ADMN 201 — Ch1: Understanding the Canadian Business System
Chapter 1 establishes the economic foundations that underpin everything else in the course: what business is, how Canada’s mixed economy works, how supply and demand allocate resources, and how competition is structured.
Learning Objectives (LO1.1–1.5)
| LO | Topic |
|---|---|
| 1.1 | Define Canadian business and its main goals |
| 1.2 | Describe global economic systems and how they control factors of production |
| 1.3 | Describe interactions between business and government in Canada |
| 1.4 | Show how demand and supply affect resource distribution |
| 1.5 | Identify elements of private enterprise and degrees of competition |
LO 1.1 — The Nature of Canadian Business
A business is an organization that produces or sells goods or services to make a profit. Profit = revenues − expenses.
- For-profit organizations: primary goal is to increase value for owners/shareholders
- Not-for-profit organizations: provide goods/services without profit as the primary goal (service-oriented)
- Both types use the same operational principles (marketing, accounting, management)
LO 1.2 — Economic Systems
See EconomicSystems for the full breakdown.
Canada operates as a mixed market economy — a blend of private enterprise (capitalism) and government regulation. The five factors of production are: labour, capital, entrepreneurs, natural resources, and information.
Key processes moving economies toward market systems: deregulation (reducing laws on business) and privatization (transferring government activities to the private sector).
LO 1.3 — Business-Government Interactions
See BusinessGovernmentRelations for the full breakdown.
Government plays six roles: customer, competitor, regulator, taxation agent, incentive provider, essential services provider. The Competition Act is the key regulatory tool. Business influences government through lobbyists, trade associations, and advertising.
Crown corporations (Hydro-Québec, Canada Post) are the main example of government-as-competitor.
LO 1.4 — Supply and Demand
See SupplyAndDemand for the full breakdown.
- Law of Demand: inverse relationship — as price falls, quantity demanded rises
- Law of Supply: direct relationship — as price rises, quantity supplied rises
- Equilibrium price: where quantity demanded = quantity supplied (the market price)
- Surplus: Qs > Qd; Shortage: Qd > Qs
- Consumer surplus: paid less than max willing; Producer surplus: received more than min willing
LO 1.5 — Private Enterprise and Competition
See PrivateEnterprise and DegreesOfCompetition for full breakdowns.
Private enterprise rests on four pillars: private property rights, freedom of choice, profits, competition. Profits motivate starting businesses; competition motivates operating them efficiently.
The four degrees of competition:
- Perfect competition — many small firms, identical products, zero price power (wheat)
- Monopolistic competition — many firms, differentiated products, some price power (coffee shops)
- Oligopoly — few large firms, high barriers, interdependent pricing (auto, banking)
- Monopoly — one firm, full price control (Canada Post letter mail)
Opening Case: Shopify
Shopify is an Ottawa-based company (founded 2006 by Tobias Lütke) that powers 1M+ businesses in 175 countries. It illustrates how Canada’s mixed market economy enables entrepreneurship — private enterprise, competitive markets, and government infrastructure all contributed to its growth. Its success would be difficult to replicate in a command economy.
mindmap root((Ch1: Canadian Business System)) Nature of Business For-profit: maximize shareholder value Not-for-profit: service goals Same operational principles apply Economic Systems Command: government controls factors Market: individuals control factors Mixed: Canada blends both 5 Factors: Labour, Capital, Entrepreneurs, Natural Resources, Information Business-Government Relations Government roles x6 Competition Act Crown Corporations Lobbyists and Trade Associations Supply and Demand Law of Demand: inverse Law of Supply: direct Equilibrium Price Surplus and Shortage Private Enterprise and Competition 4 Pillars: Property, Choice, Profit, Competition Perfect Competition Monopolistic Competition Oligopoly Monopoly