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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 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 Perfect competition: numerous buyers & sellers – no single buyer/seller can affect price – g/s is virtually identical Monopoly: one seller has control over supply & prices (e.g. food companies) (e.g. LCBO, Microsoft) Canadian Air Farce commentary on Microsoft Oligopoly: a few competing firms exist (e.g. car industry, gas companies) Basic Economic Concepts Goods: tangible/physical items Example? Services: intangible/nonphysical products Example? Needs: basic requirements for survival Example? Wants: not needed to survive, but would like to have Example? Needs & Wants Needs & Wants Continued Consumers and businesses: 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 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) Example: Vacation package Inelastic demand: a change in price has very little effect on demand Example: Food, fuel Supply Supply: the amount of a good or service that producers are willing to provide If demand exceeds supply, scarcity occurs 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 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 Example: shoe repair shop, lawyer Ventures: principal goal is to innovate and grow the venture to a regional, national, or global level Example: Tim Hortons, LuLu Lemon