what is entrepreneurship? 1 discuss the role of small business and entrepreneurship in the economy....

What Is Entrepreneurship?What Is Entrepreneurship?

1

Discuss the role of small business and entrepreneurship in the economy.

Describe economic systems.

Explain how economics is about making choices.

Discuss the role of economic indicators and business cycles.

Describe what entrepreneurs contribute to the economy.

Section 1.1 Entrepreneurship and the Economy

1.1


2

Small Business and Entrepreneurship

As an entrepreneur, you accept the risks and responsibilities of business ownership.

entrepreneur an individual who undertakes the creation, organization, and ownership of a business



3


Creating and running a business venture requires a variety of skills.

venture - a new business undertaking that involves risk



4


Starting a home-based business calls for entrepreneurship on the part of the owner.

entrepreneurship acting like an entrepreneur or having an entrepreneurial mind-set


About one in three households is involved in an entrepreneurial enterprise.

entrepreneurial the process of recognizing an opportunity, testing it in the market, and gathering resources necessary to go into business


5


Knowledge of economics contributes to an understanding of how entrepreneurs and customers interact.

economics the study of how people allocate scarce resources to fulfill their unlimited wants


An economic system includes a set of laws, institutions, and activities that guide economic decision making.

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Economic Systems


All economic systems attempt to answer four basic questions.

6

What goods and services should be

produced?

What quantity of goods and services

should be produced?

How should goods and services be

produced?

For whom should goods and services be

produced?


7

The Free Enterprise System & The Profit Motive

Most democratic nations have a free enterprise system.

free enterprise system (also known as capitalism or market economy) an economic system in which people have the right to choose:

what products to buy to own private property to choose to start a

business and compete with other businesses


Making a profit is a primary incentive of free enterprise.

profit - money that is left over after all expenses of running a business have been deducted from the income


8

Competition

Perfect competition is a market structure in which there are numerous buyers and sellers and no single buyer or seller can affect price.

market structure the nature and degree of competition among businesses operating in the same industry; market structure affects market price

The role of competition is a key element in a market economy. It helps to ensure lower prices, as well as higher quality, better service and reputation.


9

The Free Enterprise System

The government may grant a temporary monopoly to an inventor.

monopoly a market structure in which a particular commodity has only one seller



10

The Free Enterprise System

Under antitrust laws, some forms of oligopoly are illegal.

oligopoly a market structure in which there are just a few competing firms



11

Think-Pair-Share

Turn to a partner and discuss the following question:

What role do the profit motive and competition play in the free enterprise system? What is it’s impact on business?

Record your answers in the blank provided. Random groups will be asked to share their answers.

3 Minutes


12

Goods and Services

Goods and services are the products of our economic system.

goods tangible (or physical) products of our economic system that satisfy consumers’ wants and needs


services intangible (nonphysical) products that satisfy consumers’ wants and needs


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Goods and Services

Entrepreneurs respond to consumers’ wants and needs with goods and services.

want something that you do not have to have for survival, but would like to have


need a basic requirement for survival


14

Factors of Production

There are four basic factors of production:

factors of production - the resources businesses use to produce the goods and services that people want


land

labor

entrepreneurship

capital


15

Scarcity

The principle of scarcity means giving up one thing in order to have something else.

scarcity the difference between demand and supply; limited resources



16

Supply and Demand Theory

In a free enterprise system, the price of a product is determined by demand.

demand the quantity of goods or services that consumer are willing and able to buy at various prices



17


The degree to which demand for a product is affected by its price is either governed by elastic demand or inelastic demand.

elastic demand situations in which a change in price creates a change in demand


inelastic demand situations in which a change in price has little or no effect on demand for products


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Due to the law of diminishing marginal utility, even when a product’s price is low, people will not keep buying it indefinitely.

diminishing marginal utility the effect or law that establishes that price alone does not determine demand, and other factors, such as income, taste, and the amount of product already owned, play a role as well



19


Supply is continually shifting in the marketplace.

supply the amount of goods or services that producers are willing to provide



high demand + short supply = prices go up. heavy supply + short demand = prices go down.


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Because supply and demand are continually shifting in the marketplace, the change creates surpluses, shortages, and equilibrium.

equilibrium the point at which consumers buy all of a product that is supplied; at this point, there is neither a surplus nor a shortage



21

Economic Indicators and Business Cycles

There are four stages of the business cycle: growth, recession, depression, and recovery.

business cycle the general pattern of expansion and contraction that the economy goes through



22Section 1.1 Entrepreneurship and the Economy

1. What are some ways that entrepreneurs 1. What are some ways that entrepreneurs affect the economy?affect the economy?

2. What are some examples of elastic and 2. What are some examples of elastic and inelastic goods and how do they differ?inelastic goods and how do they differ?

3. Explain the relationship between cost and 3. Explain the relationship between cost and profit and supply and demandprofit and supply and demand

Check Your UnderstandingCheck Your Understanding


23

DECA Role Play Practice

1. Pick a partner.

2. Read the Role Play found on page 16.

3. Work as a team to create a presentation (focusing on the performance indicators).

4. Record your notes to be used in the presentation; will be collected for points.

5. Random group(s) will be called on to present.


24

Discuss the five components of the entrepreneurial start-up process.

Explain how to achieve business success.

Section 1.2 The Entrepreneurial Process

1.2


25

The entrepreneurial start-up process includes:

the entrepreneur

the environment

the opportunity

start-up resources

the organization


1.2

An idea plus a market equals an opportunity.


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The Entrepreneurial Start-Up Process

The five components of the entrepreneurial start-up process work together to create a new business.


the entrepreneur

the environment

the opportunity

start-up resources

the new venture organization

The entrepreneur is the driving force of the start-up process.

Entrepreneurs recognize opportunities and pull together the resources to exploit opportunities.

The nature of the environment

The availability of resources

Ways to realize value

Incentives to create new businesses

The Environment

Section 1.2 The Entrepreneurial Process 27

Four Categories of Environmental Variables


28

The Environment

New businesses seek enterprise zones that provide incentives.

enterprise zones specially designated areas of a community that provide tax benefits to new businesses locating there; communities may also provide grants for new product development



29

Start-Up Resources When entrepreneurs are ready to start up a new business, they must use creative talent to put together the necessary start-up resources.

start-up resources the capital, skilled labor, management expertise, legal and financial advice, facilities, equipment, and customers needed to start a business


A good opportunity can be turned into a business.

opportunity an idea that has commercial value


30

The New Venture Organization

The fifth component of the start-up process is the execution of the new venture organization.

new venture organization the infrastructure or foundation that supports all the products, processes, and services of a new business



31

The Facts About Business Failure

A business failure files Chapter 7 bankruptcy.

business failure a business that has stopped operating, with a loss to creditors, and one that no longer appears on the tax rolls


discontinuance a business that disappears from the tax rolls because it may be operating under a new name or because the owner has purposely discontinued in order to start a new business

A business that disappears from the tax rolls may be a failure or a discontinuance.

Most new businesses fail - MYTH!!The truth is more will succeed than fail.

66% survive the first 2 years.

How Entrepreneurs Can Succeed

Section 1.2 The Entrepreneurial Process 32

4. Plan and manage effectively

1. Recognize opportunity

2. Test the opportunity in the marketplace

3. Assemble an expert team to execute the business concept


33Section 1.1 Entrepreneurship and the Economy

1. What are the five components of the 1. What are the five components of the process of new venture creation?process of new venture creation?

2. How does an enterprise zone encourage 2. How does an enterprise zone encourage new business?new business?

3. Why shouldn’t discontinuances be 3. Why shouldn’t discontinuances be counted as business failure?counted as business failure?

Check Your UnderstandingCheck Your UnderstandingCh 1.2

what is entrepreneurship? 1 discuss the role of small business and entrepreneurship in the economy....

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