Transcript Entrepreneurship and The Economy

Entrepreneurship & Small
Business Management
Chapter 1 – Section 1.1
Entrepreneurship Defined
 Entrepreneur: is an individual who
undertakes the creation, organization, and
ownership of a business
 Venture: a new business undertaking that
involves risk
Economics
 In a free enterprise system (a.k.a capitalism)
people can make economic choices such as
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What to buy
To own property
To start a business and compete with others
Without capitalism, entrepreneurship cannot exist!
Economics Continued
 Market structure: the nature and degree of
competition among businesses operating in the
same industry
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Perfect competition: numerous buyers & sellers – no
single buyer/seller can affect price – g/s is virtually
identical
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Monopoly: one seller has control over supply & prices
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(e.g. food companies)
(e.g. LCBO, Microsoft)
Canadian Air Farce commentary on Microsoft
Oligopoly: a few competing firms exist
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(e.g. car industry, gas companies)
Basic Economic Concepts
 Goods: tangible/physical items
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Example?
 Services: intangible/nonphysical products
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Example?
 Needs: basic requirements for survival
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Example?
 Wants: not needed to survive, but would like to
have
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Example?
Needs & Wants
Needs & Wants Continued
 Consumers and businesses:
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Have developed to attend to needed wants
and in the process make a profit.
Businesses have found consumer wants to
be INSATIABLE (i.e. they can never be
satisfied)
Businesses create a desire to have a WANT
(The Corporation)
Interdependence
Demand
 Demand: the quantity of goods or services
that consumers are willing and able to buy
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Law of demand: as price goes up, the quantity
demanded goes down
Give an example of this law using a specific
product.
See page 12 in your textbook.
Demand Continued
 Elastic demand: a slight change in price
creates a sharp change in demand (highly
responsive to change)
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Example: Vacation package
 Inelastic demand: a change in price has very
little effect on demand
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Example: Food, fuel
Supply
 Supply: the amount of a good or service that
producers are willing to provide
 If demand exceeds supply, scarcity occurs
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Example? (PS3)
 Equilibrium occurs when consumers buy all
of a product that is supplied – no surplus or
shortage
Economic Indicators
 The federal gov. publishes stats to help
entrepreneurs understand the state of the
economy and predict changes
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Employment rate – August 2009 91%
GDP – the total market values of g/s produced
within a nation during a given period
What Entrepreneurs Contribute
 They recognize consumer wants and turn
demand into supply
 They respond to consumer wants and create
even more wants to be satisfied – drives the
economy
 They provide jobs, thus securing their own
financial security and those they employ
Small Business Vs. Ventures
 Small business: “mom-and-pop” - main goal
is to create a job that provides enough profit
to fulfill personal goals
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Example: shoe repair shop, lawyer
 Ventures: principal goal is to innovate and
grow the venture to a regional, national, or
global level
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Example: Tim Hortons, LuLu Lemon