Business Essentials, Ninth Canadian Edition
By Ronald J. Ebert, Ricky W. Griffin, George Dracopoulos and Frederick A. Starke
Contents:
Preface xv
Acknowledgments xix
About the Authors xx
PART 1 INTRODUCING THE CONTEMPORARY BUSINESS WORLD 1
01 UNDERSTANDING THE CANADIAN BUSINESS SYSTEM 2
Spin Master: Canadian Toy Maker Becomes a Global Children’s Entertainment Company 2
LO-1 The Idea of Business and Profit 4
LO-2 Economic Systems Around the World 4
Factors of Production 4
Types of Economic Systems 5
DISRUPTIONS IN BUSINESS Disruptions Are Everywhere! 6
THERE’S AN APP FOR THAT! 8
LO-3 Interactions between Business and Government 8
How Government Influences Business 8
THE GREENING OF BUSINESS Problems in the Ontario Power System 10
How Business Influences Government 11
LO-4 The Canadian Market Economy 11
Demand and Supply in a Market Economy 11
E-BUSINESS AND SOCIAL MEDIA SOLUTIONS The Lucrative Business of App Development 13
LO-5 Private Enterprise and Competition 14
Degrees of Competition 14
Summary of Learning Objectives 16
Questions and Exercises 17
Team Exercises 17
business case 1 18
02 THE ENVIRONMENT OF BUSINESS 20
Growth and Success: A Few Dollars at a Time 20
LO-1 Organizational Boundaries and Environments 22
Organizational Boundaries 22
Multiple Organizational Environments 23
LO-2 The Economic Environment 23
Economic Growth 23
Economic Stability 26
THERE’S AN APP FOR THAT! 26
Managing the Canadian Economy 28
LO-3 The Technological Environment 28
Research and Development (R&D) 28
Product and Service Technologies 28
THE GREENING OF BUSINESS Environmentally Friendly Automobiles 29
LO-4 The Political–Legal Environment 30
DISRUPTIONS IN BUSINESS The Physical Environment 30
LO-5 The Socio-Cultural Environment 31
Customer Preferences and Tastes 31
Ethical Compliance and Responsible Business Behaviour 31
The Business Environment 31
The Industry Environment 32
ENTREPRENEURSHIP AND NEW VENTURES Goldline Curling: Dealing with New Industry Threats 33
LO-6 Emerging Challenges and Opportunities in the Business Environment 33
Outsourcing 34
The Growing Role of Social Media 34
Business Process Management 34
LO-7 Redrawing Corporate Boundaries 34
Mergers and Acquisitions 34
Divestitures and Spinoffs 35
Employee-Owned Corporations 35
Strategic Alliances 35
Subsidiary and Parent Corporations 35
Summary of Learning Objectives 36
Questions and Exercises 37
Team Exercises 37
business case 2 38
03 CONDUCTING BUSINESS ETHICALLY AND RESPONSIBLY 40
Is Legalization of Marijuana a Good Idea? 40
Ethics in the Workplace 42
LO-1 Individual Ethics 42
Business and Managerial Ethics 43
Assessing Ethical Behaviour 43
Encouraging Ethical Behaviour in Organizations 45
LO-2 Corporate Social Responsibility 46
LO-3 The Stakeholder Model of Responsibility 47
E-BUSINESS AND SOCIAL MEDIA SOLUTIONS Retailers
Are Watching You: Is That Okay? 48
THERE’S AN APP FOR THAT! 49
DISRUPTIONS IN BUSINESS Key Issues in Whistle-Blower Programs 51
THE GREENING OF BUSINESS Which Car Pollutes Less? Electric or Gasoline? 53
Implementing Social Responsibility Programs 55
LO-4 Approaches to Social Responsibility 55
Managing Social Responsibility Programs 55
LO-5 Social Responsibility and the Small Business 56
Summary of Learning Objectives 57
Questions and Exercises 58
Team Exercises 58
Business case 3 59
04 ENTREPRENEURSHIP, SMALL BUSINESS, AND NEW VENTURE CREATION 61
Tim Hortons’ Franchisee Challenges: Heroes, and Villains 61
LO-1 Interrelationship of Small Business, New Venture Creation, and Entrepreneurship 63
Small Business 63
The New Venture/Firm 64
Entrepreneurship 64
Intrapreneurs 65
LO-2 The Role of Small and New Businesses in the Canadian Economy 66
Small Businesses 66
New Ventures 66
LO-3 The Entrepreneurial Process 67
Identifying Opportunities 67
E-BUSINESS AND SOCIAL MEDIA SOLUTIONS Shopify: Helping Entrepreneurs Expand and Monetize
Their Client Base 69
Accessing Resources 70
THERE’S AN APP FOR THAT! 71
Building the Right Team 72
ENTREPRENEURSHIP AND NEW VENTURES Crowdfunding: Finance from the Masses 73
Assessing the Fit between Elements in the Entrepreneurial Process 73
THE GREENING OF BUSINESS Green Growth in Small Businesses 74
LO-4 Starting Up a Small Business 74
Buying an Existing Business 74
Buying a Franchise 75
LO-5 Success and Failure in Small Business 76
Reasons for Success 76
Reasons for Failure 77
LO-6 Forms of Business Ownership 77
The Sole Proprietorship 77
The Partnership 77
The Corporation 78
The Co-Operative 80
Summary of Learning Objectives 81
Questions and Exercises 82
Team Exercises 83
business case 4 84
05 THE GLOBAL CONTEXT OF BUSINESS 86
Couche-Tard: Your Global Convenience Store 86
The Contemporary Global Economy 88
LO-1 The Major World Marketplaces 89
LO-2 Emerging Markets: BRICS and Beyond 90
E-BUSINESS AND SOCIAL MEDIA SOLUTIONS The Goose
Is Flying East: CanadaGoose.cn 91
LO-3 Forms of Competitive Advantage 92
The Balance of Trade 93
The Balance of Payments 93
Exchange Rates 93
THERE’S AN APP FOR THAT! 94
LO-4 International Business Management 94
Going International 94
Levels of Involvement in International Business 95
International Organizational Structures 96
LO-5 Barriers to International Trade 97
Social and Cultural Differences 97
ENTREPRENEURSHIP AND NEW VENTURES A Better Coconut Water 98
Economic Differences 98
Legal and Political Differences 99
Business-Practice Laws 100
DISRUPTIONS IN BUSINESS Is Supply Management Doomed? 101
LO-6 Overcoming Barriers to Trade 101
General Agreement on Tariffs and Trade (GATT) 101
World Trade Organization 101
The European Union 102
The North American Free Trade Agreement and the
New US-Mexico-Canada Agreement (USMCA) 103
Major New Agreements: TPP and CETA 103
Other Free Trade Agreements Around the World 104
Summary of Learning Objectives 104
Questions and Exercises 106
Team Exercises 106
business case 5 107
PART 2 THE BUSINESS OF MANAGING 111
06 MANAGING THE BUSINESS ENTERPRISE 112
A Surprising Change in Corporate Strategy at
Bombardier 112
Who Are Managers? 114
LO-1 The Management Process 114
Planning 115
Organizing 115
Leading 115
Controlling 115
Management: Science or Art? 116
E-BUSINESS AND SOCIAL MEDIA SOLUTIONS Managing Customer Service Touch Points 116
Becoming a Manager 117
What Should You Expect in a Management Job? 117
ENTREPRENEURSHIP AND NEW VENTURES Innovations in Management 118
LO-2 Types of Managers 118
Levels of Management 118
Areas of Management 119
LO-3 Management Roles and Skills 120
Management Roles 120
Management Skills 121
LO-4 Strategic Management 124
Setting Business Goals 124
Formulating Strategy 125
THERE’S AN APP FOR THAT! 126
Levels of Strategy 127
LO-5 Contingency Planning and Crisis Management 128
Contingency Planning 128
Crisis Management 128
DISRUPTIONS IN BUSINESS When Disaster Strikes 129
LO-6 Management and the Corporate Culture 129
THE GREENING OF BUSINESS Mission Zero 130
Communicating the Culture and Managing Change 131
Summary of Learning Objectives 131
Questions and Exercises 132
Team Exercises 133
business case 6 134
07 ORGANIZING THE BUSINESS ENTERPRISE 136
Building a Foundation and Structure for Long-Term Success 136
What Is Organizational Structure? 138
LO-1 Determinants of Organizational Structure 138
ENTREPRENEURSHIP AND NEW VENTURES Organizing for Growth 139
The Chain of Command 139
The Building Blocks of Organizational
Structure 139
LO-2 Job Specialization 139
Departmentalization 141
Establishing the Decision-Making Hierarchy 142
LO-3 Assigning Tasks 142
Performing Tasks 143
Distributing Authority: Centralization and
Decentralization 143
Three Forms of Authority 145
LO-4 Basic Organizational Structures 146
The Functional Structure 146
The Divisional Structure 146
Project Organization 147
Matrix Structure 147
International Structures 149
Organizational Design for the Twenty-First
Century 149
Boundaryless Organization 149
Team Organization 150
Virtual Organization 150
E-BUSINESS AND SOCIAL MEDIA SOLUTIONS “Simon
Says,” Alexa, What Have You Done? 150
Learning Organization 151
LO-5 The Informal Organization 151
Informal Groups 151
The Organizational Grapevine 151
THERE’S AN APP FOR THAT! 152
Summary of Learning Objectives 152
Questions and Exercises 154
Team Exercises 154
business case 7 155
08 MANAGING HUMAN RESOURCES AND LABOUR RELATIONS 157
An Avalanche of Sexual Harassment Cases 157
LO-1 The Foundations of Human Resource
Management 159
The Strategic Importance of HRM 159
Human Resource Planning 160
LO-2 Recruiting Human Resources 160
THE GREENING OF BUSINESS
What Are “Green” Jobs? 161
Selecting Human Resources 162
THERE’S AN APP FOR THAT! 163
E-BUSINESS AND SOCIAL MEDIA SOLUTIONS
Artificial Intelligence Meets HR 164
LO-3 Developing Human Resources 164
New Employee Orientation 164
Training 165
ENTREPRENEURSHIP AND NEW VENTURES
Are You LinkedIn? 165
Evaluating Employee Performance 166
LO-4 Compensation and Benefits 167
Determining Basic Compensation 167
Incentive Programs 168
Benefits 169
LO-5 The Legal Context of HRM 170
Equal Employment Opportunity 170
Comparable Worth 170
Sexual Harassment 171
Employee Safety and Health 171
Retirement 171
LO-6 New Challenges in the Changing
Workplace 172
Managing Workforce Diversity 172
Managing Knowledge Workers 173
Managing Contingent Workers 173
LO-7 Dealing with Organized
Labour 173
The Development of Canadian Labour Unions 173
Unionism Today 174
The Future of Unions 174
LO-8 The Legal Environment for Unions in
Canada 174
Federal Legislation—The Canada Labour Code 175
Provincial Labour Legislation 175
Union Organizing Strategy 175
Union Security 176
Types of Unions 177
LO-9 Collective Bargaining 177
Reaching Agreement on the Contract’s Terms 177
Contract Issues 177
When Bargaining Fails 178
DISRUPTIONS IN BUSINESS Community College Strike
Disrupts Students’ Lives 179
Conciliation, Mediation, and Arbitration 179
Summary of Learning Objectives 180
Questions and Exercises 181
Team Exercises 182
business case 8 183
09 MOTIVATING, SATISFYING, AND LEADING EMPLOYEES 184
Hunter Harrison 184
LO-1 Forms of Employee Behaviour 186
LO-2 Individual Differences among Employees 187
Personality 187
Attitudes at Work 188
E-BUSINESS AND SOCIAL MEDIA SOLUTIONS Caution:
Words Matter and Online Posts Can Haunt You 189
LO-3 Matching People and Jobs 189
Psychological Contracts 189
The Person–Job Fit 190
Motivation in the Workplace 190
Classical Theory 190
ENTREPRENEURSHIP AND NEW VENTURES Rebooting with Lessons from Past Ventures 191
Early Behavioural Theory 191
LO-4 Behavioural Theory in the Mid-Twentieth Century 192
Contemporary Motivation Theory 193
LO-5 Strategies for Enhancing Motivation 194
Reinforcement/Behaviour Modification 194
Goal-Setting Theory 195
Participative Management and Empowerment 195
Team Management 196
Job Enrichment and Redesign 196
Modified Work Schedules 197
THE GREENING OF BUSINESS The Compressed Workweek
and Telecommuting: Are They Really Green? 199
LO-6 Leadership and Motivation 199
Leadership and Power 200
LO-7 Approaches to Leadership 201
THERE’S AN APP FOR THAT! 202
LO-8 Recent Trends in Leadership 202
DISRUPTIONS IN BUSINESS Women in Leadership 204
Summary of Learning Objectives 205
Questions and Exercises 207
Team Exercises 207
business case 9 209
PART 3 MANAGING OPERATIONS AND INFORMATION 213
10 OPERATIONS MANAGEMENT, PRODUCTIVITY, AND QUALITY 214
The Robots Keep Coming 214
LO-1 Providing Goods and Services to Customers 216
Changes in Canadian Manufacturing over Time 216
Industrial Revolutions 217
ENTREPRENEURSHIP AND NEW VENTURES
Entrepreneurship That Matters: Speaking Loud and Clear 217
Creating Value through
Operations 218
LO-2 Differences between Service and
Manufacturing Operations 218
LO-3 Operations Processes 219
Business Strategy as the Driver of
Operations 221
LO-4 Operations Planning 222
Capacity Planning 222
Location Planning 222
Layout Planning 222
Quality Planning 224
Methods Planning 224
Operations Scheduling 225
The Master Operations Schedule 225
Detailed Schedules 225
Staff Schedules and Computer-Based
Scheduling 226
Project Scheduling 226
Operations Control 227
Materials Management 227
Production Process Control 227
LO-5 The Productivity–Quality
Connection 228
Meeting the Productivity Challenge 228
Meeting the Quality Challenge 229
LO-6 Managing for Quality 230
THERE’S AN APP FOR THAT! 231
Tools for Quality Assurance 231
LO-7 Adding Value Through Supply Chains 233
THE GREENING OF BUSINESS
Too Good to Waste 234
Summary of Learning Objectives 235
Questions and Exercises 236
Team Exercises 237
business case 10 238
11 UNDERSTANDING ACCOUNTING 240
Future Directions for the Modern
Accountant 240
What Is Accounting, and Who Uses Accounting
Information? 242
LO-1 Who Are Accountants and What
Do They Do? 243
Financial versus Managerial Accounting 243
Professional Accountants 243
THERE’S AN APP FOR THAT! 244
Accounting Services 244
Private Accountants 245
LO-2 The Accounting Equation 246
Assets and Liabilities 246
Owners’ Equity 246
ENTREPRENEURSHIP AND NEW VENTURES
Working with the Accounting Equation 247
LO-3 Financial Statements 247
Balance Sheets 247
LO-4 Income Statements 249
Statements of Cash Flows 250
The Budget: An Internal Financial
Statement 250
LO-5 Analyzing Financial Statements 251
Solvency Ratios: Borrower’s Ability to Repay Debt 251
Short-Term Solvency Ratios 251
DISRUPTIONS IN BUSINESS Skimming off the Top 251
Long-Term Solvency 252
Profitability Ratios: Earnings Power
for Owners 252
Return on Equity 252
Return on Sales 252
Earnings Per Share 252
Activity Ratios: How Efficiently Is the Firm
Using Its Resources? 253
LO-6 Bringing Ethics into the Accounting
Equation 253
Why Accounting Ethics? 253
LO-7 The Evolving Role of the Modern
Accountant 254
Summary of Learning Objectives 255
Questions and Exercises 256
Team Exercises 257
business case 11 258
PART 4 PRINCIPLES OF MARKETING 261
12 UNDERSTANDING MARKETING PRINCIPLES AND DEVELOPING PRODUCTS 262
Maple Leaf: Capitalizing on the Meatless Meat
Movement 262
LO-1 What Is Marketing? 264
Delivering Value 264
Goods, Services, and Ideas 265
Relationship Marketing and Customer Relationship Management 266
The Marketing Environment 266
LO-2 Developing the Marketing Plan 267
Strategy: The Marketing Mix 268
THERE’S AN APP FOR THAT! 268
Product 268
Pricing 269
Place (Distribution) 269
Promotion 269
LO-3 Marketing Strategy: Market Segmentation,
Target Marketing, and Positioning 269
Identifying Market Segments 270
LO-4 Marketing Research 271
The Research Process 271
Research Methods 272
E-BUSINESS AND SOCIAL MEDIA SOLUTIONS
Crowdsourcing: Wisdom from the Consumer World 273
LO-5 Understanding Consumer
Behaviour 274
Influences on Consumer Behaviour 274
The Consumer Buying Process 274
LO-6 Organizational Marketing and Buying
Behaviour 274
Business Marketing 275
B2B Buying Behaviour 275
LO-7 What Is a Product? 275
The Value Package 275
Classifying Goods and Services 276
The Product Mix 276
DISRUPTIONS IN BUSINESS Counterfeit Products 277
LO-8 Developing New Products and Branding 277
The New Product Development Process 277
Product Life Cycle 278
ENTREPRENEURSHIP AND NEW VENTURES Copper
Branch: Plant-Based Power Food 279
Identifying Products: Branding
and Packaging 280
Packaging Products 281
Labelling Products 281
Summary of Learning Objectives 282
Questions and Exercises 284
Team Exercises 284
business case 12 285
13 PRICING, PROMOTING, AND DISTRIBUTING PRODUCTS 287
Amazon Versus the Bay: Past, Present, and Future of Retail 287
LO-1 Determining Prices 289
Pricing to Meet Business Objectives 289
Price-Setting Tools 290
LO-2 Pricing Strategies and Tactics 291
Pricing Strategies 291
THERE’S AN APP FOR THAT! 292
Pricing Tactics 292
LO-3 Promoting Products and Services 293
Promotional Strategies 293
The Promotional Mix 293
LO-4 Advertising Promotions and Media 294
Advertising Media 294
Traditional Media: Changing Times 294
Online: The Power of Consumer
Engagement 294
LO-5 Personal Selling, Sales Promotions, Direct
(or Interactive) Marketing, Public Relations, and
Publicity 296
Personal Selling 296
Sales Promotions 296
Publicity and Public Relations 297
DISRUPTIONS IN BUSINESS Now Here’s a Story About Disruption! 297
LO-6 The Distribution Mix 298
Intermediaries and Distribution Channels 298
THE GREENING OF BUSINESS Single-Use Packaging Under Fire 299
Distribution Strategies 300
Channel Conflict and Channel Leadership 300
LO-7 The Role of Intermediaries 300
Wholesaling 300
Retailing 301
E-BUSINESS AND SOCIAL MEDIA SOLUTIONS The Long Tail, Revisited 302
LO-8 Physical Distribution 303
Warehousing Operations 303
Transportation Operations 303
Distribution through Supply Chains as a Marketing
Strategy 303
Summary of Learning Objectives 304
Questions and Exercises 306
Team Exercises 306
business case 13 308
PART 5 MANAGING FINANCIAL ISSUES 311
14 MONEY AND BANKING 312
RBC: A Symbol of Canadian Banking Strength 312
LO-1 What Is Money? 314
The Characteristics of Money 314
The Functions of Money 315
The Spendable Money Supply: M-1 315
M-1 Plus the Convertible Money Supply: M-2 315
Credit Cards and Debit Cards: Plastic Money? 315
LO-2 The Canadian Financial System 316
Financial Institutions 316
Financial Pillar #1—Chartered Banks 316
Services Offered by Banks 317
THERE’S AN APP FOR THAT! 317
Bank Loans 318
E-BUSINESS AND SOCIAL MEDIA SOLUTIONS Real-Time
Investing: Just a Click Away 319
Banks as Creators of Money 319
Other Changes in Banking 320
LO-3 The Bank of Canada 320
LO-4 Financial Pillar #2—Alternate Banks 321
Trust Companies 321
Credit Unions/Caisses Populaires 321
Financial Pillar #3—Specialized Lending and Savings
Intermediaries 322
Life Insurance Companies 322
Factoring Companies 322
Financial Corporations 322
Venture Capital Firms 322
Pension Funds 323
Financial Pillar #4—Investment Dealers 323
ENTREPRENEURSHIP AND NEW VENTURES Risky Business 323
Other Sources of Funds 324
Government Financial Institutions and
Granting Agencies 324
International Sources of Funds 324
LO-5 International Banking and Finance 324
Currency Values and Exchange Rates 324
The International Payments Process 325
THE GREENING OF BUSINESS Is Bitcoin
Environmentally Friendly? 326
The International Bank Structure 326
Summary of Learning Objectives 327
Questions and Exercises 328
Team Exercises 328
Business case 14 329
15 FINANCIAL DECISIONS AND RISK MANAGEMENT 331
Blockchain and Bitcoin: New Models
or Modern-Day Bubbles? 331
LO-1 The Role of the Financial Manager 333
Objectives of the Financial Manager 333
Responsibilities of the Financial Manager 333
LO-2 Why Businesses Need Funds 334
Short-Term (Operating) Expenditures 334
Long-Term (Capital) Expenditures 335
ENTREPRENEURSHIP AND NEW VENTURES Social Capital
Is Making the World a Better Place 335
LO-3 Sources of Short-Term Funds 336
Trade Credit 336
Secured Short-Term Loans 336
Unsecured Short-Term Loans 336
LO-4 Sources of Long-Term Funds 337
Debt Financing 337
THE GREENING OF BUSINESS What Are the Prospects
for “Green Bonds”? 338
LO-5 Equity Financing 339
Hybrid Financing: Preferred Stock 340
Choosing between Debt and Equity Financing 341
The Risk–Return Relationship 341
Securities Markets 343
Investment Banking 343
Stock Exchanges 344
LO-6 Buying and Selling Securities 345
Financing Securities Purchases 346
DISRUPTIONS IN BUSINESS Short Sellers
Are Everywhere 347
LO-7 Other Investments 348
Mutual Funds 348
Exchange-Traded Funds 348
Hedge Funds 348
Commodities 349
THERE’S AN APP FOR THAT! 349
Securities Regulation 349
Financial Management for Small Businesses 349
Establishing Bank Credit and Trade Credit 350
Venture Capital 350
Planning for Cash-Flow Requirements 350
LO-8 Risk Management 350
Coping with Risk 350
Summary of Learning Objectives 351
Questions and Exercises 353
Team Exercises 354
business case 15 355
APPENDIX A A BRIEF HISTORY OF BUSINESS IN
CANADA 359
APPENDIX B BUSINESS LAW 360
APPENDIX C USING TECHNOLOGY TO MANAGE
INFORMATION IN THE INTERNET AND SOCIAL MEDIA ERA 364
APPENDIX D MANAGING YOUR PERSONAL FINANCES: A SYNOPSIS 376
APPENDIX E INSURANCE AS RISK MANAGEMENT 378
Endnotes and Source Notes 381
Name and Organization Index 409
Subject Index 415