that will guide member behavior
3. Assess the company's strengths, weaknesses, opportunities, and threats (SWOT analysis); conduct business environment scans
4. Establish goals and objectives (performance targets) to direct all activities toward the mission
5. Develop and implement tactical and operational plans to achieve goals and objectives

Example: Sam Walton posed basic questions—why does the organization exist? What value does it create?—and determined his new chain would exist to offer customers the lowest prices with the best possible service.

🎯 Goals and objectives

Goals: major accomplishments the company wants to achieve over a long period.

SMART goals framework: goals should be:

• Specific
• Measurable
• Attainable
• Relevant
• Time-Based

Why SMART matters: this structure ensures goals are clear, trackable, realistic, aligned with mission, and have deadlines.

🔧 Tactical planning (middle-level)

Tactical planning is intermediate-range (one to three years) planning that is designed to develop relatively concrete and specific means to implement the strategic plan.

• Who does it: middle-level managers often engage in tactical planning
• Purpose: translate strategic goals into more concrete actions
• Time frame: one to three years

⚙️ Operational planning (first-line)

Operational planning generally assumes the existence of organization-wide or sub-unit goals and objectives and specifies ways to achieve them.

• Time frame: short-range (less than a year)
• Purpose: develop specific action steps that support the strategic and tactical plans
• Who does it: first-level managers

Don't confuse: operational planning does not set the overall direction; it assumes goals already exist and focuses on day-to-day execution.

🚨 Contingency and crisis planning

Contingency and Crisis Planning are plans for what actions to take when things go wrong.

• Why needed: plans may be flawed, or something in the environment may shift unexpectedly
• What successful managers do: anticipate and plan for the unexpected
• Dealing with uncertainty: requires contingency planning and crisis management

Example: Perhaps your plans were flawed, or maybe something in the environment shifted unexpectedly—having a backup plan helps you respond quickly.

🧠 Managerial decision-making

🧠 What decision-making is

Decision-making is the action or process of thinking through possible options and selecting one.

Why it matters:

• Managers are continually making decisions
• The quality of decision-making has an impact (sometimes quite significant) on organizational effectiveness and stakeholders
• Stakeholders: all individuals or groups affected by an organization (customers, employees, shareholders, etc.)

🎯 Decision-making impact by level

Top management team:

• Regularly make decisions affecting the future of the organization and all stakeholders
• Examples: deciding whether to pursue a new technology or product line
• Impact: a good decision can enable the organization to thrive and survive long-term; a poor decision can lead to bankruptcy

Lower-level managers:

• Generally have a smaller impact on organizational survival
• Can still have tremendous impact on their department and workers
• Example: a first-line supervisor charged with scheduling workers and ordering raw materials

Adverse outcomes from poor lower-level decisions:

• Reduced productivity (too few workers or insufficient supplies)
• Increased expenses (too many workers or too many supplies, especially if supplies have limited shelf life or are costly to store)
• Frustration among employees, reduced morale, and increased turnover (costly for the organization)

Don't confuse: lower-level decisions are unlikely to drive the entire firm out of existence, but they can still cause significant departmental problems.

🔍 Decision-making process

The excerpt describes decision-making as a process:

1. Define a problem
2. Analyze possible solutions
3. Select the best outcome

Example scenario: You're upset because your midterm grades are much lower than hoped. You're in trouble academically, your business-project team is annoyed because you're not pulling your weight, your lacrosse coach is upset because you've missed practices, the mountain-biking club (where you're president) is talking about impeaching you, and your significant other feels ignored.

Application: use the three-step process to define the problem (overcommitted, poor time management), analyze solutions (drop an activity, improve time management, get help), and select the best outcome.

🛠️ Managerial skills for planning

🛠️ Overview of required skills

To be a successful manager and planner, you must master several skills:

• Entry-level: technical competence at assigned tasks
• To advance: strong interpersonal and conceptual skills
• Throughout career: communicate ideas clearly, use time efficiently, reach sound decisions

Key insight: the relative importance of different skills varies from job to job and organization to organization, but you'll need them all to some extent to forge a managerial career.

🔧 Technical skills

Technical skills are the ones you need to perform specific tasks.

• When used most: you'll probably be hired for your first job based on technical skills; you'll use them extensively during your early career
• Examples: accounting major uses knowledge to prepare financial statements; marketing degree holder at ad agency uses promotion knowledge to prepare ad campaigns
• Also useful: when you move up to first-line managerial job and oversee task performance of subordinates
• How acquired: generally acquired during formal education; also developed through job training and work experience

🤝 Interpersonal skills

Interpersonal skills (also known as relational skills) are the ability to get along with and motivate other people.

• When critical: as you move up the corporate ladder, you can't do everything yourself; you must rely on others to help achieve goals
• Who needs them most: managers in mid-level positions
• Why mid-level managers need them: they report to top-level managers while overseeing first-line managers, so they need strong working relationships with individuals at all levels and in all areas
• What they enable: foster teamwork, build trust, manage conflict, encourage improvement

Key insight: more than most other managers, mid-level managers must use "people skills."

💬 Communication skills

Communication skills are the ability to communicate, both orally and in writing.

• Why crucial: effective communication skills are crucial to just about everyone
• How you're judged: at all levels, you'll often be judged on your ability to communicate
• Oral communication: whether talking informally or making a formal presentation, you must express yourself clearly and concisely
• What reduces influence: talking too loudly, rambling, using poor grammar
• Written communication: confusing and error-riddled documents (including emails) don't do your message any good and will reflect poorly on you

🧩 Conceptual skills

Conceptual skills are the ability to reason abstractly and analyze complex situations.

• Who needs them most: managers at the top, responsible for deciding what's good for the organization from the broadest perspective
• What senior executives do: often called on to "think outside the box"—arrive at creative solutions to complex, sometimes ambiguous problems
• Requirements: both strong analytical abilities and strong creative talents

⏰ Time-management skills

Time management skills are techniques that help you plan and organize your time to complete tasks and achieve goals.

Why needed: managers face multiple demands on their time; days are usually filled with interruptions. Ironically, some technologies supposed to save time (voicemail, email) have increased workloads.

Risk: unless you develop time-management skills, you risk reaching the end of the day feeling you've worked a lot but accomplished little.

Common-sense suggestions:

• Prioritize tasks; focus on the most important things first
• Set aside a certain time each day to return phone calls and answer email
• Delegate routine tasks
• Don't procrastinate
• Insist that meetings start and end on time, and stick to an agenda
• Eliminate unnecessary paperwork

🎯 Decision-making skills

Decision-making skills involve defining a problem, analyzing possible solutions, and selecting the best outcome.

• Expectation: every manager is expected to make decisions, whether alone or as part of a team
• Process approach: drawing on decision-making skills is often a process
• Benefit: because the same process is good for making personal decisions, it can be practiced in everyday life

🔍 Environmental analysis for planning

🔍 What environmental analysis is

Business environment analysis is a systematic process that evaluates the internal and external factors impacting a business.

When done: before planning can be done, an analysis of the business environment should be conducted.

How conducted: researching and analyzing market conditions, competition, trends, and other external factors that could influence the business's strategy.

Why essential: environmental analysis plays an essential role in strategic planning by providing a clear and thorough understanding of external business factors and how they affect the company.

Benefits: analyses help the company:

• Take advantage of opportunities
• Lower risks
• Come up with good plans that lead to growth and success

🌍 PEST analysis (external scan)

PEST is the term used for an external environment scan, whereby a business collects and analyzes data on the political, economic, social, and technological aspects of the business environment in which the business operates.

Components:

• Political
• Economic
• Social (or Sociocultural)
• Technological

Extended versions: PEST can be extended to include:

• Legal
• Environmental
• Ethical

Acronyms: when extended, referred to as PESTEL, PESTLE, or PESTLEE. Many people refer to the analysis as a PEST analysis and include all the factors.

Purpose: scan the external environment to understand factors outside the organization's control that may affect strategy.

🔲 SWOT analysis (internal and external)

SWOT analysis is a framework for identifying and analyzing an organization's strengths, weaknesses, opportunities, and threats.

Primary goal: increase awareness of the factors that go into making a business decision or establishing a business strategy.

Four components:

Component	Internal/External	Positive/Negative	Description
Strengths	Internal	Positive	Internal positives you can control that often provide competitive advantage (e.g., product quality, effective processes, access to assets, competitive advantages)
Weaknesses	Internal	Negative	Adverse internal attributes that negatively take away from strengths (e.g., knowledge gaps, low-quality product, lack of money or assets, bad locations)
Opportunities	External	Positive	External factors that provide promise (excerpt cuts off here)
Threats	External	Negative	(Not fully described in excerpt)

Don't confuse: strengths and weaknesses are internal (you control them); opportunities and threats are external (environmental factors you must respond to).

📈 Industry life cycle awareness

Four stages of the industry life cycle (also called business cycle):

1. Expansion
2. Peak
3. Contraction
4. Trough

Why it matters: understanding industry dynamics informs management's investment decisions and risk management strategies.

How it helps: companies can manage operational and financial decisions and activities to position themselves to achieve important goals, including:

• Product research and development
• Implementing innovative technology
• Expanding a customer base

🔗 Efficiency, effectiveness, and interdependence

🔗 Key management concepts

Efficiency is using the least possible amount of resources to get work done.

Effectiveness is the ability to produce a desired result.

What managers need: managers need to be both efficient and effective in order to achieve organizational goals.

The four management functions (POLC—Planning, Organizing, Leading, Controlling):

• Serve as the pillars that allow organizations to meet their goals
• Are interdependent and equally important for ensuring smooth operation of any business
• Can help managers increase organizational efficiency and effectiveness

Why these functions endure: although there have been tremendous changes in the environment faced by managers and the tools used by managers, managers still perform these essential functions.

Best means of description: the management functions of planning, organizing, leading, and controlling are widely considered to be:

• The best means of describing the manager's job
• The best way to classify accumulated knowledge about the study of management

Planning's place: planning begins at the highest level of management and works its way down through the organization (strategic → tactical → operational).

🧭 Overview

🧠 One-sentence thesis

Environmental analysis systematically evaluates internal and external factors to help companies identify opportunities, reduce risks, and develop strategies that lead to growth and success.

📌 Key points (3–5)

• What it is: a systematic process researching market conditions, competition, trends, and external factors before planning begins.
• Why it matters: provides clear understanding of external business factors and how they affect the company, enabling better strategic planning.
• Three main tools: PEST (external environment scan), SWOT (internal strengths/weaknesses + external opportunities/threats), and competitor analysis.
• Common confusion: PEST focuses only on external factors (political, economic, social, technological, etc.), while SWOT includes both internal (strengths, weaknesses) and external (opportunities, threats) factors.
• When to use it: before planning can be done, to inform strategic decisions and take advantage of opportunities.

🔍 What environmental analysis does

🔍 The systematic process

Business environment analysis: a systematic process that evaluates the internal and external factors impacting a business.

• It is not just casual observation; it involves researching and analyzing market conditions, competition, trends, and other external factors.
• The analysis must be conducted before planning can be done.
• It influences the business's strategy by providing a foundation of understanding.

🎯 The role in strategic planning

• Environmental analysis plays an essential role in a company's strategic planning.
• It provides a clear and thorough understanding of external business factors and how they affect the company.
• Analyses help the company:
  • Take advantage of opportunities
  • Lower risks
  • Come up with good plans that lead to growth and success

🌍 PEST Analysis: scanning the external environment

🌍 What PEST examines

PEST: an external environment scan whereby a business collects and analyzes data on the political, economic, social, and technological aspects of the business environment in which the business operates.

• PEST stands for:
  • Political
  • Economic
  • Social
  • Technological
• The excerpt emphasizes this is an external environment scan.

📋 Extended versions: PESTEL/PESTLE/PESTLEE

• PEST can be extended to include additional external factors:
  • Legal
  • Environmental
  • Ethical
• When these are included, the acronym becomes PESTEL, PESTLE, or PESTLEE.
• Many people refer to the analysis as a PEST analysis and include all the factors mentioned.
• Don't confuse: despite different acronyms, they all refer to the same type of external environment scan with varying levels of detail.

🔲 SWOT Analysis: internal and external factors

🔲 What SWOT covers

SWOT analysis: a framework for identifying and analyzing an organization's strengths, weaknesses, opportunities, and threats.

• The four letters stand for:
  • Strengths
  • Weaknesses
  • Opportunities
  • Threats
• The primary goal is to increase awareness of the factors that go into making a business decision or establishing a business strategy.

💪 Strengths (internal, positive)

• Strengths are internal positives about your company that you can control.
• They often provide a competitive advantage.
• Examples from the excerpt:
  • Quality of your product
  • Effectiveness of your processes
  • Access to physical or team assets
  • Other competitive advantages

⚠️ Weaknesses (internal, negative)

• A Weakness is an adverse internal attribute that negatively takes away from your Strengths.
• Examples from the excerpt:
  • Knowledge gaps on your team
  • Low-quality product
  • Lack of money or other tangible assets
  • Bad locations

🌟 Opportunities (external, positive)

• An Opportunity is an external factor that provides promise or is likely to contribute to your potential success.
• Examples from the excerpt:
  • Growth rate in your industry
  • Specific laws or policies that will benefit the need for your product
  • Positive customer feedback
  • Technological advancements

🚨 Threats (external, negative)

• A Threat is an external factor that you have no control over, which could negatively impact your success.
• These are typically acknowledged so that you can provide a plan to overcome each one.
• Examples from the excerpt:
  • Potential future competitors
  • Costs of supply
  • Upcoming market trends
  • Negative technological changes
  • Upcoming regulations or laws

🔄 How to distinguish internal vs external in SWOT

Category	Internal or External	Controllable?	Positive or Negative
Strengths	Internal	You can control	Positive
Weaknesses	Internal	You can control	Negative
Opportunities	External	You have no control	Positive
Threats	External	You have no control	Negative

• Don't confuse: Strengths and Weaknesses are about your company (internal); Opportunities and Threats are about the environment (external).

🏢 Competitor Analysis

🏢 What it examines

Competitor analysis: examining similar brands in the same industry to gain insight into other companies' offerings, brands, sales, and marketing approaches.

• It focuses on similar brands in the same industry.
• The goal is to gain insight into:
  • Other companies' offerings
  • Brands
  • Sales approaches
  • Marketing approaches
• The excerpt mentions the Five Forces Analysis as one method for competitor analysis.
• Example: applying the Five Forces Analysis to a coffee shop within the coffee industry to understand competitive dynamics.

🧭 Overview

🧠 One-sentence thesis

Organizing is the management function that coordinates and allocates a firm's resources by developing a structure for people, positions, and departments to maximize information flow and work efficiency.

📌 Key points (3–5)

• What organizing involves: dividing tasks, grouping jobs and employees, and assigning authority and responsibilities to carry out plans.
• Organizational structure tools: organizational charts depict reporting relationships, chain of command, and span of control (the number of direct subordinates a manager can manage).
• Job design vs departmentalization: organizing happens at two levels—individual job design (how tasks are assigned) and departmentalization (how jobs are grouped into units).
• Common confusion: functional vs divisional structures—functional groups by business function (e.g., marketing, finance), while divisional groups by product, customer, process, or geography; each has trade-offs between specialization and flexibility.
• Modern balance: traditional specialization improves efficiency but can cause boredom and turnover, so modern approaches add empowerment, job enrichment, and teamwork.

🏗️ What organizing means and why it matters

🏗️ Definition and purpose

Organizing: the process of coordinating and allocating a firm's resources in order to carry out its plans.

• It involves developing a structure for people, positions, departments, and activities within the firm.
• Managers arrange structural elements to maximize the flow of information and the efficiency of work processes.
• The structure is the framework within which effort is coordinated, usually represented by an organization chart.

🎯 Three core activities

Managers accomplish organizing by:

1. Dividing up tasks (division of labour)
2. Grouping jobs and employees (departmentalization)
3. Assigning authority and responsibilities (delegation)

📊 Organizational charts and span of control

• Organizational charts provide a graphic representation of the chain of command within an organization.
• Span of control: the total number of direct subordinates that a manager can control or manage; varies depending on the complexity of the work.
• Vertical lines in an organizational chart represent flows of communication and authority relationships among people at various levels.
• Decisions about structure are called organizational design decisions.

🧩 Two levels of organizing work

🧩 Job design (individual level)

Job design: the process of defining duties, responsibilities, and how tasks should be carried out at the job level.

• Focuses on organizing activities into clusters of related tasks that can be handled by certain individuals or groups.
• Also called job specialization: dividing tasks into narrow, repetitive roles to improve efficiency.
• Traditional approach: specialization—breaking down activities into tasks that can be performed by individuals or groups.
• Problem with over-specialization: overly specialized jobs can lead to boredom, low job satisfaction, and high turnover.
  • Example: working on an assembly line, screwing lids onto jars all day, would likely become monotonous over time.
• Modern approach: many organizations now aim for a balance between specialization and variety, including empowerment, job enrichment, and teamwork to increase autonomy, engagement, and commitment.

🏢 Departmentalization (organizational level)

Departmentalization: grouping specialized jobs into meaningful units (divisions, departments, or groups).

• Managers decide how to group jobs into departments to coordinate work effectively.
• Depending on the organization and the size of the work units, they may be called divisions, departments, or just plain groups.
• Common methods include functional, product, customer, process, and geographic groupings.
• Large organizations often use a combination of these methods to best suit their operations.

🔧 Functional organizational structure

🔧 How it works

• Groups employees based on the type of work they perform or their area of expertise.
• Common departments include marketing, finance, operations, human resources, and IT.
• Widely used in small to medium-sized organizations and in companies with a single product or service line.

✅ Advantages

• Encourages specialization and expertise within each area.
• Promotes operational efficiency through clear roles and processes.
• Easier management and supervision within departments.

⚠️ Challenges

• Can create silos, where departments work independently and may not share information.
• May lead to poor communication across functions.
• Less flexibility in responding to specific product, customer, or regional needs.

🌐 Divisional organizational structure

🌐 How it works

Divisional organizational structure: a type of organizational structure where a company is divided into independent divisions that operate like their own companies within the larger organization; each division has its own resources, teams, and responsibilities.

🗂️ Four types of divisions

Type	How it groups	Example from excerpt
Product divisions	By product lines	General Motors uses product-based divisions for Buick, Cadillac, Chevrolet, and GMC
Customer divisions	By customer needs	Johnson & Johnson is divided into consumer business, pharmaceuticals, and professional business
Process divisions	By production/service processes	Bowater Thunder Bay has several steps in production and opts for a process division structure
Geographical divisions	By regional location	Adidas is set up to operate effectively in the five regions of the world where it operates

✅ Advantages

• Focus and Accountability: Each division operates like its own business unit, making it easier to focus on specific goals and be accountable for results.
• Responsiveness to Markets: Divisions can quickly respond to changes in customer needs, regional demands, or product trends.
• Improved Coordination Within Divisions: Having all necessary functions (marketing, production, etc.) within the same division allows for better coordination.
• Flexibility and Innovation: Divisions can experiment and innovate without affecting the entire organization.

⚠️ Disadvantages

• Duplication of Resources: Each division may have its own departments, leading to inefficient use of resources and higher costs.
• Inconsistent Company Policies: Different divisions may develop their own ways of doing things, leading to inconsistency across the organization.
• Limited Communication Across Divisions: Divisions may focus on their own goals and not share knowledge or best practices with each other.
• Potential for Internal Competition: Divisions may compete for resources or recognition, which can harm collaboration and overall company unity.

🔍 Don't confuse functional vs divisional

• Functional structure: groups by business function (marketing, finance, HR)—good for specialization but can create silos.
• Divisional structure: groups by product, customer, process, or geography—good for responsiveness and accountability but can duplicate resources and create inconsistency.
• The excerpt notes that large organizations often use a combination of these methods.

🏭 Real-world example: 3M's structure

🏭 3M's hierarchical and departmental approach

• Corporate level: mainly hierarchical structure due to large-scale operations in multiple industries; requires strong command and control.
• Departmental level: maintains a departmental organizational structure under the larger corporate hierarchical structure to ensure different businesses are properly managed.
• Variation within departments: some departments have a matrix structure, while others are more hierarchical.
  • Example: the matrix organizational structure is used in R&D to support 3M's innovation through employee contributions.
• 3M has operations in different types of markets, such as healthcare, electronics and communications, and transportation, with diverse competitors including General Electric.

🧭 Overview

🧠 One-sentence thesis

Leading is the management function that provides direction and motivation to employees at all organizational levels, and effective leaders adapt their style to match employee needs while using various power sources and motivational techniques to achieve organizational goals.

📌 Key points (3–5)

• What leading means: providing focus and direction to others and motivating them to achieve organizational goals; anyone can be a leader, not just managers.
• Leadership styles vary: four basic styles (Autocratic, Democratic, Transformational, Free-rein) work better in different situations and with different employee maturity levels.
• Common confusion: managers vs. leaders—managers are designated leaders by structure and may use coercion, while leaders can be anyone who influences others by choice.
• Motivation is individual: employees are motivated by different factors (intrinsic vs. extrinsic) at different life stages, requiring managers to understand multiple motivational theories.
• Culture and control matter: corporate culture shapes how leadership works, and the controlling function ensures performance aligns with standards through a five-step process.

👥 Leadership fundamentals

👤 Leaders vs. managers

A leader can be anyone in an organization, regardless of position, who is able to influence others to act or follow, often by their own choice.

Managers are designated leaders according to the organizational structure, but may need to use negative consequences or coercion to achieve change.

• The key distinction is influence method: leaders inspire voluntary action, managers may rely on formal authority.
• Don't confuse: having a management title doesn't automatically make someone an effective leader.
• Organizations need strong leadership at all levels—top, middle, and supervisory—to meet goals and remain competitive.

🎯 What leaders do at different levels

Level	Leadership role
Top managers	Set, share, and gain support for company direction and strategy—mission, vision, values
Middle and supervisory managers	Direct employees daily as they carry out plans and work within the structure

🎨 Four basic leadership styles

👮 Autocratic style

Autocratic leaders are directive leaders, allowing for very little input from subordinates.

• These leaders prefer to make decisions and solve problems alone; subordinates implement solutions according to specific, detailed instructions.
• Information flows one direction: manager to subordinate.
• When it works well: emergencies, highly structured environments requiring quick decisive actions, new employees with little experience, military settings.
• Example: During a factory fire or equipment failure, the plant manager orders immediate evacuation without consulting the team.
• Drawbacks: Often perceived as narrow-minded and heavy-handed; unwillingness to share power, information, and decision-making.
• The trend today is away from this controlling style.

🤝 Democratic (Participative) style

Participative leaders use a democratic, consensual, consultative style. The leader encourages team participation and values group input before making decisions.

• Leaders share decision-making with group members and encourage discussion of issues and alternatives.
• When it works well: collaborative environments where creativity, buy-in, and team cohesion are critical.
• Example: A marketing team brainstorming ideas for a new product campaign—the leader facilitates discussions, gathers input, and makes the final decision based on consensus.

🔀 Three types of participative leadership

Type	How decisions are made	Best for
Democratic	Group members vote on final decision	Highly trained professionals (e.g., physicians' clinic)
Consensual	All parties must agree to final decision	Mediation situations (e.g., labor mediators)
Consultative	Leader consults subordinates but retains final authority	Assembly-line productivity improvements

⚡ Transformational style

Transformational leadership is a leadership style that can inspire positive changes in those who follow.

• Leaders are energetic, enthusiastic, and passionate.
• They convey a clear vision of group goals and have marked passion for the work.
• They make the group feel recharged and energized.
• Primary goals: inspire growth, promote loyalty, instill confidence in group members.
• Leaders help every member succeed by providing support, guidance, and inspiration.
• When it works well: industries undergoing change or organizations aiming for significant innovation.
• Example: A tech startup founder inspires the team to develop a groundbreaking app by sharing a compelling vision, mentoring employees, and encouraging risk-taking.
• Modern organizations prefer this style because team building and information sharing are important.
• Don't confuse: Leaders who can be both transactional and transformational are rare and in high demand.

🕊️ Free-rein (Laissez-faire) style

With this style, the leader provides minimal supervision, allowing employees to make decisions and work independently.

• Employees are assigned tasks and given free rein to figure out the best way to accomplish them.
• The manager doesn't get involved unless asked.
• Subordinates have unlimited freedom as long as they don't violate company policies.
• When it works well: highly trained professionals who are self-motivated and require little oversight (e.g., research laboratory, software development team).
• Example: A software development team self-manages their tasks and delivers results; the leader steps in only when issues arise.
• Drawbacks: If accompanied by unclear expectations and lack of feedback, employees may feel frustrated, perceive the manager as uninvolved or indifferent, or feel the manager is unwilling/unable to provide necessary structure.

🔄 Adaptive leadership approaches

🎯 Situational leadership

Situational leadership means selecting a leadership style that matches the maturity and competency levels of those completing the tasks.

• No leadership style is effective all the time.
• Effective leaders recognize employee growth and adapt their approach.
• Example: Newly hired employees may respond well to authoritative leadership until they understand job requirements; once established, they may perform better under participative or free-rein styles.
• Using situational leadership empowers employees.

💪 Employee empowerment

Empowerment means giving employees increased autonomy and discretion to make their own decisions, as well as control over the resources needed to implement those decisions.

• Participative and free-rein leaders use empowerment to share decision-making authority.
• When decision-making power is shared at all levels, employees feel greater ownership and responsibility for organizational outcomes.

⚡ Power and delegation

🔌 Five sources of power

Power is the ability to influence others to behave in a particular way.

To be effective leaders, managers must be able to influence others' behaviors through five primary power sources:

Power type	Source
Legitimate power	Individual's position in the organization
Reward power	Individual's control over rewards
Coercive power	Individual's ability to threaten negative outcomes
Expert power	Individual's extensive knowledge in one or more areas
Referent power	Individual's charisma and the respect/admiration they inspire

🤲 Delegating authority

Delegating is the process of entrusting work to subordinates, letting go, trusting—this is challenging for many managers but a necessary skill.

📊 Benefits of effective delegation

• Decrease manager's workload
• Increase productivity
• Empower employees
• Help employees develop new skills

🏢 Centralized vs. decentralized decision-making

Approach	How it works	Advantages	Disadvantages
Centralized	Done at top management level	Consistent decision-making	Lower-level managers feel underutilized; impedes development of decision-making skills
Decentralized	Spread throughout organization	Top management can focus on growth and long-term vision; engages more people; speeds up company growth	May increase conflict, duplicate work, and challenge consistent strategy execution

🎯 Motivating employees

🔥 Why motivation matters

• Motivated employees focus efforts on achieving specific goals.
• Manager's job is to motivate employees to do their best work.
• Benefits of motivated employees:
  • Call in sick less frequently
  • Are more productive
  • Less likely to convey bad attitudes to customers and coworkers
  • Stay in jobs longer, reducing turnover and hiring/training costs

🧠 Two types of personal motivation

Type	Source	Examples
Intrinsic	Comes from within	Enjoyment of doing a task, satisfaction of job well done, desire to achieve
Extrinsic	Comes from external factors	Pay, bonuses, avoiding punishment, gaining recognition/prestige, job perks

📚 Four major motivational theories

🏔️ Maslow's Hierarchy of Needs

According to Maslow's theory, the idea is that we need to satisfy lower-level needs before we move to the other levels; once we have satisfied said need(s), we move on to the next level as the previous one no longer satisfies us.

Five levels (highest to lowest):

1. Self-Actualization: Creativity, problem-solving, acceptance of facts
2. Esteem: Self-esteem, confidence, achievement, respect
3. Social: Love/belonging through friendship, family
4. Safety: Security of body, employment, resources, health, property
5. Physiological: Breathing, food, water, sleep

💼 Implications for managers

• (1) Not all employees are driven by the same needs
• (2) The needs that motivate individuals can change over time
• Managers should consider which needs different employees are trying to satisfy and structure rewards accordingly.
• Example: A new employee repossessing cars is motivated by money for food (physiological need); as a city councillor, the same person may prefer public recognition over a pay raise (esteem need).

⚖️ Herzberg's Two-Factor Theory

Herzberg divided work factors into two categories to understand employee satisfaction:

Motivation factors: Those factors that are strong contributors to job satisfaction.

Hygiene factors: Those factors that are not strong contributors to satisfaction but must be present to meet a worker's expectations and prevent job dissatisfaction.

Category	Nature	Examples	Effect
Motivation factors	Relate to the work itself and how employee performs it	Promotion opportunities, challenging work, recognition, advancement	Increase satisfaction and motivate better performance
Hygiene factors	Relate to the environment in which work is performed	Salary, working conditions, workspace, supervision	Poor hygiene increases dissatisfaction; good hygiene prevents dissatisfaction but doesn't motivate

Herzberg's message: Motivation requires a twofold approach—eliminating "dissatisfiers" (hygiene factors) and enhancing satisfiers (motivation factors).

Don't confuse: Fixing hygiene problems may alleviate dissatisfaction but won't necessarily improve satisfaction or motivation.

🎯 Vroom's Expectancy Theory

Expectancy theory proposes that employees will work hard to earn rewards that they value and that they consider "attainable."

Three conditions for motivation (employee must believe):

1. His or her efforts will result in acceptable performance (effort → performance link)
2. Acceptable performance will lead to the desired reward (performance → reward link)
3. The reward has value

Example: An insurance company pays $2,000 base salary plus $200 commission per policy sold above ten policies monthly. An agent will be motivated to sell more than ten policies when:

• The agent believes effort will result in policy sales
• The agent is confident that selling more than ten policies will result in the bonus
• The $200 bonus per policy is valuable to the agent

What weakens motivation:

• Company raises prices, making sales harder → agents less confident effort leads to performance
• Company adds a 90-day no-cancellation requirement → agents less confident performance leads to reward
• Bonuses cut from $200 to $25 → reward has less value

Manager takeaway: Offer rewards employees value, set reachable performance levels, and ensure a strong link between performance and reward.

⚖️ Adams' Equity Theory

The Equity Theory of motivation is the idea that what an individual receives for their work has a direct effect on their motivation. When applied to the workplace, it means an individual will generally aim to create a balance between what they give to the organization compared to what they get in return.

How it works:

• Employees analyze their contributions/inputs (hours worked, education, experience, work performance)
• They analyze their rewards/outcomes (salary, bonus, promotion, recognition)
• They create a contributions/rewards ratio
• They compare it to others

👥 Basis of comparison can be:

• Someone in a similar position
• Someone holding a different position in the same organization
• Someone with a similar occupation
• Someone who shares certain characteristics (age, education, experience)
• Oneself at another point in time

📊 Perceived equity vs. inequity

• Equity: Ratio of contributions to rewards is comparable to others → feel treated fairly
• Inequity: Ratio is out of balance → feel treated unfairly (usually conclude others are treated better)

Example: You spend 30 hours on a class report and get a C; your roommate spends 5 hours, ignores half the requirements, and gets a B+. You perceive inequity because your contributions/rewards ratio is worse than your roommate's.

🔧 What employees do when they perceive inequity

• Try to bring ratio into balance by:
  • Decreasing inputs (working fewer hours, not taking on additional tasks)
  • Increasing outputs (asking for a raise)
• If that fails:
  • Complain to supervisor
  • Transfer to another job
  • Leave the organization
  • Rationalize the situation

Manager takeaway: Focus on treating workers fairly, especially in determining compensation, which is a common basis of comparison.

🏢 Corporate culture

🌐 What corporate culture is

Corporate culture refers to the shared values, beliefs, attitudes, and practices that shape the social and psychological environment of a business.

• The leadership style of managers usually indicates the underlying philosophy or values of the organization.
• This set of attitudes, values, and standards distinguishes one organization from another.
• Culture evolves over time based on accumulated history, including the vision of founders.
• It influences how employees interact, make decisions, and work toward organizational goals.
• Strong corporate culture can drive employee engagement, enhance productivity, and align individual actions with company mission.

🔑 Key elements of corporate culture

• Core Values: Guiding principles that inform behaviors and decision-making
• Leadership Style: The approach leaders take to inspire and manage teams
• Communication: How information flows (formal and informal channels)
• Work Environment: The physical and emotional atmosphere
• Behavioral Norms: Expectations for conduct among employees and management

🗣️ The grapevine

The grapevine represents the informal communication network within an organization.

• A natural part of corporate culture where employees share information unofficially through casual conversations, rumors, or personal interactions.
• How culture shapes the grapevine:
  • In open, transparent cultures: grapevine less likely to spread harmful rumors because employees trust formal communication
  • In hierarchical or secretive cultures: reliance on grapevine increases as employees seek information not available through official channels

📈 Why culture matters

• Culture may be intangible but has tremendous impact on employee morale and company success.
• Example: Google discovered mothers were leaving at higher rates, improved parental leave policies, and reduced attrition by 50%. Google's analytical approach plus culture-building activities (town halls, support for transgender employees, unconscious-bias workshops) make it a safe and inclusive workplace.

🎛️ Management Function 4 = Controlling

📋 What controlling means

Controlling involves ensuring that performance does not deviate from standards.

• This function concerns the manager's role in taking necessary actions to ensure work-related activities are consistent with and contribute toward organizational and departmental objectives.
• Don't confuse: Controlling does not mean managers should attempt to control or manipulate personalities, values, attitudes, or emotions of subordinates.

🔄 The five-step control process

1. Set Performance Standards: Set standards by which performance will be measured (often stated in monetary terms like revenue, costs, profits, but also units produced, defective products, quality levels, customer service)
2. Measure Performance: Use appropriate methods to measure actual performance against set standards
3. Compare Performance to Standards: Compare actual performance against standards; identify any deviations
4. Determine Reasons for Deviations: Identify reasons for any deviations from standards
5. Take Corrective Action: Implement necessary corrective actions to address deviations and ensure continued alignment with organizational goals

Additional step: Use information gained from the process to set up future performance standards.

📊 How performance is measured

Measurement methods depend on performance standards and include:

• Financial statements
• Sales reports
• Production results
• Customer satisfaction
• Formal performance appraisals

🔍 Control techniques

An audit involves an examination and verification of records and supporting documents.

Audit type	What it provides
Budget audit	Information about where the organization is with respect to what was planned or budgeted for
Performance audit	Determines whether reported figures reflect actual performance

🎯 What managers control

• Financial criteria
• Production and operations processes
• Procedures for delivery of services
• Compliance with company policies
• Many other activities within the organization

⚙️ Requirements for effective controlling

• Requires plans: Planning provides necessary performance standards or objectives
• Requires clarity: Clear understanding of where responsibility for deviations from standards lies
• All levels involved: Managers at all levels engage in controlling to some degree

🧭 Overview

🧠 One-sentence thesis

Controlling ensures organizational performance stays aligned with standards through a systematic five-step process that enables managers to detect deviations and correct course before projects fail.

📌 Key points (3–5)

• What controlling is: ensuring performance does not deviate from standards—not about manipulating people, but about keeping work activities aligned with organizational objectives.
• The five-step control process: set standards → measure performance → compare to standards → determine reasons for deviations → take corrective action (and use information for future planning).
• Why controls matter: without project controls, managers cannot answer critical questions about people, quality, cost, and time, leading to project failure.
• Common confusion: controlling ≠ behavioral manipulation; it concerns work-related activities and alignment with goals, not controlling personalities or emotions.
• Benchmarking as specialized control: comparing practices and processes to other organizations to improve overall efficiency and effectiveness, not just one aspect of performance.

🎯 What controlling means

🎯 Definition and scope

Controlling involves ensuring that performance does not deviate from standards.

• This is the fourth management function (after planning, organizing, and leading).
• It applies to all levels of management, though the focus differs by level.
• The excerpt emphasizes that controlling is not about manipulating subordinates' personalities, values, attitudes, or emotions.
• Instead, it concerns the manager's role in ensuring work-related activities are consistent with and contribute toward organizational and departmental objectives.

🚫 What controlling is NOT

Don't confuse: Controlling in management ≠ control in the behavioral or manipulative sense.

• Managers should not attempt to control or manipulate the personalities, values, attitudes, or emotions of their subordinates.
• The function focuses on work activities and alignment with goals, not personal control.

🔄 The five-step control process

The excerpt describes controlling as a five-step cycle:

📏 Step 1: Set performance standards

• Establish the standards by which performance will be measured.
• Standards are often stated in monetary terms (revenue, costs, profits).
• They may also be stated in other terms: units produced, number of defective products, levels of quality or customer service.

📊 Step 2: Measure performance

• Use appropriate methods to measure actual performance against the set standards.
• Measurement can be done in several ways depending on the performance standards: financial statements, sales reports, production results, customer satisfaction, formal performance appraisals.

⚖️ Step 3: Compare performance to standards

• Compare the actual performance against the standards.
• Identify any deviations from the standards.
• This step reveals whether things are on track or off track.

🔍 Step 4: Determine reasons for deviations

• Identify the reasons for any deviations from the standards.
• Understanding why performance deviated is essential before taking action.
• Example: Perhaps your plans were flawed, or maybe something in the environment shifted unexpectedly.

🛠️ Step 5: Take corrective action

• Implement necessary corrective actions to address the deviations.
• Ensure continued alignment with organizational goals.
• Also useful: use the information gained from the process to set up future performance standards (feedback loop).

Why this matters: Through the control process, managers can catch when things don't go as planned and quickly course correct to keep the project on track.

🔗 Prerequisites and techniques for effective controlling

🗺️ Controlling requires planning

• Effective controlling requires the existence of plans, since planning provides the necessary performance standards or objectives.
• Without clear standards from planning, there is nothing to measure against.

🎯 Controlling requires clear responsibility

• Controlling also requires a clear understanding of where responsibility for deviations from standards lies.
• Managers must know who is accountable for which aspects of performance.

🔧 Traditional control techniques

The excerpt mentions two traditional control techniques:

Technique	What it examines	Purpose
Audit	Examination and verification of records and supporting documents	General verification
Budget audit	Financial records vs. planned/budgeted amounts	Shows where the organization is relative to what was planned
Performance audit	Whether reported figures reflect actual performance	Determines if numbers are accurate reflections of reality

🏭 Scope of controlling

Although controlling is often thought of in terms of financial criteria, managers must also control:

• Production and operations processes
• Procedures for delivery of services
• Compliance with company policies
• Many other activities within the organization

⚠️ The importance of project controls

❓ Why projects go off track without controls

The excerpt lists four key areas where lack of project controls causes problems:

Area	What goes wrong without controls
People	Questions arise about who's available, who's in charge of roles and responsibilities, who should own specific tasks
Quality	Expectations may not be met, items in project phases may be incomplete, things may not work along the way
Cost	Unforeseen fees may occur because of changes from stakeholders or miscalculations during planning
Time	Schedule delays, shifting priorities, clashes in resources, leading to unsatisfactory project results

💡 What controls provide

• Project controls provide information that allows managers to make informed and timely decisions that prevent project risks.
• A manager must keep things on track and within scope throughout the project.
• Without a project control process, it's difficult to answer important questions about the project, which may impact or complicate project success.

Example: If cost isn't controlled, a project might experience budget overruns due to stakeholder changes or planning errors; controls catch these issues early.

📈 Benchmarking as a specialized control activity

📈 What benchmarking is

Benchmarking involves comparisons to other organizations' practices and processes with the objective of learning and improvement in both efficiency and effectiveness.

• Benchmarking could be considered a specialized kind of control activity.
• Rather than controlling a particular aspect of performance (say, defects for a specific product), benchmarking aims to improve a firm's overall performance.

🔍 Three ways to conduct benchmarking

🔍 Public information monitoring

• Organizations often monitor publicly available information to keep tabs on the competition.
• Sources: annual reports, news articles, and other publicly available data.
• Example: In academia, universities and colleges often use published rankings tables to see how their programs compare on student satisfaction, salaries of graduates, and other important dimensions.

🔍 Direct collaboration with unrelated industries

• Organizations may work directly with companies in unrelated industries to compare similar business functions.
• Example: A manufacturer of aircraft would not likely have a great deal in common with a company making engineered plastics, yet both have common functions such as accounting, finance, information technology, and human resources.
• Companies can exchange ideas that help each other improve efficiency, often at a very low cost to either.

🔍 Benchmarking partnerships

• To compare performance more directly with competitors without depending only on public data, companies may join benchmarking partnerships.
• In these arrangements, an independent consultant gathers key data from all participants, anonymizes it, and shares summarized results with the group.
• This allows each company to assess how it measures up within the industry without disclosing its individual performance.

Don't confuse: Benchmarking is not just about monitoring one competitor or one metric; it's a systematic approach to learning from multiple sources to improve overall organizational performance.

🧭 Overview

🧠 One-sentence thesis

Entrepreneurship drives economic prosperity, innovation, and societal transformation by creating jobs, introducing new products and services, and empowering individuals to address global challenges.

📌 Key points (3–5)

• Economic impact: Entrepreneurs contribute to GDP growth, create employment directly and indirectly, and reduce unemployment through new business formation.
• Innovation driver: Entrepreneurs introduce groundbreaking ideas and technologies that solve societal problems and force existing businesses to improve.
• Quality of life improvement: Entrepreneurship raises standards of living through better products, higher incomes, improved infrastructure, and enhanced access to education and healthcare.
• Diversification and resilience: New businesses across various industries make economies less vulnerable to shocks and reduce dependence on single sectors.
• Social empowerment: Entrepreneurship provides opportunities for marginalized groups and enables social entrepreneurs to tackle issues like poverty, education, and climate change.

💼 Economic contributions of entrepreneurship

💰 GDP growth and job creation

Economic Growth and Job Creation: Entrepreneurs are critical drivers of economic development by establishing new businesses that contribute to GDP growth and generate employment opportunities.

• Jobs are created both directly (within the new business operations) and indirectly (through demand for suppliers, service providers, and other industries).
• This dynamism boosts local economies and reduces unemployment.
• Small and medium-sized enterprises (SMEs) are significant contributors to job creation in both developed and developing economies.
• Example: A startup creates jobs for its employees and also generates work for suppliers and service providers in the community.

📈 Income and wealth generation

• Entrepreneurs increase income levels by hiring employees who receive remuneration.
• This income gets circulated in the economy through spending and salaries, generating incremental wealth.
• Increased employment and higher earnings contribute to better national income through higher tax revenue and higher government spending.
• The excerpt emphasizes that this circulation of money improves standards of living across the community.

🌍 Historical impact

The excerpt notes that entrepreneurship has produced historically significant figures:

• Henry Ford and Thomas Edison gained places in history as small business founders.
• Bill Gates (Microsoft), Mike Lazaridis (Research in Motion), Steve Jobs (Apple Computer), and Larry Page and Sergey Brin (Google) changed the way global business is done today.

🚀 Innovation and advancement

💡 Technological breakthroughs

Innovation and Technological Advancement: Entrepreneurs often introduce groundbreaking ideas, products, and services that improve lives and solve societal problems.

• Entrepreneurs challenge traditional methods and encourage innovation and technological progress.
• Many technological breakthroughs originated from entrepreneurial ventures.
• The excerpt specifically mentions smartphones and e-commerce as examples.
• These innovations benefit consumers and drive competition, compelling existing businesses to adapt and improve.

🔄 Competitive pressure

• Entrepreneurial innovation forces existing businesses to improve their efficiency and offerings.
• This competitive dynamic further advances technology and efficiency across entire industries.
• The result is continuous improvement in products and services available to consumers.

🏘️ Societal transformation

🏠 Improved standard of living

Improved Standard of Living: Entrepreneurship leads to the development of goods and services that address consumer needs more effectively.

• Entrepreneurs make products more accessible, affordable, or efficient.
• Example: The excerpt mentions affordable transportation services like Uber and low-cost consumer goods offered by startups that improve daily life for millions.
• As businesses grow and incomes rise, employees and communities benefit from better infrastructure, education, and healthcare.

Broader societal changes:

• Higher expenditure on education
• Better sanitation
• Fewer slums
• Higher level of homeownership
• A large and diversified employment base makes society greater

🌱 Empowerment and social change

Empowerment and Social Change: Entrepreneurship empowers individuals, particularly marginalized groups, by providing opportunities to take control of their economic futures.

• Women-led businesses are transforming communities by creating jobs and addressing gender inequalities.
• Social entrepreneurs tackle pressing societal issues like poverty, education, and climate change through sustainable and innovative solutions.
• Example: Microfinance initiatives have empowered countless individuals to start businesses and improve their lives.
• Don't confuse: Social entrepreneurship focuses on addressing societal problems, not just profit maximization.

🛡️ Economic resilience

🔀 Diversification benefits

Economic Diversification and Resilience: Entrepreneurship encourages diversification by fostering businesses in various industries, including emerging sectors like renewable energy, biotechnology, and digital technologies.

• A diversified economy is less reliant on a single industry.
• This makes the economy more resilient to economic shocks.
• Example: In resource-dependent countries, encouraging entrepreneurship in non-resource sectors helps reduce vulnerability to fluctuations in global commodity prices.

🎯 Emerging sectors

The excerpt identifies key emerging sectors where entrepreneurship drives diversification:

• Renewable energy
• Biotechnology
• Digital technologies

These sectors represent new opportunities for economic growth and reduced dependence on traditional industries.

✅ Success factors for small businesses

📋 Strategic foundations

The excerpt identifies five key reasons small businesses succeed:

Success Factor	What It Means	Example from Excerpt
Clear Vision and Strong Planning	Well-defined business plan with realistic goals and growth strategy	A bakery with a unique product line tailored to health-conscious consumers attracts a loyal customer base
Financial Management	Monitoring expenses, optimizing pricing, securing adequate funding	A café maintaining detailed cash flow records and controlling costs can reinvest profits into expansion
Understanding Market and Customers	Focus on customer needs, preferences, and feedback	An e-commerce store offering personalized shopping experiences builds customer loyalty
Adaptability and Innovation	Adapting to changing trends and staying competitive	A clothing retailer that shifts to online sales during a pandemic ensures continued revenue
Effective Leadership and Teamwork	Skilled leaders who motivate teams and make informed decisions	A software startup with strong leadership and skilled employees can quickly scale operations

🎯 Proactive approach

• Small businesses must remain proactive and monitor performance.
• Success hinges on strategic planning, adaptability, customer focus, and sound financial management.
• Businesses must adapt to challenges to thrive in a competitive environment.

❌ Failure factors for small businesses

🚨 Main reason for failure

The main reason is the lack of research and offering a product or a service that there is no market for.

• This is identified as the primary cause of small business failure.
• Other factors contribute, but market research and product-market fit are fundamental.

📉 Internal failure factors

The excerpt identifies five key reasons small businesses fail:

1. Lack of Planning

• Poor business planning, unclear goals, or lack of market research.
• Without a solid business plan, owners struggle to define target audience, competitive strategy, or financial projections.
• Example: A restaurant opening without researching local demand or competition may struggle to attract customers.

2. Inadequate Funding

• Insufficient startup capital or poor financial management.
• Many small businesses underestimate costs or fail to secure necessary funding to sustain operations.
• Example: A retail store running out of cash before building a stable customer base will likely close.

3. Poor Marketing and Customer Understanding

• Failure to connect with target audience or market products effectively.
• Example: A business using outdated marketing strategies may not reach modern, digital-savvy customers.

4. Ineffective Management

• Inexperience, poor decision-making, or inability to delegate leads to operational inefficiencies.
• Example: A business owner handling everything alone may burn out and neglect crucial aspects of the business.

🌐 External failure factors

Economic or Market Challenges

• External factors like economic downturns, increased competition, or changing market trends.
• Example: A travel agency may struggle during a recession or global health crisis, such as COVID-19.

Don't confuse: Internal factors (planning, funding, management) are within the entrepreneur's control, while external factors (economic conditions, market changes) are environmental challenges that require adaptation.

🇨🇦 Small business context in Canada

📊 Definition and challenges

Companies with fewer than a hundred members of staff are considered small businesses in Canada.

Current challenges:

• As more consumers shop online, small companies often do not have the workforce or know-how to create an online presence.
• Many cannot compete with larger companies on pricing.
• As a result, many small Canadian companies are struggling and do not expect their sales to increase.

🏗️ Economic importance

Despite challenges, the excerpt emphasizes:

• Small businesses are the backbone of the Canadian economy.
• They make a significant contribution (though the excerpt text cuts off before completing this point).

This highlights the tension between the vital role of small businesses and the difficulties they face in adapting to modern market conditions.

🧭 Overview

🧠 One-sentence thesis

Small business success depends on strategic planning, financial management, market understanding, and adaptability, while failure typically stems from lack of research, inadequate funding, and poor planning—with the main reason being offering products or services for which there is no market.

📌 Key points (3–5)

• Main cause of failure: Lack of research and offering a product or service that there is no market for (42% of failures).
• Success factors: Clear vision, financial management, customer focus, adaptability, and effective leadership.
• Failure factors: Poor planning, inadequate funding, weak marketing, ineffective management, and external economic challenges.
• Common confusion: Many small businesses underestimate costs or fail to secure necessary funding, thinking they can sustain operations with personal funds (67% use personal funds, but this is not a long-term strategy).
• Canadian context: Small businesses (fewer than 100 employees) represent 98.1% of employer businesses, employ 63.8% of the workforce, but face challenges competing online with larger companies.

✅ Why Small Businesses Succeed

📋 Clear vision and strong planning

A well-defined business plan helps set realistic goals, understand market needs, and devise a growth strategy.

• Planning involves understanding the market, setting achievable goals, and creating a roadmap for growth.
• Without clear direction, businesses struggle to identify their target audience or competitive strategy.
• Example: A bakery with a unique product line tailored to health-conscious consumers can attract a loyal customer base.

💰 Financial management

• Successful businesses monitor expenses, optimize pricing, and secure adequate funding.
• Detailed financial tracking allows businesses to control costs and reinvest profits strategically.
• Example: A café maintaining detailed cash flow records and controlling costs can reinvest profits into expansion.

🎯 Understanding market and customers

• Businesses that focus on customer needs, preferences, and feedback often outperform competitors.
• Customer-centric approaches build loyalty and repeat business.
• Example: An e-commerce store offering personalized shopping experiences can build customer loyalty.

🔄 Adaptability and innovation

• Thriving businesses adapt to changing trends and innovate to stay competitive.
• Flexibility allows businesses to respond to unexpected challenges or market shifts.
• Example: A clothing retailer that shifts to online sales during a pandemic ensures continued revenue.

👥 Effective leadership and teamwork

• Skilled leaders who motivate teams, make informed decisions, and delegate effectively drive success.
• Strong leadership combined with skilled employees enables rapid scaling.
• Example: A software startup with a strong leadership team and skilled employees can quickly scale operations.

❌ Why Small Businesses Fail

📉 Lack of planning

Poor business planning, unclear goals, or a lack of market research often lead to failure.

• Without a solid business plan, owners struggle to define their target audience, competitive strategy, or financial projections.
• This is distinct from having a plan that fails—this is about having no plan at all.
• Example: A restaurant opening without researching local demand or competition may struggle to attract customers.

💸 Inadequate funding

• Insufficient startup capital or poor financial management can cripple a business.
• Many small businesses underestimate costs or fail to secure necessary funding to sustain operations.
• About 29% of small companies close because they run out of money.
• About 67% of small business owners use personal funds to keep the business running, which is not a sustainable long-term strategy.
• Example: A retail store running out of cash before building a stable customer base will likely close.

📢 Poor marketing and customer understanding

• Businesses that fail to connect with their target audience or market their products effectively see limited growth.
• Using outdated strategies prevents reaching modern customers.
• About 14% of failures are due to ignoring customers' needs.
• Example: A business using outdated marketing strategies may not reach modern, digital-savvy customers.

🔧 Ineffective management

• Inexperience, poor decision-making, or inability to delegate can lead to operational inefficiencies.
• About 23% of failures are due to not having the right team.
• Example: A business owner handling everything alone may burn out and neglect crucial aspects of the business.

🌍 Economic or market challenges

• External factors like economic downturns, increased competition, or changing market trends can negatively impact businesses.
• About 19% of failures are due to being out-performed by competition.
• Example: A travel agency may struggle during a recession or global health crisis, such as COVID-19.

🎯 The main reason for failure

• The main reason is lack of research and offering a product or service that there is no market for.
• About 42% of small businesses fail because they have not researched the market and are selling something customers are not interested in.
• Other contributing factors include pricing issues (18%), lack of focus (13%), and failure to make necessary changes (7%).

📊 Small Business Statistics in Canada

📈 Employment and economic impact

Metric	Data
Definition of small business	Fewer than 100 employees
Percentage of all employer businesses	98.1% (2021)
Percentage of Canadian workforce employed	63.8% (10.3 million people, 2021)
Medium-sized businesses employment	21.1% (3.4 million people)
Large businesses employment	15.1% (2.4 million people)
Contribution to GDP	Over half of Canada's GDP (small and medium-sized combined)

📉 Survival rates

• 21.5% of small businesses close before the end of their first year.
• About 50% of small businesses survive for five years.
• About 33% reach ten years in business.

👥 Business size and ownership

• About 73.9% of Canadian companies have fewer than 10 employees.
• 55.3% employ fewer than 5 people.
• 18.6% have between 5 and 9 employees.
• Baby boomers own 42% of Canadian companies (biggest business-owning age group).
• Millennials own 24% of all small companies (2019), and this number is growing.
• As of October 2021, there are about 3.5 million entrepreneurs and 901,794 small businesses in Canada.

🌐 Challenges and priorities

• Small companies often lack the workforce or know-how to create an online presence or pricing that can compete with larger companies.
• Many small Canadian companies are struggling and do not expect their sales to increase.
• About 58% of small business owners believe work-life balance is crucial for long-term survival.

🚀 Entrepreneurial Traits and Characteristics

🔑 Key traits

An entrepreneur is someone who starts, owns, and operates a business.

Entrepreneurs may not have all the skills needed to run a business successfully, so they might hire consultants, contract employees, or full-time employees to support tasks they lack skills for or don't have time to focus on.

🔥 Passion

• Work ethic and passion go hand in hand.
• It takes work ethic to keep the business strong, and passion to feel motivated enough to maintain that work ethic.
• The feeling of success is priceless and motivates entrepreneurs when they see great outcomes from their efforts.

🎲 Risk tolerance

• Taking risks helps businesses find new ways to differentiate themselves from the competition, especially in saturated markets.
• Even when risks don't have the intended result, entrepreneurs can apply valuable lessons to future decisions.
• Example: Microsoft's Bill Gates left Harvard during his sophomore year in 1975 to found the company, with a vision of "a computer on every desk and in every home"—something no one could have conceived of at the time.

💪 Persistence

• Successful entrepreneurs are comfortable with the possibility of failing, but they don't give up easily.
• They see failure as an opportunity to learn and grow.
• Many hypotheses turn out wrong, and some ventures fail altogether, but persistence means continuing to ask questions and work toward goals.

💡 Innovative

• Innovation is a characteristic some, but not all, entrepreneurs possess—fortunately, it's a strategic mindset that can be cultivated.
• Some of the most successful startups have taken existing products or services and drastically improved them to meet changing market needs.
• Companies that thrive are often built from the wild creativity of their creators.
• With aggressive competition, entrepreneurs are forced to come up with original ideas that differentiate their companies.
• Creative entrepreneurs consider the possibility that the traditional solution isn't good enough.

🎯 Three characteristics of entrepreneurial activity

Characteristic	Description
Innovation	Coming up with new ideas, pivoting, and adapting when a consumer or economic environment changes
Operating a Business	Understanding the functional areas of business, analyzing internal and external environments, making decisions, and more
Risk-taking	Being able to deal with risk; no guarantees of success; learning how to mitigate risks

🎯 Motivational factors

• Entrepreneurs are often motivated by much more than money.
• Most start their business to become their own boss.
• In BDC's 2019 survey, when asked why they became an entrepreneur:
  • 70% cited independence, autonomy, and flexibility (most popular answer).
  • About 1 in 2 mentioned passion or self-fulfillment.
  • 1 in 3 cited financial reasons.
• Three in four entrepreneurs said they had to deal with financial insecurity, significant stress, and lack of benefits.
• Yet, 90% were professionally satisfied.

🌟 Diversity of entrepreneurs

• Entrepreneurs are increasingly diverse.
• From a 2019 BDC survey of 1,025 Canadian business owners:
  • 28% were women, up from 11% 40 years ago.
  • Newcomers to Canada were twice as likely to start a business as Canadian-born counterparts.
  • The number of Canadians under 35 who started a business increased by 80% between 2014 and 2018.

🏷️ Types of Entrepreneurs

🏪 Small business entrepreneurship

• People interested in making a profit that supports their family and a modest lifestyle.
• They often run the business and work in it.
• They hire local employees and family members.
• Examples: Local grocery stores, hairdressers, small restaurants, small boutiques, consultants, plumbers, accountants.

🏢 Large company entrepreneurship

• Often a team of executives who know how to sustain innovation.
• Small business entrepreneurship can turn into this when the company grows quickly or when a large company acquires a small business.
• Examples: Microsoft, Google, Disney.

📈 Scalable startup entrepreneurship

• Look for things missing in the market and create solutions.
• Many start in Silicon Valley and are technology-focused.
• Seek rapid expansion and big profit returns.
• Examples: Facebook, Instagram, Uber.

🌍 Social entrepreneurship

• Want to solve social problems with their products and services.
• Main goal is to make the world a better place, not to make big profits.

A social entrepreneur does not start a company with their main goal being to make a profit; instead, their goal is to make a positive change in the world.

• Goals often align with the United Nations Sustainable Development Goals.
• Efforts may have local, national, or global impact.
• Focus areas: Reducing poverty, ending homelessness, fighting climate change, child rights restoration, access to health care and financial services, women's empowerment, community development.
• They might be for-profit or non-profit, operating under the umbrella of social enterprise or entrepreneurship.
• They often persuade societies, large organizations, and governments to encourage social transformation by addressing unmet needs and social issues.
• Example: Mark Marsolais-Nahwegahbow (Ojibwe) founded Birch Bark Coffee Company, offering organic, fair trade coffee, bringing sustainable revenue to his community, and pledging to devote profits to purchase water purifiers for reserves without clean drinking water.

💡 Innovative entrepreneurship

• Aim to change the way people live for the better.
• Tend to be very motivated and passionate.
• Look for ways to make their products and services stand out.
• Examples: Steve Jobs, Bill Gates.

💼 Hustler entrepreneurship

• Willing to work hard and put in constant effort.
• Aspirations motivate them, and they are willing to do what it takes to achieve goals.
• Have drive and determination and do not give up easily.

🔄 Imitator entrepreneurship

• Use other people's business ideas but work to improve them.
• Seek to make certain products and services better and more profitable.
• Have a lot of self-confidence and determination.
• Learn from others' mistakes.

🔬 Researcher entrepreneurship

• Like to do as much research as possible before starting a business.
• Believe that with the right preparation and information, they have a higher chance of success.
• Tend to rely on facts, data, and logic rather than intuition.

💰 Buyer entrepreneurship

• Use their wealth to fuel business ventures, usually through purchasing well-established businesses they think will be successful.
• Goal is to grow the businesses they acquire and expand their profits.

🆘 Necessity Entrepreneur

🆘 Definition and context

A necessity entrepreneur is someone who starts a business based on a need for income, out of necessity, because they cannot find employment, have lost their job, need to supplement their income, or require flexibility to attend to other demands in their lives.

• Some find business ideas to pursue after retirement or after being downsized.
• A typical necessity entrepreneur is over 50 years of age, has been unemployed for over a year, and sees the possibility of finding full-time employment dwindling.

🔍 How necessity entrepreneurs differ

• A business started of necessity is usually initiated through some sort of bad luck: job loss, redundancy, or even ill health.
• These entrepreneurs are hesitant because, in all honesty, they would rather be working for a large corporation with the guarantee of a monthly income.
• However, for whatever reason, that is not an option.
• They have particular knowledge or know a specific product that they think is of value to others.
• If the only way to use these specialties is to create their own business, that's what they do.
• Example: A parent with an autistic child who finds it difficult to work a full-time job and still provide the care and attention required to support their child decides to start a business for flexibility.

🧭 Overview

🧠 One-sentence thesis

Small businesses are the backbone of the Canadian economy, employing the majority of the workforce and contributing over half of GDP, yet they face high failure rates primarily due to lack of market research and inadequate funding.

📌 Key points (3–5)

• Definition in Canada: Small businesses are defined as companies with fewer than 100 employees; 73.9% have fewer than 10 employees.
• Economic importance: In 2021, small businesses represented 98.1% of all employer businesses, employed 63.8% of the Canadian workforce (10.3 million people), and contribute over half of Canada's GDP.
• High failure rates: 21.5% close within the first year, only 50% survive five years, and about 33% reach ten years.
• Main failure cause: 42% fail because they have not researched the market and are selling products or services customers are not interested in.
• Common confusion: While small businesses dominate in number and employment, many struggle to compete online with larger companies due to lack of workforce or know-how.

📊 Small Business Landscape in Canada

📊 Size and employment distribution

Small businesses in Canada: companies with fewer than 100 employees.

Breakdown by employee count:

• 73.9% of Canadian companies have fewer than 10 employees
• 55.3% employ fewer than 5 people
• 18.6% have between 5 and 9 employees

Employment distribution across business sizes (2021):

Business Size	% of Workforce	Number of People
Small businesses	63.8%	10.3 million
Medium-sized businesses	21.1%	3.4 million
Large businesses	15.1%	2.4 million

🏢 Market dominance

• In 2021, 98.1% of all employer businesses in Canada were small businesses
• Each small business may only employ a few people, but combined, they are the biggest employers in Canada
• Small and medium-sized companies contribute over half of Canada's GDP

💼 Current landscape (October 2021)

According to Start Up Canada:

• Approximately 3.5 million entrepreneurs in Canada
• 901,794 small businesses operating

⚠️ Survival and Failure Rates

⚠️ Timeline of business survival

The excerpt provides clear data on how many small businesses survive over time:

• First year: 21.5% of small businesses close before the end of their first year
• Five years: About 50% of small businesses survive for five years
• Ten years: About 33% get to celebrate ten years in business

Don't confuse: These are cumulative survival rates, not annual closure rates—the first year is the most critical period.

💸 Primary reasons for failure

Top failure factors with percentages:

Reason	Percentage	Explanation from excerpt
No market research	42%	Selling a service or product that customers are not interested in
Running out of money	29%	67% of owners use personal funds to keep business running (not sustainable long-term)
Wrong team	23%	Not having the right team
Competition	19%	Being out-performed by their competition
Pricing issues	18%	Problems with pricing strategy
Ignoring customers	14%	Ignoring the customers' needs
Lack of focus	13%	Not maintaining clear focus
Failure to adapt	7%	Failure to make necessary changes

🔍 The main culprit

The excerpt emphasizes: "the main reason is the lack of research and offering a product or a service that there is no market for."

Example: A restaurant opening without researching local demand or competition may struggle to attract customers.

🎯 Success Factors

🎯 Clear vision and strong planning

A well-defined business plan helps set realistic goals, understand market needs, and devise a growth strategy.

• Without a solid business plan, owners struggle to define their target audience, competitive strategy, or financial projections
• Example: A bakery with a unique product line tailored to health-conscious consumers can attract a loyal customer base

💰 Financial management

Successful businesses monitor expenses, optimize pricing, and secure adequate funding to manage operations and growth.

• Many small businesses underestimate costs or fail to secure necessary funding to sustain operations
• Example: A café maintaining detailed cash flow records and controlling costs can reinvest profits into expansion
• Counter-example: A retail store running out of cash before building a stable customer base will likely close

👥 Understanding the market and customers

Businesses that focus on customer needs, preferences, and feedback often outperform competitors.

• Failure to connect with target audience or market products effectively leads to limited growth
• Example: An e-commerce store offering personalized shopping experiences can build customer loyalty
• Counter-example: A business using outdated marketing strategies may not reach modern, digital-savvy customers

🔄 Adaptability and innovation

Thriving businesses adapt to changing trends and innovate to stay competitive.

• External factors like economic downturns, increased competition, or changing market trends can negatively impact businesses
• Example: A clothing retailer that shifts to online sales during a pandemic ensures continued revenue
• Counter-example: A travel agency may struggle during a recession or global health crisis, such as COVID-19

👔 Effective leadership and teamwork

Skilled leaders who motivate teams, make informed decisions, and delegate effectively can drive success.

• Inexperience, poor decision-making, or inability to delegate can lead to operational inefficiencies
• Example: A software startup with a strong leadership team and skilled employees can quickly scale operations
• Counter-example: A business owner handling everything alone may burn out and neglect crucial aspects of the business

🌐 Current Challenges

🌐 Digital competition struggle

As more consumers are shopping online, small companies face specific challenges:

• Often do not have the workforce to create an online presence
• Lack the know-how to create competitive online pricing
• Cannot compete with larger companies in the digital space
• As a result, many small Canadian companies are struggling and do not expect their sales to increase

📈 Owner perspectives and demographics

Work-life balance:

• About 58% of small business owners believe a work-life balance is crucial for long-term survival

Ownership by age group (2019 data):

• Baby boomers: 42% of Canadian companies (biggest business-owning age group)
• Millennials: 24% of all small companies (growing number)
• Between 2014 and 2018, the number of Canadians under 35 who started a business increased by 80%

Diversity trends:

• 28% of entrepreneurs were women in 2019, up from 11% forty years ago
• Newcomers to Canada were twice as likely to start a business as their Canadian-born counterparts

🚀 Entrepreneurial Traits

🚀 Who is an entrepreneur

Entrepreneur: someone who starts, owns, and operates a business.

• It is difficult to generalize about the kind of people attracted to starting their own business because entrepreneurs are increasingly diverse
• Entrepreneurs may not have all the skills they need to run a business successfully

🛠️ Compensating for skill gaps

When entrepreneurs lack certain skills, they have options:

• Hire a consultant for specialized tasks
• Hire a contract employee for temporary needs
• Hire a full-time employee for ongoing support

Example scenarios from the excerpt:

• If accounting is your weakness, hire an accountant, payroll service, or bookkeeper
• If sales or marketing are not skills you have developed, hire a salesperson or contract a marketing company

Important note: While hiring consultants, services, or employees does cost money, the excerpt states "you can rest assured it is being done accurately, and the investment should pay off."

🔥 Key trait: Passion

"Work ethic and passion go hand in hand. It takes a work ethic to keep the business strong, and it takes passion to feel motivated enough to maintain a good work ethic. That feeling of success is priceless, and it's how entrepreneurs feel when they see great outcomes from the effort they put into their work."

🎲 Key trait: Risk tolerance

Taking risks helps businesses find new ways to differentiate themselves from the competition, which is especially helpful in saturated markets.

🧭 Overview

🧠 One-sentence thesis

Entrepreneurs succeed through a combination of key personal traits—passion, risk tolerance, persistence, and innovation—alongside three core characteristics: innovating, operating a business, and managing risk, driven primarily by motivations of independence rather than money alone.

📌 Key points (3–5)

• Four key traits: passion (work ethic + motivation), risk tolerance (willingness to differentiate and learn from failure), persistence (learning from mistakes), and innovation (creative problem-solving).
• Three characteristics of entrepreneurial activity: innovation (adapting to change), operating a business (understanding functional areas), and risk-taking (dealing with uncertainty).
• Primary motivation: 70% of Canadian entrepreneurs cite independence, autonomy, and flexibility—not financial gain—as their main driver.
• Common confusion: entrepreneurs don't need all skills themselves; they can hire consultants or employees to fill gaps (e.g., accounting, marketing).
• Reality check: 90% report professional satisfaction despite facing financial insecurity, stress, and lack of benefits.

🎯 The Four Key Traits

🔥 Passion

"Work ethic and passion go hand in hand. It takes a work ethic to keep the business strong, and it takes passion to feel motivated enough to maintain a good work ethic."

• Passion fuels the work ethic needed to sustain a business.
• The feeling of success from effort creates motivation to continue.
• Without passion, maintaining the necessary work ethic becomes difficult.

🎲 Risk Tolerance

Risk tolerance: the willingness to take chances that may not have guaranteed outcomes.

• Why it matters: Taking risks helps businesses differentiate from competitors, especially in saturated markets.
• Even failed risks provide valuable lessons for future decisions.
• Example: The excerpt cites Bill Gates leaving Harvard in 1975 to found Microsoft—his vision of "a computer on every desk and in every home" was unimaginable at the time, but the risk paid off.
• Don't confuse: Being comfortable with failure doesn't mean giving up easily; it means viewing failure as a learning opportunity.

💪 Persistence

• Entrepreneurs see failure as an opportunity to learn and grow, not as a reason to quit.
• Many hypotheses turn out wrong, and some ventures fail completely.
• What makes the difference: Willingness to learn from mistakes, continue asking questions, and persist until reaching the goal.
• The excerpt emphasizes that successful entrepreneurs don't give up easily despite being comfortable with the possibility of failing.

💡 Innovative

Innovation: a strategic mindset that can be cultivated, involving drastically improving existing products or services to meet changing market needs.

• Not all entrepreneurs naturally possess this trait, but it can be developed.
• How it works: Successful startups often take existing products/services and drastically improve them.
• Creative entrepreneurs question whether traditional solutions are good enough.
• Why it's necessary: Aggressive competition forces entrepreneurs to come up with original ideas that differentiate their companies.

🏗️ Three Characteristics of Entrepreneurial Activity

🔄 Innovation

• Coming up with new ideas.
• Pivoting and adapting when consumer or economic environments change.
• This is about responsiveness to external conditions, not just creativity.

🏢 Operating a Business

• Understanding the functional areas of business.
• Analyzing internal and external environments.
• Making decisions across various business domains.
• Practical note: If you lack certain skills (accounting, sales, marketing), you can hire consultants, contract employees, or full-time staff to fill those gaps.
• The investment in hiring specialists should pay off through accuracy and better outcomes.

⚠️ Risk-taking

• No guarantees that the business will be successful or remain successful.
• Entrepreneurs must learn how to mitigate risks.
• This is distinct from risk tolerance (a trait)—this is about actively managing uncertainty.

🎯 What Drives Entrepreneurs

🗽 Independence Over Money

Survey findings from 1,025 Canadian business owners (2019):

Motivation	Percentage
Independence, autonomy, and flexibility	70%
Passion or self-fulfillment	~50%
Financial reasons	~33%

• The most popular answer for "why they became an entrepreneur" was independence—not money.
• This challenges the common assumption that financial gain is the primary driver.

😊 Satisfaction Despite Hardship

The reality of entrepreneurship:

• 75% deal with financial insecurity, significant stress, and lack of benefits.
• Yet 90% report professional satisfaction.
• This suggests that non-financial rewards (autonomy, passion, self-fulfillment) outweigh the difficulties for most entrepreneurs.

🏪 Types of Entrepreneurs

🏪 Small Business Entrepreneurship

• Goal: Make a profit that supports family and a modest lifestyle.
• Often run and work in the business themselves.
• Hire local employees and family members.
• Examples: Local grocery stores, hairdressers, small restaurants, boutiques, consultants, plumbers, accountants.

🏢 Large Company Entrepreneurship

• Teams of executives who know how to sustain innovation.
• Can evolve from small business entrepreneurship through rapid growth or acquisition.
• Examples: Microsoft, Google, Disney.

📈 Scalable Startup Entrepreneurship

• (The excerpt cuts off before completing this description.)

📊 Canadian Small Business Context

📊 Key Statistics (2021)

Metric	Value
Small businesses as % of all employer businesses	98.1%
Workforce employed by small businesses	63.8% (10.3 million people)
Small businesses with fewer than 10 employees	73.9%
Small businesses with fewer than 5 employees	55.3%

⚠️ Survival and Failure Rates

Survival:

• 21.5% close before the end of their first year.
• About 50% survive for five years.
• About 33% reach ten years in business.

Top reasons for failure:

• 42%: Haven't researched the market; selling products/services customers aren't interested in.
• 29%: Run out of money (67% use personal funds to keep running—not sustainable long-term).
• 23%: Not having the right team.
• 19%: Out-performed by competition.
• 18%: Pricing issues.
• 14%: Ignoring customers' needs.
• 13%: Lack of focus.
• 7%: Failure to make necessary changes.

👥 Demographic Trends

• 28% of business owners were women (up from 11% forty years ago).
• Newcomers to Canada were twice as likely to start a business as Canadian-born counterparts.
• Canadians under 35 starting businesses increased by 80% between 2014 and 2018.
• Baby boomers own 42% of Canadian companies; millennials own 24% (as of 2019).

🧭 Overview

🧠 One-sentence thesis

Entrepreneurs can be categorized into distinct types based on their goals, motivations, and approaches—ranging from small business owners focused on modest profits to social entrepreneurs prioritizing positive societal impact over financial gain.

📌 Key points (3–5)

• Nine main types: Entrepreneurs fall into categories including small business, large company, scalable startup, social, innovative, hustler, imitator, researcher, and buyer entrepreneurship.
• Motivation-based distinction: Necessity entrepreneurs start businesses due to job loss or income needs, while opportunity entrepreneurs identify market gaps and pursue growth.
• Social entrepreneurship focus: Social entrepreneurs prioritize solving societal problems (aligned with UN Sustainable Development Goals) over profit maximization.
• Common confusion: Not all entrepreneurs are profit-driven innovators; some run modest local businesses, others improve existing ideas, and some start ventures out of necessity rather than opportunity.
• Hybrid models exist: Some ventures combine profit-making with social goals or emerge from necessity while supporting sustainable objectives.

🏢 The Nine Types of Entrepreneurship

🏪 Small business entrepreneurship

People interested in this category are probably interested in making a profit that supports their family and a modest lifestyle.

• Owners typically work in the business themselves and hire local employees or family members.
• Goal is sustainable income, not rapid expansion.
• Example: Local grocery stores, hairdressers, small restaurants, boutiques, consultants, plumbers, and accountants.

🏗️ Large company entrepreneurship

• Involves teams of executives who sustain innovation within established corporations.
• Can evolve from small businesses that grow quickly or through acquisition.
• Example: Microsoft, Google, and Disney represent this category.

🚀 Scalable startup entrepreneurship

• Entrepreneurs look for gaps in the market and create solutions to fill them.
• Seek rapid expansion and significant profit returns.
• Often technology-focused and concentrated in tech hubs.
• Example: Facebook, Instagram, and Uber.

🌍 Social entrepreneurship

People in this category want to solve social problems with their products and services. Their main goal is to make the world a better place and so they are not concerned with making big profits.

• Covered in detail in the next section due to its unique characteristics.

💡 Innovative entrepreneurship

• Aim to change how people live for the better.
• Highly motivated and passionate individuals.
• Focus on making products and services stand out from competitors.
• Example: Steve Jobs and Bill Gates exemplify innovative entrepreneurs.

💪 Hustler entrepreneurship

People who are willing to work hard and put in constant effort are considered hustler entrepreneurs.

• Motivated by aspirations and willing to do whatever it takes to achieve goals.
• Characterized by drive, determination, and persistence.
• Do not give up easily despite obstacles.

🔄 Imitator entrepreneurship

• Use others' business ideas but work to improve them.
• Seek to make products and services better and more profitable.
• Learn from others' mistakes.
• Possess high self-confidence and determination.

📊 Researcher entrepreneurship

• Conduct extensive research before starting a business.
• Believe proper preparation and information increase success chances.
• Rely on facts, data, and logic rather than intuition.

💰 Buyer entrepreneurship

• Use existing wealth to fuel business ventures.
• Typically purchase well-established businesses they believe will succeed.
• Goal is to grow acquired businesses and expand profits.

🌱 Social Entrepreneurship in Depth

🎯 Core mission and alignment

A social entrepreneur does not start a company with their main goal being to make a profit, instead, their goal is to make a positive change in the world.

• Goals often align with United Nations Sustainable Development Goals.
• Impact may be local, national, or global in scope.
• Focus areas include reducing poverty, ending homelessness, and fighting climate change.

🔧 Operating structure

• May operate as for-profit or non-profit entities.
• Function under the umbrella of social enterprise or entrepreneurship.
• Recognize societal issues and mobilize resources for the greater good.
• Use profits, grants, or fundraising to support their mission.

📋 Common focus areas

Social entrepreneurs typically address:

• Poverty reduction
• Child rights restoration
• Access to health care and financial services
• Women's empowerment
• Community development

Don't confuse: Social entrepreneurs still need focus and serious processes to be sustainable—admirable causes alone don't guarantee success without proper business planning.

🌟 Real-world example: Mark Marsolais-Nahwegahbow

The excerpt provides a specific case:

• Founded Birch Bark Coffee Company on Birch Island in the District of Manitoulin Island.
• Offers organic, fair trade, and small-producers-certified coffee.
• Brings sustainable revenue to his community.
• Pledged to devote profits to purchase certified water purifiers for reserves without clean drinking water.
• Aims to inspire young Indigenous people through example and speaking engagements.

🔀 Motivation-Based Categories

🆘 Necessity entrepreneur

A necessity entrepreneur is someone who starts a business based on a need for income, out of necessity, because they cannot find employment, have lost their job, need to supplement their income, or require flexibility to attend to other demands in their lives.

Typical profile:

• Often over 50 years of age
• May have been unemployed for over a year
• Sees full-time employment opportunities dwindling

Key characteristics:

• Business initiated through bad luck (job loss, redundancy, ill health)
• Would often prefer working for a large corporation with guaranteed income
• Hesitant but possess specific knowledge or product of value
• Start businesses because it's the only way to use their specialties

Example from excerpt: A parent with an autistic child who cannot work full-time due to caregiving demands. They obtain formal credentials in autism and behavioral science, then start a fee-based consulting service for families. This allows them to earn income while still providing necessary care for their child.

🎯 Opportunity entrepreneur

An opportunity entrepreneur is someone who sees an opportunity to make money, gets involved at the right time, and aims for business growth and economic development.

Example: Matt Horan and Rollasole:

• Identified problem: girlfriend complained about walking home in high heels
• Created solution: first vended shoe (Rollasole)
• Started in local nightclub, expanded online, in stores, and vending machines
• Formed partnership to bring product to the United States
• Catalyzed related innovations (vending machines for sneakers, dress shoes, flip flops)

Example: Tim Horton:

• Canadian hockey player who founded first Tim Horton doughnut shop in Hamilton, Ontario (1964)
• Grew into chain of franchises across Canada and United States
• Purchased by Burger King in 2014
• Now part of Restaurant Brands International Inc. (RBI) with over 29,000 restaurants in 100+ countries

🔄 Hybrid models

Don't confuse: Categories are not mutually exclusive. The excerpt notes that entrepreneurs may combine:

• Profit-making with socially sustainable goals
• Necessity-driven ventures that also support social objectives

Example: 31 Bits:

• Founded by college student Kallie Dovel after trip to Uganda
• Identified opportunity: uneducated single mothers with exceptional jewelry-making skills
• Created company employing Ugandan artisans at fair wages
• Promotes ethical sourcing, family time, dignified careers, and cultural preservation
• Mission: "Use fashion and design to drive positive change in the world by providing artisans with dignified opportunities and inspiring customers to live meaningful lives"
• Achieved commercial success (hundreds of stores, celebrity endorsements) while transforming artisans' lives

📚 Comparison Table

Type	Primary Goal	Key Characteristic	Example
Small business	Modest profit for family support	Owner works in business, hires locally	Local hairdresser, consultant
Large company	Sustained innovation	Executive teams in established corporations	Microsoft, Google, Disney
Scalable startup	Rapid expansion, big profits	Fill market gaps, tech-focused	Facebook, Instagram, Uber
Social	Solve social problems	Impact over profit	Birch Bark Coffee Company
Innovative	Change how people live	Highly motivated, passionate	Steve Jobs, Bill Gates
Hustler	Achieve aspirations	Hard work, constant effort	(Generic profile)
Imitator	Improve existing ideas	Learn from others' mistakes	(Generic profile)
Researcher	Minimize risk through preparation	Rely on facts, data, logic	(Generic profile)
Buyer	Grow acquired businesses	Use wealth to purchase established firms	(Generic profile)
Necessity	Generate needed income	Start due to job loss or life demands	Parent with autistic child
Opportunity	Capitalize on market timing	Identify gaps, pursue growth	Tim Hortons, Rollasole

🧭 Overview

🧠 One-sentence thesis

Starting a new business requires systematically working through eight key steps—from identifying an opportunity to planning for growth—while choosing the right legal structure that balances control, liability protection, and tax considerations.

📌 Key points (3–5)

• Eight-step process: The Business Development Bank of Canada outlines a structured path from opportunity identification through business growth.
• Business structure matters: Sole proprietorships, partnerships, corporations, and co-operatives each offer different trade-offs between ease of setup, liability protection, and cost.
• Common confusion: Unlimited vs. limited liability—sole proprietors and general partners are personally liable for all business debts, while corporations and co-ops provide legal separation.
• Multiple entry paths: Entrepreneurs can start from scratch, buy an existing business, purchase a franchise, or pursue acquisitions, each with distinct risk profiles.
• Growth requires dual focus: Success demands balancing day-to-day operations ("working in the business") with strategic planning ("working on the business").

🚀 The Eight-Step Startup Process

🔍 Step 1: Identify a Business Opportunity

• Find gaps in the market by identifying unmet needs or problems requiring solutions.
• Before spending money, validate your idea through research:
  • What are competitors doing?
  • How will your company stand out?
  • Who are your target customers, and will they buy?
  • How much capital is needed, and where will it come from?

🏗️ Step 2: Choose a Business Structure

Three common structures in Canada, each with distinct characteristics:

Structure	Key Feature	Main Advantage	Main Drawback
Sole proprietorship	Owner and business are legally the same	Easy and informal to create	Owner personally liable for all debts
Partnership	Two or more owners	Shared resources and responsibilities	Each partner liable for all partners' actions
Corporation	Separate legal entity from shareholders	Limited liability and easier fundraising	Higher setup costs ($1,000–$6,000+) and double taxation

📝 Step 3: Choose a Business Name

• Your name creates the first impression on customers.
• Key questions to ask:
  • Does it reflect what you sell?
  • Is it memorable?
  • Is it unique and available?
• Don't rush this decision—it's harder than it appears.

📋 Step 4: Create a Business Plan

A business plan: a document that explains how your business operates, summarizing structure, objectives, milestones, and financial performance.

• Used to secure funding, validate ideas, or guide operations.
• Includes research results, product/customer information, and strategic goals.
• Acts as a guide for you and others to understand how the business will succeed.

💰 Step 5: Obtain Business Financing

Two main financing categories:

• Debt financing: Personal funds, bank loans
• Equity financing: Investors receive partial ownership or decision-making participation

Other options include:

• Government grants and subsidies
• Family and friends
• Crowdfunding
• Business incubators or accelerators
• Venture capitalists or angel investors

🏢 Step 6: Choose a Commercial Space

Location needs vary by business model:

• Online-only: May work from home but need supplier and shipping arrangements
• Mobile operations: Set up where customers are (e.g., food trucks outside retail stores or rotating among company lunch hours)
• Brick-and-mortar: Consider buying vs. leasing, proximity to target market (increase sales) vs. proximity to suppliers (reduce costs)
• Don't forget licenses (for liquor, food) and insurance requirements

👥 Step 7: Hire Employees

• Small operations may not need employees initially (e.g., a hot dog stand owner working alone)
• Some entrepreneurs specifically create family-owned businesses to provide jobs for relatives
• As you grow, invest time in thorough job searches to find the right fit
• Consider using recruiting firms to vet candidates—costs money but saves time and reduces hiring mistakes

📈 Step 8: Grow Your Business

• The first year is the most challenging—when many businesses fail
• Balance two types of work:
  • Working in the business: Day-to-day operations
  • Working on the business: Planning for future growth
• Visit resources like BDC's "manage your growth" hub for guidance in early months

🏛️ Business Structure Deep Dive

👤 Sole Proprietorship

Sole proprietorship: a simple, unincorporated business owned and operated by one person.

• Complete control: Owner receives all profits and makes all decisions
• Full liability: Owner is personally responsible for all financial and legal obligations
• Easiest to start: Most common structure for new entrepreneurs
• Example businesses: independent photographers, small landscaping companies, freelance writers, personal trainers

🤝 Partnership

Partnership: a non-incorporated business owned by two or more people who share profits, responsibilities, and risks.

The unlimited liability problem:

• Each partner is personally liable not only for their own actions but for all partners' actions
• Example: If your partner in an architectural firm makes an error causing a structure to collapse, you can be personally sued for your personal assets
• This makes many people reluctant to enter partnerships

Partnership variations:

• General partnership: All partners have unlimited liability
• Limited Liability Partnership (LLP): Partners pool resources while limiting liability for other partners' professional negligence
• Limited partnership: At least one general partner with unlimited liability and at least one limited partner whose liability is limited to their investment

📜 Partnership Agreement

A well-planned agreement can lessen dispute impacts by specifying:

• Cash and contribution amounts from each partner
• Division of income or loss
• Partner responsibilities (who does what)
• Conditions for selling an interest
• Conditions for dissolving the partnership
• Conditions for settling disputes

🏢 Corporation

Corporation: a legal entity that separates the business from its owner/operator, with shareholders having limited liability.

Key advantages:

• Limited liability: Shareholders protected from business debts
• Fundraising ability: Can raise funds by selling stock
• Better loan access: Established corporations have advantages in securing bank loans
• Ownership transfer: Can sell shares without affecting business continuity

How corporations work:

• Shareholders own the company by buying stock (e.g., owning 30 of 100 shares = 30% ownership)
• Shareholders elect a board of directors
• Board oversees major policies, sets goals, hires/evaluates the CEO
• Board approves dividends (cash payments to shareholders)

The agency problem:

Agency problem: a conflict of interest inherent in a relationship where one party is supposed to act in the best interest of the other.

• Managers may prioritize career advancement over profitability
• Shareholders may prioritize profits over employee well-being
• Self-interest is difficult to prevent in these situations

Drawbacks:

• Higher setup costs: Filing, licensing, accounting, and attorney fees can total $1,000–$6,000 or more
• More regulation: Subject to greater governmental oversight
• Double taxation: Corporation pays taxes on earnings, then shareholders pay taxes on dividends received

🤲 Co-operative (for-profit and not-for-profit)

Co-operative: controlled by its members and structured to meet common needs rather than maximize shareholder profits.

Largest Canadian co-ops include:

• Desjardins (largest co-operative financial group)
• Sollio Co-operative Group (largest agri-food co-op)
• Federated Co-operatives (one of Canada's largest companies)
• South Country Co-op
• Vancity Co-op (Canada's largest community credit union)

Key features:

• Democratic control: One member, one vote (ensures input but may slow decision-making)
• Member participation required: All members must participate for success
• Member benefits: Special discounts, deals, education, training, services, sometimes dividends
• Surplus distribution: Revenue distributed proportional to members' use of services
• Shared risk: Members share profits and losses, potentially reducing risk tolerance

Member responsibilities:

• Contribute financially by purchasing membership shares and using services
• Participate in governance (attend meetings, vote, elect board)
• Follow bylaws and policies
• Offer improvement suggestions
• Volunteer time and serve on committees

📊 Business Structure Comparison Table

Characteristic	Sole-proprietorship	Partnership	Corporation	Co-operative
Ease of formation	High	High	Medium	Medium
Continuity	Low	Low	High	High
Protection against liability	Low	Low	High	High
Ease of raising money	Low	Medium	High	High
Government regulation	Low	Low	High	Medium

🛒 Alternative Business Entry Strategies

🍦 Franchising

Franchise business: a business where the owner (franchisor) grants licenses to licensees (franchisees) to operate the business at various locations.

Main financial elements:

• Franchise purchase fee: $20,000–$50,000 depending on license
• Minimum liquid capital:
  • Service-based: $50,000–$60,000
  • Facilities-based: $75,000–$100,000
• Franchise royalties: Ongoing fee of 4%–12% of location's profits
• Additional expenses: Commercial space, staffing, etc.

Best for: Individuals seeking lower risk and structured support while operating under a recognized brand (e.g., Baskin-Robbins, CrossFit)

🏪 Buying an Existing Business

• Provides immediate operations
• Comfortable for those managing an established system
• Requires thorough evaluation of business goals, risk tolerance, and market opportunities before acquisition

🤝 Acquisitions

Business acquisition: a financial transaction where one company buys the majority or all of another company's shares or assets, gaining control.

Key points:

• Can be amicable or hostile (against management's wishes)
• Buying more than 50% of shares gives effective control
• Complex arrangements requiring investment bank assistance due to legal and tax ramifications

Example: Microsoft's $68.7 billion acquisition of Activision Blizzard (2023) brought Call of Duty, World of Warcraft, and Candy Crush under Microsoft's umbrella, boosting its gaming presence and positioning it to compete with Sony.

🎯 Reasons for Acquisitions

🔗 Vertical Integration

• Buy suppliers or supply chain businesses
• Reduces costs and expands capabilities
• Boosts profits and reduces dependence on suppliers/distributors

↔️ Horizontal Integration

• Take over companies operating at the same industry level
• Expands size and diversifies product offerings
• Reduces competition and enables market expansion

🌍 Foreign Market Entry

• Buying an existing company in another country may be the easiest foreign market entry method
• Purchased business already has personnel, brand name, and intangible assets
• Ensures the acquiring company starts with an established presence

🔄 Choosing Your Entry Path

Approach	Best For	Key Advantage	Main Challenge
Start from scratch	Innovators with strong vision	Complete creative control	Highest risk and uncertainty
Buy existing business	Those wanting immediate operations	Established systems and customers	Due diligence required
Franchising	Risk-averse with capital	Recognized brand and support	Ongoing royalty fees
Acquisition	Established companies	Rapid market expansion	Complex legal/financial process

🧭 Overview

🧠 One-sentence thesis

Entrepreneurs must choose among starting from scratch, buying an existing business, or franchising, and can also grow through acquisitions, mergers, strategic alliances, or joint ventures, each with distinct legal structures, commitments, and risk profiles.

📌 Key points (3–5)

• Three ownership paths: starting from scratch (for innovators with high risk tolerance), buying an existing business (for immediate operations), or franchising (for lower risk with brand support).
• Franchise costs: include purchase fees ($20,000–$50,000), liquid capital requirements ($50,000–$100,000), ongoing royalties (4%–12% of profits), and operational expenses.
• Acquisitions vs mergers: acquisitions involve one company buying control of another (over 50% of shares), while mergers combine companies into a new single entity with shared stock.
• Common confusion: strategic alliances vs joint ventures—alliances keep companies independent without a new entity, while joint ventures create a separate legal entity with shared ownership and governance.
• Why companies combine: to gain market share, access technology, reduce costs, eliminate competition, enter new markets, or achieve economies of scale.

🏢 Starting and Owning a Business

🆕 Three paths to business ownership

The excerpt identifies three main approaches:

Path	Best for	Key characteristic
Starting from scratch	Innovators with strong vision, risk tolerance, creativity	Build everything new
Buying existing business	Those wanting immediate operations, comfortable managing established systems	Inherit operational infrastructure
Franchising	Individuals seeking lower risk, structured support	Operate under recognized brand

🏪 Franchising structure

A franchise business is a business where the owner grants licenses to licensees to operate the business (sell its products, provide services, and more) at a business location.

• The franchisor owns the brand; each location is a franchisee with its own management.
• Franchisees pay fees to "rent" the brand name.
• Example: Baskin-Robbins or CrossFit locations in multiple cities—each pays the franchisor to use the brand.

💰 Franchise financial requirements

Four main cost categories:

1. Franchise purchase fee: $20,000 to $50,000 depending on the license
2. Minimum liquid capital:
   • Service-based business: $50,000 to $60,000
   • Facilities-based business: $75,000 to $100,000
3. Franchise royalties: ongoing fee of 4% to 12% of the franchise location's profits
4. Additional expenses: commercial space (if applicable), staffing, and other operational costs

Don't confuse: the purchase fee is one-time, but royalties are ongoing payments based on profits.

🤝 Acquisitions: Buying Control

📊 What an acquisition is

A business acquisition is a financial transaction where one company buys the majority or all of another company's shares or assets, giving the acquiring company control over the target company.

• Control is gained by buying more than 50% of the target company's shares.
• Can be amicable (both companies agree) or hostile (against management's wishes).
• Complex arrangements requiring investment bank help due to legal and tax ramifications.

Example: Microsoft's acquisition of Activision Blizzard for $68.7 billion in 2023 brought gaming franchises (Call of Duty, World of Warcraft, Candy Crush) under Microsoft's control, boosting its gaming industry presence and positioning it to compete with Sony.

🎯 Seven reasons companies acquire others

1. Vertical integration: Buy suppliers or supply chain partners to reduce costs, expand capabilities, and reduce dependence on external parties
2. Horizontal integration: Take over companies at the same industry level to expand size, diversify products, reduce competition, and enter new markets
3. Enter foreign markets: Buying an existing company provides instant personnel, brand name, and intangible assets—easier than building from scratch
4. Cost of expansion: When physical/logistical constraints exist or resources are depleted, acquiring may be more cost-effective than expanding operations
5. Eliminate competition: Reduce excess capacity and focus on productive providers (though federal watchdogs monitor deals that may harm consumers through higher prices or lower quality)
6. Gain new technology: More cost-efficient than spending time and money to develop technology internally
7. Gain intellectual property: Acquire trademarks, patents, copyrights, and trade secrets

Don't confuse: vertical integration (buying suppliers/distributors in your supply chain) vs horizontal integration (buying competitors at your same level).

🔗 Mergers: Combining into One

🤝 What a merger is

A company merger is when two or more companies join together to form a new company with a single stock.

• Companies negotiate asset valuation and exchange ratio.
• Often thought of as equal split, but one company may end up with larger ownership percentage.
• Similar to acquisitions; often grouped together as "mergers and acquisitions (M&A)."

Key difference from acquisition: merger creates a new combined entity with single stock, rather than one company simply taking control of another.

🎯 Six reasons companies merge

1. Increase market share: Gain larger portion of the market
2. Access new technologies: Gain expertise, patents, or intellectual property
3. Gain economies of scale: Consolidate operations, reduce redundancies, streamline processes, improve profit margins
4. Diversify: Enter new markets or offer new products/services
5. Blend cultural values: Create more diverse and inclusive workforce
6. Enhance competitive position: Strengthen portfolio/services to better meet consumer needs

🤝 Strategic Alliances and Joint Ventures

🤝 Strategic alliance structure

A strategic alliance is a partnership between two or more businesses to work together on a common goal, while each company remains independent.

• Goal: share resources and capabilities to create mutual value (entering new markets, developing products, increasing innovation).
• Each company stays independent—no new entity created.

Two types:

• Equity strategic alliance: One company buys equity in another (partial acquisition)
• Non-equity strategic alliance: Companies collaborate without exchanging equity, each bringing resources

Example: Starbucks and Barnes & Noble partnership is a non-equity strategic alliance.

🏗️ Joint venture structure

A joint venture (JV) is a business collaboration in which two or more companies create a new, independent legal entity to achieve a specific business objective or undertake a particular project.

• Companies share ownership, profits, risks, and governance of the newly formed entity.
• Requires substantial capital investment and long-term commitment.
• Typically concludes when objective is met (unless parties extend).
• Terms outlined in private, confidential contract.
• Common form: project-based joint venture that dissolves upon project completion.

🇨🇦 Setting up joint ventures in Canada

Two main ways:

1. Partners agree on a contract setting out venture terms
2. Form a separate corporate entity

⚖️ Joint venture trade-offs

Advantages:

• Increased growth, productivity, and profits
• Reduced costs and risks
• Growth without borrowing funds or seeking outside investors
• Quick access to expertise

Disadvantages:

• Higher likelihood of conflicts
• Decreased control and flexibility through joint decision-making
• More widely shared knowledge, risking sensitive information communication to other parties

Example: Sony and Honda joint venture called "Afeela" to create electric vehicles, combining Sony's imaging/networks/entertainment expertise with Honda's mobility development/technology/sales skills (pre-orders in 2025, U.S. delivery in 2026).

🔍 Strategic alliance vs joint venture comparison

Aspect	Strategic Alliance	Joint Venture
Legal structure	No new entity formed	New independent entity created
Commitment	Flexible and less binding	Long-term and formal commitment
Risk and control	Risks and control are individual	Shared ownership, risks, and governance

Don't confuse: The key distinguishing feature is whether a separate legal entity is created—strategic alliances keep companies independent, while joint ventures create a new entity with shared ownership and decision-making authority.

🧭 Overview

🧠 One-sentence thesis

Strategic alliances and joint ventures enable companies to collaborate toward common goals while differing fundamentally in whether they create a new legal entity, with joint ventures forming separate organizations and strategic alliances maintaining partner independence.

📌 Key points (3–5)

• Strategic alliances allow companies to work together on common goals while remaining independent, sharing resources without forming a new entity.
• Joint ventures create a new, independent legal entity owned jointly by the partners, with shared profits, risks, and governance.
• Common confusion: The main difference is that joint ventures create a separate legal entity, while strategic alliances do not.
• Types of strategic alliances include equity alliances (one company buys equity in another) and non-equity alliances (companies collaborate without exchanging equity).
• Business planning tools like traditional business plans and business model canvases help entrepreneurs outline goals, strategies, and operations, with various support resources available from governments and institutions.

🤝 Strategic Alliances

🤝 What a strategic alliance is

A strategic alliance is a partnership between two or more businesses to work together on a common goal, while each company remains independent.

• The goal is to share resources and capabilities to create mutual value.
• Common objectives include entering new markets, developing new products, or increasing innovation.
• Each company maintains its separate legal identity throughout the partnership.

💼 Types of strategic alliances

Equity strategic alliance:

• One company buys equity in another company.
• Also known as a partial acquisition.
• Involves financial investment and ownership stake.

Non-equity strategic alliance:

• Two companies come together without exchanging equity.
• Each company brings its resources to the alliance.
• Example: The partnership between Starbucks and Barnes & Noble demonstrates this model.

🏢 Joint Ventures

🏢 What a joint venture is

A joint venture (JV) is a business collaboration in which two or more companies create a new, independent legal entity to achieve a specific business objective or undertake a particular project.

• Companies share ownership, profits, risks, and governance of the newly formed entity.
• Often requires substantial capital investment and long-term commitment.
• Typically concludes once the objective is met unless parties agree to extend the venture.

🛠️ How joint ventures work in Canada

Two main ways to set up a joint venture in Canada:

1. Partners agree on a contract that sets out the terms of the venture.
2. Form a separate corporate entity.

The arrangement leverages the strengths of each participant, often yielding mutual benefits.

Example: A hairstylist and a nail salon might collaborate in a JV to attract more customers and increase profits.

⚖️ Advantages and disadvantages

Advantages	Disadvantages
Increased growth, productivity and profits	Higher likelihood of conflicts arising
Reduced costs and risks	Decreased control and flexibility through joint decision-making
Growth opportunity without borrowing funds or seeking outside investors	More widely shared knowledge, leading to sensitive information being communicated to other parties
Quick access to expertise

🚗 Real-world examples

Sony and Honda "Afeela" joint venture:

• Collaboration between electronics company Sony and automobile company Honda.
• Goal: Create an electric vehicle combining Sony's expertise in imaging, networks, and entertainment with Honda's skills in mobility development, technology, and sales.
• Plans to take pre-orders in 2025 and deliver the vehicle in the U.S. in 2026.

Honda battery plant joint venture:

• Announced in 2022 to build a battery plant in Columbus, Ohio.
• Purpose: Produce lithium-ion EV batteries for Honda's electric vehicles.

🔍 Key Differences Between Strategic Alliances and Joint Ventures

🔍 Comparison table

Aspect	Strategic Alliance	Joint Venture
Legal Structure	No new entity formed	New independent entity created
Commitment	Flexible and less binding	Long-term and formal commitment
Risk and Control	Risks and control are individual	Shared risks, profits, and governance
Duration	Typically short to medium term	Often long-term
Examples	Co-branding agreements, research collaborations	Infrastructure projects, product development partnerships

⚠️ Don't confuse

The main difference is that a joint venture creates a separate legal entity, while a strategic alliance does not. This fundamental distinction affects commitment level, risk sharing, and governance structure.

📋 Business Planning Tools

📋 Traditional business plan

In its simplest form, a business plan is a guide that outlines goals for your business and how you plan to reach them.

Purpose and benefits:

• Helps you understand the direction of your business and the steps to get there.
• Having a solid business plan can help you grow up to 30% faster.
• Increases confidence regarding business health, even during crises.
• A business plan is not fixed but flexible and needs revision from time to time.

Key characteristic: There is no one right way to write a business plan; your approach depends on your industry and who is reading your plan.

📝 Nine sections of a traditional business plan

1. Executive Summary: The definitive recap of all information in the business plan, usually not exceeding two pages; serves as an elevator pitch to convince investors.

2. Company Description: List of goods and services, target market, short- and long-term goals, and brief company history.

3. Market Analysis: Details the target market including demographics, geographical location, consumer behavior, and market needs; confirms adequate demand exists.

4. Competitive Analysis: Research of major competitors to gain insight into their products, sales, and marketing tactics.

5. Management Plan: Outline of legal structure, management team, and human resource requirements; lists employees needed, remuneration, and external professionals.

6. Operating Plan: Overview of physical requirements such as office space, machinery, labor, supplies, and inventory.

7. Sales and Marketing Plan: Defines promotion and sales strategies, pricing plans, unique selling proposition, and communication channels.

8. Financial Plan and Projections: Budget, costs related to staffing, development, manufacturing, and marketing; financial statements for established businesses or targets for new businesses.

9. Appendix: Additional information or attachments that support claims and ideas, such as financial statements or external market reports.

🎨 Business model canvas

The business model canvas is a strategic planning tool used by managers to illustrate and develop their business model.

What it does:

• Clearly identifies the key elements that make up a business.
• Simplifies a business plan into a condensed form.
• Acts as an executive summary for the business plan.
• Created by Alexander Osterwalder of Strategyzer.

Uses:

• Outline the fundamental building blocks of a business or individual products.
• Understand your own business model or that of a competitor.
• Identify potential opportunities for growth and expansion or areas needing improvement.

🧱 Nine building blocks of the business model canvas

1. Customer segments
2. Value proposition
3. Channels
4. Customer relationships
5. Key activities
6. Revenue streams
7. Key resources
8. Key partnerships
9. Cost structure

Each component is represented by a rectangle in the model diagram.

🎓 Support and Education for Entrepreneurs

🎓 University of Toronto Open Learning Series

The University of Toronto, The Bridge, Scarborough Campus, offers a free entrepreneurship course within its open learning series.

After completing the course, you will be able to:

• Explain the value proposition and utility to help focus on specific motivations for a specific product.
• Define the target market and describe the value specific to a target market.
• Evaluate the utility and value of a product within an industry using market research.
• Design a usage scenario for a product.
• Discuss software design principles to help product development.

About The BRIDGE:

A joint venture between UTSC's Department of Management and the UTSC Library where business, research, and innovation converge, delivering extraordinary student experiences through entrepreneurship, research, advanced training programs, and work-integrated learning.

📚 Other open educational resources

Free online courses are offered by various education providers, including:

• Massachusetts Institute of Technology (MIT)
• INSEAD
• University of Toronto
• McMaster University
• University of Michigan
• Stanford Online
• Open Yale Courses
• Harvard University
• LinkedIn Learning
• FutureLearn
• Coursera
• Udacity
• edX
• Khan Academy
• YouTube

Some courses are referred to as MOOCs, Open Courses, Free Trials, or Demos.

📖 OER (Open Educational Resources)

OER are defined as learning, teaching, and research materials in any format and medium that reside in the public domain or are under copyright that have been released under an open license, which permit no-cost access, re-use, re-purpose, adaptation, and redistribution by others.

Sources for free ebooks, case studies, video tutorials, and lessons:

• eCampus Ontario
• BCCampus
• OpenStax
• OER Commons
• Saylor Academy
• Khan Academy
• MERLOT
• Directory of Open Access Journals (DOAJ)
• Open Textbook Library
• OASIS

The Recommendation on Open Educational Resources was adopted by UNESCO's General Conference on November 25, 2019.

🏛️ Government and Institutional Support

🏛️ Government of Canada support programs

Strategic Partnerships Initiative (SPI):

• Helps Indigenous communities participate in complex economic opportunities.
• Additional $300 million available until 2027 for clean energy projects in Indigenous, rural, and remote communities across Canada.

Aboriginal Entrepreneurship Program (AEP):

• Provides access to capital and business opportunities to Indigenous entrepreneurs and business owners in Canada.

🔍 Business Benefits Finder

The Government website provides a search tool for entrepreneurs seeking financial or other types of support to start or expand their businesses.

Categories for support:

• Canadians
• Indigenous Peoples
• Black Canadians
• Other Racialized Persons
• Women
• Language Minorities
• 2SLGBTQI+
• Newcomers to Canada
• Persons with Disabilities
• Youth (<40)
• Rural or Northern Residents

🤝 Mentoring and business support

Mentoring programs:

• Government of Canada and many chambers of commerce have programs designed to facilitate contact between business leaders and budding entrepreneurs.
• Local economic development centers and some business leaders' associations offer similar programs.

Government of Canada resources:

• Starting a Business website: Information for registering a business, getting business support and financing, choosing a business name, applying for business permits and licenses, and tax help.
• Business Grants and Financing website: Information on Government financing programs, loans, capital investments, wage subsidies, grants, tax credits, and managing business finances.

💼 Specific grant and loan programs in Canada

• Business Start Program (BSP) in Manitoba
• Youth Entrepreneurship Partnership Program in Ontario
• Jeunes Promoteurs in Quebec
• Canada Small Business Financing Program

🌍 International government support examples

United States:

• U.S. Small Business Administration (SBA): Federal agency providing assistance to current and prospective small business owners.
• Federal entrepreneur programs for immigrants: Microenterprise Development Program and Minority Business Development Agency Business Centers.

Some government programs specifically offer support to young entrepreneurs, entrepreneurs starting businesses within specific industries, and entrepreneurs who are part of specific minority groups.

🏦 Business Development Bank of Canada (BDC)

We support small and medium-sized businesses in all industries and at every stage of growth with money and advice.

The BDC offers many tools and resources, as well as advice, to entrepreneurs and business owners.

💰 Crowdfunding

Crowdfunding is a kind of crowdsourcing and alternative financing by which people, via the Internet, can contribute money to a person, cause, event, or business venture.

Uses:

• Fund startup businesses.
• Help communities suffering from a natural disaster.
• Aid families and individuals in financial need due to medical emergencies or death.
• Support cultural institutions such as art organizations and charities.

Significance:

• Now a common method for connecting entrepreneurs and investors.
• Offers an alternative to bank loans or venture capitalists.
• Billions of dollars are raised annually via crowdfunding.

🧭 Overview

🧠 One-sentence thesis

Governments, educational institutions, and specialized organizations provide diverse support mechanisms—from open educational resources and financial programs to incubators and crowdfunding—that help entrepreneurs at every stage of business development.

📌 Key points (3–5)

• Open Educational Resources (OER): UNESCO-defined freely accessible learning materials help entrepreneurs access knowledge at no cost across multiple platforms.
• Government support programs: Canada and other countries offer targeted financial assistance, mentoring, and business development tools for diverse entrepreneur groups (Indigenous, youth, women, racialized persons, etc.).
• Alternative financing: Crowdfunding enables entrepreneurs to raise capital directly from the public via the Internet, bypassing traditional bank loans or venture capital.
• Incubators vs accelerators: Incubators help new businesses learn and grow in early stages, while accelerators help established startups scale quickly in exchange for equity.
• Common confusion: Incubators and accelerators serve different stages—incubators support ideation and launch; accelerators require a minimum viable product and focus on rapid scaling.

📚 Open Educational Resources

📖 What OER provides

OER are defined as "learning, teaching, and research materials in any format and medium that reside in the public domain or are under copyright that have been released under an open license, which permit no-cost access, re-use, re-purpose, adaptation, and redistribution by others."

• UNESCO's General Conference adopted this definition at its 40th session on 25 November 2019 as the first international normative instrument for openly licensed educational materials.
• These resources are completely free to access, modify, and share.

🌐 Available platforms

The excerpt lists numerous platforms offering free entrepreneurship education:

• Canadian sources: eCampus Ontario, BCCampus
• International sources: OpenStax, OER Commons, Saylor Academy, Khan Academy, MERLOT
• Academic resources: Directory of Open Access Journals (DOAJ), Open Textbook Library, OASIS

These platforms provide ebooks, case studies, video tutorials, and lessons on entrepreneurship and many other subjects.

🏛️ Government support programs

🇨🇦 Canadian federal initiatives

Program	Target group	What it provides
Strategic Partnerships Initiative (SPI)	Indigenous communities	Helps participate in complex economic opportunities
Clean energy funding	Indigenous, rural, and remote communities	$300 million available until 2027
Aboriginal Entrepreneurship Program (AEP)	Indigenous entrepreneurs	Access to capital and business opportunities

🔍 Business Benefits Finder

• The Government of Canada provides a search tool for entrepreneurs seeking financial or other support.
• Entrepreneurs can search by demographic categories: Indigenous Peoples, Black Canadians, Other Racialized Persons, Women, Language Minorities, 2SLGBTQI+, Newcomers to Canada, Persons with Disabilities, Youth (<40), and Rural or Northern Residents.
• The tool helps discover available government supports based on a few short questions about the business idea.

🤝 Mentoring and information resources

• Government of Canada and chambers of commerce offer mentoring programs connecting business leaders with budding entrepreneurs.
• Local economic development centers and business leaders' associations provide similar programs.
• The "Starting a Business" website covers: registering a business, getting support and financing, choosing a business name, applying for permits and licenses, and tax help.
• The "Business Grants and Financing" website provides information on financing programs, loans, capital investments, wage subsidies, grants, and tax credits.

🌍 Examples across jurisdictions

Canadian programs:

• Business Start Program (BSP) in Manitoba
• Youth Entrepreneurship Partnership Program in Ontario
• Jeunes Promoteurs in Quebec
• Canada Small Business Financing Program

U.S. examples:

• Small Business Administration (SBA): federal agency providing assistance to current and prospective small business owners
• Microenterprise Development Program for immigrants
• Minority Business Development Agency Business Centers

🏦 Business Development Bank of Canada (BDC)

"We support small and medium-sized businesses in all industries and at every stage of growth with money and advice."

• BDC offers tools, resources, and advice to entrepreneurs and business owners.
• Support is available regardless of industry or growth stage.

💰 Alternative financing: Crowdfunding

💡 What crowdfunding is

"Crowdfunding is a kind of crowdsourcing and alternative financing by which people, via the Internet, can contribute money to a person, cause, event, or business venture."

• It operates through Internet platforms where multiple people contribute funds.
• It serves as an alternative to traditional bank loans or venture capitalists.

📊 Uses and scale

Common applications:

• Funding startup businesses
• Helping communities after natural disasters
• Aiding families and individuals facing medical emergencies or death
• Supporting cultural institutions (art organizations, charities)

Scale: Billions of dollars are raised annually via this fundraising method.

🎯 Real-world example

Oculus VR (now part of Meta):

• Produces virtual reality headsets and other hardware/software
• Founder Palmer Luckey used Kickstarter in 2012
• Raised $2.4 million (U.S.), vastly exceeding the $250,000 goal
• Facebook purchased the company for $2 billion in cash and stock in 2014

This example shows how crowdfunding can attract significant initial capital and lead to major acquisitions.

🚀 Incubators and accelerators

🐣 Business incubators

"A business incubator is a specialized program designed as a space for new businesses to learn and grow."

How they work:

• Provide services for entrepreneurs and startups
• Offer reduced rates for supplies and workspace
• Young businesses must apply for a position
• Require commitment to a certain amount of time in the program

What participants gain:

• More thorough business planning
• Learning from other individuals
• Cost savings on supplies and workspace

🚄 Business accelerators

"A business accelerator is a program designed to help established startups scale quickly, and often provide funding in exchange for equity in the business."

Key differences from incubators:

• Require startups to already have a minimum viable product or fixed team before applying
• Focus on rapid scaling rather than initial learning
• Involve an intense period of growth and development
• Typically last three to six months
• Often take equity in exchange for funding

Don't confuse: Incubators help new businesses learn and grow from the beginning; accelerators help established startups that already have a product scale quickly.

🏫 Examples of programs

Seneca College – HELIX:

• Innovation and Entrepreneurship Incubator with a two-stage process
• INNOVATION Strand: Six workshops for developing innovation mindset and growing ventures from ideation to launch
• ACCELERATION Strand: Requires completion of all six INNOVATION workshops and delivery of a pitch
• Provides resources and support throughout the process

MIT:

• delta v accelerator: Capstone entrepreneurial experience for MIT students
• MIT REAP: Global initiative with two programs (Global and Focus) that strengthen innovation-driven entrepreneurial ecosystems and transform economies worldwide

MaRS Discovery District:

• Innovation hub working with business startups to scale-ups
• Offers a Start-up toolkit for tech founders
• Helps solve real problems for real people
• Works with hundreds of companies across the country
• Turns breakthrough ideas into products and services with global impact

District 3:

• Works with founders and startup teams
• Helps validate business and get to scaling faster and better
• Provides tools and a library to help founders select what information to follow
• Recognizes that learning to select advice takes time and experience

Futurpreneur:

• Only national, non-profit organization in Canada providing financing, mentoring, and support tools to aspiring business owners aged 18-39
• Operating for over two decades
• Internationally recognized mentoring program
• Hand-matches young entrepreneurs with business experts from a network of more than 2,600 volunteer mentors

🎯 Key takeaways from the excerpt

💼 Entrepreneurship's economic role

1. Economic growth: New companies create employment, contribute to GDP, and bring innovative products and services to consumers.
2. Entrepreneur definition: Someone who starts, owns, and operates a business; increasingly diverse group.

🧠 Entrepreneur characteristics

3. Key traits: Passion, risk tolerance, persistence, and an innovative mindset.
4. Motivation: Entrepreneurs are motivated by much more than money; most start their business to become their own boss.

📝 Practical note

The excerpt recommends checking with your college or university to see if there is an incubator or accelerator available on campus, emphasizing that these resources may be closer than entrepreneurs realize.

🧭 Overview

🧠 One-sentence thesis

The business model canvas is a strategic planning tool that condenses a full business plan into a simplified template showing the key elements that make up a business.

📌 Key points (3–5)

• What it is: a strategic planning tool used by managers to illustrate and develop their business model.
• How it works: clearly identifies key elements of a business and simplifies a business plan into condensed form.
• Relationship to business plans: acts as an executive summary for the business plan rather than replacing it.
• Common confusion: the canvas is not a replacement for a full business plan—it's a condensed version that highlights core components.
• Context: part of broader entrepreneurial support tools alongside incubators, accelerators, and funding options.

🎯 Purpose and Function

🎯 What the canvas does

The business model canvas is a strategic planning tool used by managers to illustrate and develop their business model.

• It provides a visual framework for understanding how a business operates.
• Managers use it to both illustrate (show) and develop (create/refine) their business model.
• The tool is designed for active strategic planning, not just documentation.

🗂️ Key elements identification

• The canvas template "clearly identifies the key elements that make up a business."
• It breaks down a business into its fundamental components in a structured way.
• This clarity helps managers see all critical parts of their business at once.

📋 Relationship to Business Plans

📋 Simplification role

• The canvas "simplifies a business plan into a condensed form."
• It takes the comprehensive information from a full business plan and distills it.
• This makes complex business information more accessible and easier to communicate.

📄 Executive summary function

• "The business model canvas template acts as an executive summary for the business plan."
• It does not replace the full business plan but summarizes it.
• Don't confuse: the canvas is a companion tool, not a substitute—full business plans are still used to secure funding, validate ideas, and provide detailed operational and strategic goals.

📊 Business plan context

The excerpt notes that business plans are used to:

• Help secure funding
• Validate a business idea
• Grow an existing business
• Buy or sell a business
• Advise clients
• Legitimize a business idea and show research results
• Provide product and customer information
• Include operational and strategic goals

The canvas supports these purposes by providing a quick overview of the complete plan.

🚀 Entrepreneurial Ecosystem Context

🏢 Support structures mentioned

The canvas is presented alongside other entrepreneurial support tools:

Support Type	Examples from Excerpt	Purpose
Incubators	HELIX (Seneca College), MaRS	Space for new businesses to learn and grow; reduced rates for supplies and workspace
Accelerators	MIT delta v, District 3	Help established startups scale quickly; often provide funding for equity
Funding	Crowdfunding (e.g., Kickstarter), Futurpreneur	Financial support for startups and young entrepreneurs

🎓 Educational resources

• The excerpt places the canvas within a broader context of support and education for entrepreneurs.
• Other resources mentioned include open learning series, open courses, OER resources, and government support.
• Example: District 3 offers a library of tools and organizations to help founders validate their business and scale faster.

🧭 Overview

🧠 One-sentence thesis

Entrepreneurs can access a variety of support resources including university open learning series, open courses, OER resources, incubators and accelerators, government support, and crowdfunding to help develop and grow their business ventures.

📌 Key points (3–5)

• Types of entrepreneurs: necessity entrepreneurs (need income/flexibility), opportunity entrepreneurs (see profit potential), and social entrepreneurs (aim for positive world change).
• Business structures available: sole proprietorship, partnership, corporation, and co-operative—each with different ownership, profit-sharing, and legal characteristics.
• Business growth strategies: acquisition (buying another company), merger (joining to form new company), strategic alliance (partnership while staying independent), and joint venture (combining resources for specific goal).
• Planning tools: business plan (secures funding, validates ideas) and business model canvas (strategic tool that simplifies a business plan into condensed form).
• Common confusion: Don't confuse strategic alliances with joint ventures—alliances keep companies independent for common goals, while joint ventures combine resources for a specific goal.

🎯 Types of Entrepreneurs

🆘 Necessity Entrepreneur

A necessity entrepreneur is someone who starts a business based on a need for income, out of necessity, because they cannot find employment, have lost their job, need to supplement their income, or require flexibility to attend to other demands in their lives.

• Why they start: driven by need rather than opportunity
• Common situations: unemployment, job loss, income supplementation, or life demands requiring flexibility
• Example: Someone who lost their job and cannot find employment starts a small service business to generate income.

💰 Opportunity Entrepreneur

An opportunity entrepreneur is someone who sees an opportunity to make money, gets involved at the right time, and aims for business growth and economic development.

• Why they start: spot profit potential and timing
• Goals: business growth and contributing to economic development
• Different from necessity entrepreneurs—motivated by opportunity rather than need

🌍 Social Entrepreneur

Social entrepreneurs don't start companies with their main goal being to make a profit; instead, their goal is to make positive change in the world.

• Primary motivation: positive world impact, not profit maximization
• Profit is secondary to social mission
• Example: An organization that creates employment opportunities for disadvantaged communities while running a sustainable business.

🏢 Business Structure Options

👤 Sole Proprietorship

A sole proprietorship is a simple, unincorporated business owned and operated by one person.

• Key characteristics:
  • Simplest structure
  • Unincorporated
  • Single owner and operator
• No separation between owner and business legally

🤝 Partnership

A partnership is a non-incorporated business owned by two or more people who share profits and responsibilities and risks.

• Shared elements: profits, responsibilities, and risks
• Risk management: disputes can be lessened with a well-planned partnership agreement
• Partnership agreement: specifies everyone's rights and responsibilities
• Don't confuse with corporation—partnerships are not incorporated and owners share directly in profits and risks

🏛️ Corporation

A corporation is a separate legal entity from its shareholders and can be incorporated at the federal or provincial level.

• Key distinction: separate legal entity from shareholders
• Incorporation options: federal or provincial level
• Different from sole proprietorship and partnership—legally separate from owners

🤲 Co-operative

A co-operative is controlled by its members and can operate for profit or as a not-for-profit.

• Control structure: member-controlled
• Purpose: structured to meet common needs of members rather than maximize profits for shareholders
• Flexibility: can be for-profit or not-for-profit
• Example: A group of farmers forming a co-op to collectively market their products and share resources.

📈 Business Growth and Expansion Strategies

🛒 Acquisition

A business acquisition is a financial transaction where one company buys the majority or all of another company's shares or assets, giving the acquiring company control over the target company.

• What happens: one company gains control by purchasing shares or assets
• Result: acquiring company controls the target company
• The target company is absorbed into the acquiring company's operations

🔗 Merger

A company merger is when two or more companies join together to form a new company with a single stock.

• Key difference from acquisition: companies combine to create entirely new entity
• Result: new company with single stock
• Don't confuse with acquisition—merger creates new company, acquisition means one company takes control of another

🤝 Strategic Alliance

A strategic alliance is a partnership between two or more businesses to work together on a common goal, while each company remains independent.

• Independence maintained: companies stay separate entities
• Purpose: share resources and capabilities to create mutual value
• Common goals: entering new markets, developing new products, or increasing innovation
• Example: Two companies partner to co-develop a product while each maintains separate operations and ownership.

🎯 Joint Venture

A joint venture (JV) is a business arrangement where two or more parties combine resources to achieve a specific goal.

• Resource combination: parties pool resources together
• Specific goal: focused on particular objective
• Different from strategic alliance—joint ventures combine resources more formally for specific goals, while alliances maintain more independence

📋 Planning and Validation Tools

📄 Business Plan

A business plan is often used to help secure funding, validate a business idea, grow an existing business, buy a business, sell a business, or advise clients.

Multiple purposes:

• Secure funding
• Validate business ideas
• Grow existing business
• Support buying or selling a business
• Advise clients

What it provides:

• Legitimizes a business idea
• Shows research results
• Provides product and customer information
• Includes operational and strategic goals

🎨 Business Model Canvas

The business model canvas is a strategic planning tool used by managers to illustrate and develop their business model.

Key functions:

• Clearly identifies key elements that make up a business
• Simplifies a business plan into condensed form
• Acts as an executive summary for the business plan

Relationship to business plan: The canvas is a condensed version that captures essential elements, not a replacement for detailed planning.

🚀 Steps to Creating a New Business

📝 The Nine-Step Process

The excerpt outlines a sequential approach to starting a business:

1. Identify a business opportunity
2. Choose a business structure (sole proprietorship, partnership, corporation, or co-operative)
3. Choose a business name
4. Create a business plan
5. Obtain business financing
6. Choose a commercial space
7. Hire employees
8. Grow your business

Each step builds on the previous one—for example, you need to identify the opportunity before choosing the structure, and you need a business plan before obtaining financing.

🎓 Support Resources for Entrepreneurs

📚 Available Support Types

The excerpt lists six categories of support:

Resource Type	Description
University of Toronto Open Learning Series	Educational content from university
Open courses	Accessible learning opportunities
OER resources	Open Educational Resources
Incubators and Accelerators	Programs that support business development
Government support	Public sector assistance programs
Crowdfunding	Community-based financing

These resources address different entrepreneurial needs—education, mentorship, funding, and business development support.

🧭 Overview

🧠 One-sentence thesis

Economics studies how societies allocate scarce resources to produce and distribute goods and services, with businesses and households interacting through input and output markets in a continuous circular flow that determines what is produced, how it is produced, and for whom.

📌 Key points (3–5)

• What economics studies: how individuals, businesses, governments, and nations allocate limited resources to satisfy unlimited wants and needs, with scarcity as a core concept.
• The circular flow model: households provide factors of production (labor, land, capital) to businesses in exchange for income (wages, rent, interest), while businesses use these resources to produce goods and services sold back to households.
• Productivity as efficiency: how efficiently inputs (labor, capital, land, entrepreneurship) are transformed into outputs (goods and services), typically measured as output per hour worked.
• Economic systems differ by control: free market economies rely on supply and demand with minimal government intervention, planned economies have the state determine production and prices, and mixed economies combine both approaches.
• Common confusion: microeconomics vs macroeconomics—microeconomics studies individual and business decisions, while macroeconomics examines decisions of countries and governments, but they are interdependent and complement each other.

🏗️ Foundational concepts

🏗️ What economics is

Economics is the study of how individuals, businesses, governments, and nations allocate their limited resources to satisfy their unlimited wants and needs.

• It examines how a society uses scarce resources to produce and distribute goods and services.
• Economics is fundamentally the study of choices—what people, firms, or nations choose from among available resources.
• Every economy must answer three core questions: what to produce, how to produce it, and for whom to produce it.

🔒 Scarcity as the central constraint

Scarcity: the limitation of resources, meaning the demand for a good or service is greater than the availability of that good or service.

• Resources of a person, firm, or nation are always limited.
• Scarcity is one of the key concepts of economics—it drives all economic decision-making.
• Example: food becomes scarce in a geographic region due to drought or harsh winter, forcing choices about allocation.
• Don't confuse: scarcity is not about absolute shortage; it's about demand exceeding availability at any given time.

🔬 Microeconomics vs macroeconomics

Branch	What it studies	Scope
Microeconomics	Individuals and business decisions	Specific actors and markets
Macroeconomics	Decisions of countries and governments	Aggregate economy-wide phenomena

• These two branches appear different but are interdependent and complement each other.
• Example: news stories about union wage increases (micro) and the Bank of Canada lowering interest rates (macro) both reflect economic principles.

🔄 The circular flow of resources

🔄 Inputs: factors of production

Resources (inputs) used to produce outputs may include land and natural resources, labor (physical and mental), capital (buildings and equipment), entrepreneurship, and knowledge.

• These resources are often called factors of production because businesses use them to produce goods.
• Each factor plays a distinct role:
  • Land and natural resources: provide raw materials
  • Labor: transforms raw materials into goods and services
  • Capital: equipment, buildings, vehicles, cash needed for production
  • Entrepreneurship: skill, drive, and creativity to organize other resources and bring products to market
  • Knowledge: information and expertise that enhance production

👕 Example: making a shirt

The excerpt illustrates factors of production with a shirt manufacturing example:

• Land: physical factory space, electricity to power the plant, raw cotton
• Labor: workers who manufacture the shirts
• Capital: factory, machinery, equipment, and financial resources to operate
• Entrepreneurship: skills and knowledge to organize resources effectively and bring the product to market

🔁 The circular flow model

The circular flow model depicts how money circulates through the economy from individuals to firms in the form of labor and buying goods and services, then from firms to individuals in the form of wages and providing goods/services.

• Households provide factors of production to businesses (as workers, landlords, investors).
• Businesses pay households for these resources (wages, rent, interest).
• Businesses use resources to produce goods and services, which are sold for revenue.
• Revenue is used to buy additional resources, and the cycle continues.

The dual roles:

• Households: provide factors of production and consume goods and services
• Businesses: buy resources and produce and sell goods and services

🌐 Adding complexity to the model

• The basic circular flow model is stripped down to essentials but explains how product and labor markets work.
• More real-world elements can be added: financial markets, governments, and international interactions (imports and exports).

📊 Productivity and efficiency

📊 What productivity measures

Productivity refers to how efficiently goods and services are being produced.

• Productivity increases when:
  • More output is produced with the same amount of inputs, or
  • The same amount of output is produced with fewer inputs
• Usually measured as the ratio of aggregate output to aggregate input.

👷 Labor productivity

Labor productivity is defined as economic output (gross domestic product, or GDP) per hour worked.

• The most common productivity measure.
• Typically the biggest determinant of economic and wage growth in the long term.
• Over time, labor productivity and real wages are closely—though not exactly—linked.
• Labor productivity tends to rise with increases in technology.

Country-scale calculation:

• Labor productivity = GDP ÷ total hours worked
• Example: if a country's GDP is $1 trillion and people worked 20 billion hours, labor productivity = $50 per hour.

🏭 Other productivity measures

Type	What it measures	Significance
Capital productivity	How well physical capital (real estate, equipment, inventory) generates output	Often considered with labor productivity as an indicator of standard of living
Total factor productivity	Portion of output growth not explained by labor or capital growth	Sometimes called "innovation-led growth"

• Theoretically, higher labor productivity equals higher economic output and lower inflation.

🏛️ Economic systems and control

🏛️ What an economic system is

A nation's economic system is the combination of policies, laws, and choices made by its government to establish the systems that determine what goods and services are produced and how they are allocated.

• Economic systems are the means by which a society (households, businesses, and government) makes decisions about:
  • Allocating resources to produce products
  • Distributing those products
• The degree of freedom individuals and business owners enjoy in making these decisions varies by system type.

🆓 Free market economy

A free market economy is an economic system in which the production and distribution of goods and services are primarily determined by supply and demand with minimal government intervention.

• Private individuals and businesses own the means of production.
• Transactions are conducted in a competitive market environment.
• People decide how to use factors of production (land, labor, capital, physical resources).
• Producers decide what to produce, how much to charge, and what to sell.
• A free market system is a capitalist system that focuses on unfettered exchange with little or no government interference.

🔀 Mixed economy

A mixed economy is an economic system where some resources are planned for by the government, while citizens control others.

• The world's dominant economic organization is a mixed economy.
• In Canada, the government and the free-market system guide the economy together.
• Combines elements of both market-driven and government-directed resource allocation.

📋 Planned economy

A planned economy is a system where the state determines production levels and regulates prices.

• In a centrally planned economy, the state uses advanced planning mechanisms to determine production levels, rather than supply and demand.
• Socialism is generally considered a planned economy, where the government controls production and distribution.

🏢 Capitalism vs socialism

System	Ownership	Control mechanism	Philosophy
Capitalism	Private individuals and businesses own capital and wealth	Market forces (supply and demand)	Promotes creation and ownership of capital
Socialism	Public or state ownership of means of production	Government planning	Shared ownership leads to more equal society

• Don't confuse: capitalism emphasizes private ownership and market freedom, while socialism emphasizes collective ownership and government control, but most real-world economies are mixed systems combining elements of both.

🧭 Overview

🧠 One-sentence thesis

Economic systems determine how societies allocate resources and distribute products, with most real-world economies operating as mixed systems that blend free market competition and government control rather than existing as pure capitalism or pure socialism.

📌 Key points (3–5)

• Three fundamental questions: every economic system must decide what to produce, how to produce it, and who receives the output.
• Two main system types: planned systems (government controls allocation) vs. free market systems (competition and private ownership drive decisions).
• Mixed economies dominate: most countries, including Canada, combine free market principles with government intervention rather than operating as purely capitalist or purely planned.
• Common confusion: pure capitalism vs. pure communism are theoretical extremes; in practice, all modern economies are mixed, leaning toward one end or the other.
• Competition varies by market structure: four types of competition (perfect, monopolistic, oligopoly, monopoly) shape how businesses operate and set prices.

📊 Productivity fundamentals

📊 What productivity measures

Productivity: economic output per unit of input used in producing it (an aggregate input).

• It is not total output; it is output per unit of input.
• The excerpt emphasizes efficiency—how much value is created from a given amount of resources.

👷 Labor productivity

Labor productivity: economic output (GDP) per hour worked.

• Most common productivity measure.
• Typically the biggest determinant of economic and wage growth in the long term.
• Real wages and labor productivity are closely—though not exactly—linked over time.
• Tends to rise with increases in technology.
• Calculation: If a country's GDP is $1 trillion and people worked 20 billion hours, labor productivity = $50 per hour.

🏭 Other productivity types

Type	What it measures	Notes
Capital productivity	How well physical capital (real estate, equipment, inventory) generates output	Often considered together with labor productivity as an indicator of standard of living
Total factor productivity	Portion of growth not explained by labor or capital growth	Sometimes called "innovation-led growth"

🏛️ Economic system fundamentals

🏛️ Three core questions

Every economic system must answer:

1. What goods and services should be produced? In what quantity? When?
2. How should they be produced? Who should produce them, and what resources (including technology) should be combined?
3. Who should receive the products? How should they be allocated among consumers?

Economic system: the means by which a society (households, businesses, and government) makes decisions about allocating resources to produce products and about distributing those products.

• The degree of freedom individuals and business owners enjoy in making these decisions varies by system type.

🗂️ System definitions

System	Key characteristics
Free market economy	Production and distribution determined by supply and demand with minimal government intervention; private ownership of means of production; competitive market environment
Mixed economy	Some resources planned by government, others controlled by citizens; world's dominant economic organization
Planned economy	State determines production levels and regulates prices using advanced planning mechanisms rather than supply and demand
Capitalism	Promotes creation and ownership of capital and wealth; free market system with unfettered exchange and little government interference
Socialism	Means of production owned by public or state; based on idea that shared ownership leads to more equal society; generally a planned economy
Communism	Aims to eliminate class struggles through public ownership of means of production; no private property or currency; wealth shared equally or based on need; often associated with centrally planned economies

• Don't confuse: Communism is not the same as a planned economy, but communism is often associated with centrally planned economies.

🔴 Planned systems

🔴 Communism in practice

• Highest level of government control.
• In theory: government owns all or most enterprises; central planning dictates what is produced, how, and who receives it.
• In practice: pure communism is practically nonexistent today; only a few countries (notably North Korea and Cuba) operate under rigid, centrally planned systems.

🔴 Socialism characteristics

• Industries providing essential services (utilities, banking, health care) may be government-owned.
• Some businesses may be privately owned.
• Central planning allocates goods and services from government-run industries and tries to ensure wealth is distributed equally.
• Privately owned companies operate to make profit for owners.
• Worker benefits: generally work fewer hours, have longer vacations, receive more health care, education, and child-care benefits than workers in capitalist economies.
• Trade-off: taxes are generally steep to offset high cost of public services.
• Examples: Venezuela, Sweden, France (lean towards socialistic approach).

🔵 Free market systems

🔵 Capitalism core features

Free market system: an economic system in which most businesses are owned and operated by individuals, also known as capitalism.

• Competition dictates how goods and services are allocated.
• More limited government involvement, concentrated on regulations dictating how businesses are permitted to operate.

🏠 Private property rights

• Business owners can expect to own their land, buildings, machines, etc.
• Owners keep the majority of their profits, except for taxes.
• The profit incentive is a key driver of any free market system.

🌍 Real-world examples

• Economies of the United States and Japan are based on capitalism.
• However, a purely capitalistic economy is as rare as one that is purely communist.
• Example: Police protection is provided by government in the U.S., not allocated by market forces—if it were market-based, ability to pay would determine who received services, an outcome few would consider acceptable.

🟣 Mixed market economies

🟣 What mixed economies are

Mixed market economy: relies on both markets and the government to allocate resources.

• In practice, most economies are mixed, with a leaning towards either free market or socialistic principles, rather than being purely one or the other.
• This is the dominant form of economic organization in the world.

↔️ Movement between systems

Towards more capitalism (privatization):

• Some previously communist economies (Eastern Europe, China) are becoming more mixed.
• They adopt more capitalistic characteristics and convert government-owned businesses to private ownership through privatization.

Towards more socialism (nationalization):

• Venezuela has moved increasingly towards socialism.
• Taking control of industries (oil, media) through nationalization.

🍁 The Canadian economic system

• Features a mixed market system, similar to the United States.
• Primarily a free market system, but federal government controls some basic services (postal service, air traffic control).
• Has some socialist characteristics: social security retirement benefits, free health care.

📖 Historical foundation: Adam Smith

• The free market system was espoused by Adam Smith in The Wealth of Nations (1776).
• According to Smith: competition alone would ensure consumers received the best products at the best prices.
• In his assumed competition: a seller charging more than others would find no buyers; a job-seeker asking more than the going wage won't be hired.
• The "invisible hand" of competition makes the market work effectively without need to regulate prices or wages.

⚖️ Tension: laissez-faire vs. intervention

• Almost immediately, a tension developed between the principle of laissez-faire (leaving things alone) and government intervention.
• Today: common for the Canadian government to intervene in the economic system.
• Example: Government exerts influence on food and pharmaceutical industries through Canada's Food and Drug Act and Regulations, preventing unsafe or mislabeled products from reaching the market.

🏪 Degrees of competition

🏪 Competition in economic theory

• "Types" or "degrees" of competition refer to how firms compete in the market.
• These classifications focus on the market environment, not direct "business competition" (strategies businesses use to compete).
• The Canadian economy is founded on principles of private enterprise: private property rights, freedom of choice, profits, and competition.
• Under a mixed economy, businesses decide which goods to produce or services to offer and how they are priced.
• Competition for sales among businesses is a vital part of the economic system.
• Competition varies within industries and has a big influence on how companies operate.

🔍 Four types of competition

Characteristic	Perfect Competition	Monopolistic Competition	Oligopoly	Pure Monopoly
Number of Firms	Very Many	Many	A Few	One
Types of Products	Homogeneous	Differentiated	Homogeneous or Differentiated	Homogeneous
Barriers to Entry/Exit	No Substantial Barriers	Minor Barriers	Considerable Barriers	Extremely Great Barriers
Examples	Agriculture	Retail Trade	Banking	Public Utilities

✅ Perfect competition

Perfect competition: a market structure characterized by many buyers and sellers, homogeneous products, and no single participant having market power.

• Exists when many consumers buy a standardized product from numerous small businesses.
• No seller is big enough or influential enough to affect the price.
• Sellers and buyers accept the going price.
• Example: A commercial fisher bringing fish to the local market has little control over the price and must accept the going market price.

Role of supply and demand:

• Price is determined entirely by the interaction of supply and demand.
• High competition ensures the supply curve (producers) and demand curve (consumers) interact freely without interference (no monopolistic pricing or government controls).
• Producers can only compete on efficiency since prices cannot be manipulated.
• Supply aligns with true demand.

🎨 Monopolistic competition

• Still many sellers (as in perfect competition).
• But they do not sell identical products—they sell differentiated products (differ somewhat or are perceived to differ, even though they serve a similar purpose).

Product differentiation methods:

• Quality, style, convenience, location, brand name.
• Example: Some people prefer Coke over Pepsi, even though the products are quite similar. But if there's a substantial price difference, buyers can be persuaded to switch. If Coke has a big promotional sale, some Pepsi drinkers might switch (at least temporarily).

How differentiation is accomplished:

• Sometimes geographical: you probably buy gasoline at the station closest to your home, regardless of brand.
• Other times: perceived differences promoted by advertising designed to convince consumers one product is different from and better than another.

Price control:

• Regardless of customer loyalty, if price goes too high, the seller will lose business to a competitor.
• Under monopolistic competition, companies have only limited control over price.

🧭 Overview

🧠 One-sentence thesis

In a perfectly competitive market, the interaction of supply (what sellers are willing to sell at various prices) and demand (what buyers are willing to purchase at various prices) determines an equilibrium price where the quantity demanded equals the quantity supplied.

📌 Key points (3–5)

• The law of supply and demand: When supply is greater than demand, prices fall; when demand is greater than supply, prices rise.
• Demand behavior: Buyers are typically willing to buy less when prices rise and more when prices fall; the demand curve slopes downward.
• Supply behavior: Sellers are more willing to sell when prices rise and less willing when prices fall; the supply curve slopes upward.
• Equilibrium price: The point where supply and demand curves intersect—where the quantity buyers want to purchase equals the quantity sellers want to sell.
• Common confusion: Real markets rarely operate without outside influences; surpluses (sellers supply more than buyers want) and shortages (sellers don't produce enough to satisfy demand) can occur when conditions change.

📉 Demand: what buyers want

📉 Definition and behavior

Demand: the quantity of a product that buyers are willing to purchase at various prices.

• The quantity people are willing to buy depends on price.
• Consumers are typically willing to buy less of a product when prices rise and more when prices fall.
• Why: we find products more attractive at lower prices, and our income goes further.

📊 The demand curve

• The demand curve shows the quantity of a product that will be demanded at different prices.
• Example: In a local apple market, if apples sell for $0.80 per pound, buyers will purchase 1,500 pounds per day; at $0.60 per pound, they will purchase 2,000 pounds; at $0.40 per pound, they will purchase 2,500 pounds.
• The curve slopes downward: as price decreases, quantity demanded increases.

🔄 Factors that affect demand

The excerpt lists factors that can shift the demand curve:

• Changes in income levels
• Population changes
• Consumer preferences
• Complementary goods
• Substitute goods

📈 Supply: what sellers offer

📈 Definition and behavior

Supply: the quantity of a product that sellers are willing to sell at various prices.

• The quantity a business is willing to sell depends on price.
• Businesses are more willing to sell when prices rise and less willing when prices fall.
• Why: businesses are set up to make profits, and there are larger profits when prices are high.

📊 The supply curve

• The supply curve shows the quantity sellers would be willing to sell at different prices, regardless of demand.
• Example: Farmers are willing to sell 1,000 pounds of apples when the price is $0.40 per pound, 2,000 pounds at $0.60, and 3,000 pounds at $0.80.
• The curve slopes upward: as price increases, quantity supplied increases.
• Don't confuse: the supply curve goes in the opposite direction from the demand curve.

🔄 Factors that affect supply

The excerpt lists factors that can shift the supply curve:

• Technological changes
• Changes in resource prices
• Price expectations
• The number of suppliers
• The price of substitute goods

⚖️ Equilibrium: where supply meets demand

⚖️ What equilibrium means

Equilibrium price: the state in which market supply and demand balance each other; the point at which the supply and demand curves intersect.

• When both curves are plotted on one graph, they intersect at a single point.
• Example: In the apple market, the equilibrium price is $0.60 per pound, where the quantity demanded (2,000 pounds) equals the quantity supplied (2,000 pounds).

🎯 Why equilibrium is stable under perfect competition

• If a farmer charges more than $0.60: they won't sell very many apples because other suppliers offer apples for less, so their profits will go down.
• If a farmer charges less than $0.60: they will sell more apples, but their profit per pound will be less than at the equilibrium price.
• With profit being the motive, there is no incentive to deviate from the equilibrium price.
• Conclusion: Without outside influences, markets in perfect competition will arrive at an equilibrium point where both buyers and sellers are satisfied.

🌀 What happens when conditions change

The excerpt warns that the simple equilibrium model is very simplistic; real-world markets are much more complex.

Situation	What happens	Result
Sellers supply more than buyers want	Surplus	Prices tend to fall
Sellers don't produce enough to satisfy demand	Shortage	Prices tend to rise
Incomes rise and buyers are willing to pay more	Demand curve shifts	Equilibrium price increases
Crops are larger than expected (e.g., favorable weather)	Supply curve shifts	Equilibrium price decreases (farmers sell at lower prices rather than let crops spoil)

• Don't confuse: the equilibrium is not fixed—it changes when the demand or supply curves shift.
• Example: As demand increases, prices will go up; as supply increases, prices will come down.

🔍 Perfect competition context

🔍 How supply and demand fit into perfect competition

The excerpt introduces supply and demand to explain how perfect competition works.

Perfect competition: a market structure characterized by many buyers and sellers, homogeneous products, and no single participant having market power.

• In perfect competition, price is determined through the mechanisms of supply and demand.
• Because no seller is big enough or influential enough to affect the price, sellers and buyers accept the going price.
• Example: A commercial fisher brings fish to the local market and has little control over the price; they must accept the going market price.

📐 The law of supply and demand

The law of supply and demand: an economic theory that explains how the relationship between supply and demand determines prices.

• When supply is greater than demand, prices fall.
• When demand is greater than supply, prices rise.
• High competition ensures that the supply curve (producers) and demand curve (consumers) interact freely without interference, such as monopolistic pricing or government controls.
• Producers can only compete on efficiency since prices cannot be manipulated, aligning the supply with the true demand.

🧭 Overview

🧠 One-sentence thesis

Economies aim for growth, high employment, and price stability, and we measure progress toward these goals using indicators like GDP, unemployment rates, and the consumer price index.

📌 Key points (3–5)

• Three main economic goals: growth (measured by GDP), high employment (tracked by unemployment rate), and price stability (monitored via CPI).
• GDP vs GDP per capita: GDP measures total output, but GDP per capita (output divided by number of households) may better indicate economic performance per person.
• Business cycles: economies naturally expand and contract through phases of prosperity, recession, recovery, and (rarely) depression.
• Common confusion: inflation vs deflation—inflation means rising prices (troublesome for purchasing power), deflation means falling prices (can slow growth as buyers delay purchases).
• Economic indicators: leading indicators predict future trends, coincident indicators reflect current conditions, and lagging indicators confirm past changes.

📊 The three economic goals

🌱 Growth

Gross domestic product (GDP): the market value of all goods and services produced by the economy in a given year.

• GDP includes only domestically produced goods and final products (not intermediate products like a silicon chip that goes into a computer).
• A rising GDP (after adjusting for inflation) means the economy is growing; a falling GDP means contraction.
• GDP per capita = total production divided by number of households.
  • Example: as of 2017, India's GDP ranked 7th globally but its GDP per capita ranked 142nd, while Canada's GDP ranked 10th but GDP per capita ranked 18th—showing Canada's higher output per household.

Gross national product (GNP): the value of all products and services produced by the citizens of a country, both domestically and internationally, minus income earned by foreign residents.

• GNP accounts for production by a country's citizens abroad.
• Example: if Canada has production facilities in the USA, its GNP includes both Canadian and USA output by Canadian citizens.

💼 High employment

• People spend money earned from working; reduced personal spending weakens the economy.
• Full employment in principle: everyone who wants to work has a job.
• Full employment in practice: about 95% of those wanting to work are employed.

Unemployment rate: the percentage of the labour force (at least 15 years old) that is unemployed and actively seeking work.

• The unemployment rate rises during recessions (low demand for goods and services) and falls during expansions (high demand).
• Four types of unemployment:
  • Frictional: workers moving between jobs and locations.
  • Structural: jobs terminated.
  • Cyclical: impacted by the business cycle when businesses lack demand for labour.
  • Seasonal: jobs that occur during part of the year (e.g., snow plowing, beach industries).

💰 Price stability

Price stability: when the average price for goods and services either does not change or changes very little.

• Rapidly rising prices hurt individuals (pay more for necessities) and businesses (higher costs, difficulty passing costs to consumers).

🔄 The business cycle

📈 Four phases

Business cycle: the economic ups and downs resulting from expansion and contraction.

• A typical cycle runs three to five years but can last much longer.
• The cycle can be divided into four phases:

Phase	What happens
Prosperity	Economy expands, unemployment low, incomes rise, consumers buy more, businesses increase production and offer new products
Recession	GDP decreases, unemployment rises, people have less money, business revenues decline; often defined as GDP going down for two consecutive quarters
Recovery/Expansion	Economy starts growing again after a recession
Depression	A long-lasting recession (perhaps a decade) with very high unemployment and severely curtailed production; no uniform definition, but characterized by duration

• Don't confuse: recession vs depression—a recession is a slowdown; a depression is a prolonged, severe recession with very high unemployment.
• The federal government has economic tools to fight threats of depression, making another severe depression like the 1930s unlikely.

🔁 How cycles work

• Similar to a product lifecycle: as businesses introduce new products, those products grow, mature, and decline.
• When all business cycles in an economy are combined, the economy's overall business cycle is created.

📉 Measuring inflation and deflation

📊 Consumer Price Index (CPI)

Consumer Price Index (CPI): measures the rate of inflation by determining price changes of a hypothetical basket of goods (food, housing, clothing, medical care, appliances, automobiles, etc.) bought by a typical household.

• Reported monthly by Statistics Canada.
• The Bank of Canada measures prices against the base year of 2002 (given value of 100).
• Example: in 2012, the CPI averaged $121, meaning what cost $100 in 2002 cost $121.70 in 2012—the difference registers inflation.
• Inflation rate = the percentage change in a price index.
• CPI measures consumer goods prices only, not prices of goods used to create consumer goods.

Producer Price Index (PPI): tracks the average change in prices at the wholesale level (raw materials, product components requiring further processing, and finished goods sold to retailers).

🔺 Inflation

Inflation: when the overall price level goes up.

• How it happens: more jobs and higher wages → increased household incomes → rise in consumer spending → increased aggregate demand → firms increase prices → inflation across many businesses and sectors.
• Long-lasting high inflation often results from lax monetary policy: if the money supply grows too big relative to the economy's size, the currency's purchasing power falls and prices rise.

🔻 Deflation

Deflation: when the price level goes down (rarely happens).

• Deflation can damage an economy: when purchasers expect lower future prices, they defer purchases, slowing economic growth.
• Example: Japan experienced a long deflation period contributing to economic stagnation.

🔮 Economic forecasting with indicators

🔍 Three types of indicators

Economic indicator: a statistic that provides valuable information about the economy.

Type	Timing	Purpose	Examples from excerpt
Leading indicators	Signal future economic activity before it occurs	Predict changes in the economy	Stock prices, building permits, consumer confidence index, new manufacturing orders, new unemployment claims
Coincident indicators	Move in real-time with the economy	Reflect current state	GDP, employment levels, retail sales, industrial production, new jobs created
Lagging indicators	Reflect changes that have already occurred	Confirm trends and validate leading indicators	Unemployment changes, consumer debt levels, inflation rate, length of unemployment

🚦 Leading indicators in detail

• Stock prices: reflect investor sentiments about future economic conditions.
• Building permits: an increase suggests future growth in construction and housing markets.
• Consumer confidence index: higher confidence indicates likely increases in spending, boosting economic activity.
• New manufacturing orders: an increase indicates increased production and economic growth.
• New unemployment claims: often reflect employers' expectations about future economic conditions.
  • If businesses anticipate a slowdown, they may lay off workers, increasing claims.
  • Provides an early signal of weakening economic activity or labor market challenges.
  • Example: a sustained rise in claims could indicate an impending economic downturn, prompting policy adjustments like monetary easing or fiscal stimulus.

📸 Coincident indicators in detail

• Provide a snapshot of the present economic situation.
• Helpful for short-term planning.
• New jobs created: reflects current economic activity and labor market conditions; shows how businesses are responding to the existing economic climate by expanding their workforce.

🔙 Lagging indicators in detail

• Useful for validating the accuracy of leading indicators and understanding the economy's historical performance.
• Unemployment changes: lag behind economic trends as businesses adjust to economic shifts.
• Consumer debt levels: rising levels confirm past high spending during an economic boom.
• Inflation rate: typically reacts to earlier changes in supply, demand, and monetary policy.
• Length of unemployment: if unemployed workers have remained out of work for a long time, we may infer that the economy has been slow.

🧭 Overview

🧠 One-sentence thesis

Economic forecasting uses leading, coincident, and lagging indicators to predict future economic trends, assess current conditions, and confirm past performance, helping businesses and policymakers make informed decisions.

📌 Key points (3–5)

• Why forecasting matters: measures like GDP and CPI show where the economy stands today, but indicators help predict where it's headed.
• Three types of indicators: leading (predict future), coincident (reflect present), and lagging (confirm past trends).
• Common confusion: leading vs lagging—leading indicators signal future activity (e.g., stock prices, building permits), while lagging indicators confirm trends after they occur (e.g., unemployment rate, consumer debt).
• Government tools: the government manages the economy through monetary policy (Bank of Canada), fiscal policy, and national debt management.
• Practical use: businesses use leading indicators to forecast demand; governments use lagging indicators to assess policy effectiveness; both rely on coincident indicators for immediate snapshots.

📊 The three types of economic indicators

📈 Leading indicators

Leading indicators: statistics that signal future economic activity and predict changes in the economy before they occur.

• These move ahead of the economy—they rise or fall before the economy expands or contracts.
• Purpose: help anticipate expansions or recessions three to twelve months into the future.
• If a leading indicator rises, the economy is more likely to expand in the coming year; if it falls, contraction is more likely.

Key examples from the excerpt:

Indicator	What it signals
Stock prices	Investor sentiment about future economic conditions
Building permits	Future growth in construction and housing markets
Consumer confidence index	Likely increases in spending and economic activity
New manufacturing orders	Increased production and economic growth ahead
New unemployment claims	Employers' expectations about future conditions; rising claims signal weakening activity or impending downturn

• Example: If businesses anticipate a slowdown, they may lay off workers, leading to an increase in unemployment claims—this provides an early signal of weakening economic activity.
• Policymakers monitor these changes to make proactive adjustments (e.g., monetary easing or fiscal stimulus).

📸 Coincident indicators

Coincident indicators: statistics that move in real-time with the economy, reflecting its current state.

• These provide a snapshot of the present economic situation.
• They align with the economy's current performance rather than predicting future trends.

Key examples:

Indicator	What it shows
GDP	Economic output at a given time
Employment levels	Current labor market conditions
Retail sales	Ongoing consumer spending trends
Industrial production	Real-time manufacturing activity
New job creation	How businesses are responding to the existing economic climate by expanding their workforce

• Example: A rise in new jobs typically coincides with economic growth, indicating healthy consumer demand and business investment; a decline suggests slower activity or contraction.
• Use case: helpful for short-term planning and immediate economic health assessments.

📉 Lagging indicators

Lagging indicators: statistics that reflect changes that have already occurred in the economy; they confirm trends but do not predict them.

• These move after the economy has already changed.
• Purpose: validate the accuracy of leading indicators and help understand the economy's historical performance.

Key examples:

Indicator	What it confirms
Unemployment rate	Businesses adjusting to economic shifts (lags behind trends)
Consumer debt levels	Past high spending during an economic boom
Inflation rate	Earlier changes in supply, demand, and monetary policy
Length of unemployment	If workers have been unemployed for a long time, the economy has been slow

• Example: Changes in unemployment often lag behind economic trends because businesses take time to adjust their workforce after economic shifts.
• Don't confuse: lagging indicators with leading indicators—lagging indicators confirm what has already happened, while leading indicators predict what will happen.

🏛️ Government's role in managing the economy

🎭 Multiple roles of government

The Canadian government (federal, provincial, municipal) influences business activities in several ways:

• Customer: purchases goods and services (e.g., infrastructure projects, equipment)

• Competitor: operates Crown corporations (e.g., Canada Post) that may compete with private businesses

• Regulator: enforces laws promoting competition, protecting consumers, ensuring environmental and social responsibility

• Taxation agent: collects taxes to fund public programs and infrastructure

• Provider of incentives: offers subsidies, tax credits, and grants to stimulate specific industries or investments

• Protector of consumers: sets quality and safety standards for goods, services, and business practices

• Provider of essential services: delivers healthcare, education, transportation, and emergency services

• Businesses may attempt to influence government decisions through lobbying, trade associations, political contributions, and public advocacy.

🛠️ Three primary economic management tools

To manage the broader economy, the government uses:

1. Monetary Policy
2. Fiscal Policy
3. National Debt Management

💰 Monetary policy and the Bank of Canada

🏦 What monetary policy is

Monetary policy: actions exercised by the Bank of Canada that decrease or increase the money supply and raise or lower short-term interest rates, making it harder or easier to borrow money.

• The Bank of Canada is empowered to take various actions affecting the money supply and interest rates.
• Expansionary policy: puts more money into circulation (makes borrowing easier).

🇨🇦 The role of the Bank of Canada

• The Bank of Canada is the nation's central bank.
• Principal role: "to promote the economic and financial welfare of Canada," as defined in the Bank of Canada Act.
• It is the institution responsible for implementing monetary policy in Canada.

🔍 How to use indicators in practice

📋 Different uses for different indicators

User	Which indicators	Why
Businesses	Leading indicators	Forecast demand and adjust production
Governments	Lagging indicators	Assess the effectiveness of policies
Both	Coincident indicators	Immediate economic health assessments

• Example: A business might watch building permits (leading) to anticipate future construction demand and adjust inventory accordingly.
• Example: A government might review unemployment rate changes (lagging) to determine whether a past stimulus policy successfully improved the labor market.
• Understanding the differences between these indicators is crucial for making informed decisions about the state of the economy and potential future trends.