Download What Is Entrepreneurship?

What Is Entrepreneurship?
1.1
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
What Is Entrepreneurship?
Small Business and
Entrepreneurship
As an entrepreneur, you
accept the risks and
responsibilities of business
ownership.
Section 1.1 Entrepreneurship and the Economy
entrepreneur
an individual who
undertakes the
creation, organization,
and ownership of a
business
2
What Is Entrepreneurship?
Small Business and
Entrepreneurship
Creating and running a
business venture requires
a variety of skills.
Section 1.1 Entrepreneurship and the Economy
venture - a new
business undertaking
that involves risk
3
What Is Entrepreneurship?
Small Business and
Entrepreneurship
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
Section 1.1 Entrepreneurship and the Economy
4
What Is Entrepreneurship?
Small Business and
Entrepreneurship
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.
Section 1.1 Entrepreneurship and the Economy
5
Economic Systems
?
What goods and
services should be
produced?
?
What quantity of
goods and services
should be produced?
All economic systems attempt
to answer four basic questions.
?
How should goods
and services be
produced?
Section 1.1 Entrepreneurship and the Economy
?
For whom should
goods and services be
produced?
6
What Is Entrepreneurship?
The Free Enterprise System
& The Profit Motive
Most democratic nations
have a free enterprise
system.
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
Section 1.1 Entrepreneurship and the Economy
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
7
What Is Entrepreneurship?
Competition
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.
market structure
the nature and
Perfect competition is a
degree of competition
market structure in which
among businesses
there are numerous
operating in the same
buyers and
industry; market
sellers and no
structure affects
single buyer or
market price
seller can
affect price.
8
What Is Entrepreneurship?
The Free Enterprise System
The government may grant
a temporary monopoly to
an inventor.
Section 1.1 Entrepreneurship and the Economy
monopoly a market
structure in which a
particular commodity
has only one seller
9
What Is Entrepreneurship?
The Free Enterprise System
Under antitrust laws,
some forms of oligopoly
are illegal.
Section 1.1 Entrepreneurship and the Economy
oligopoly a market
structure in which
there are just a few
competing firms
10
What Is Entrepreneurship?
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
11
What Is Entrepreneurship?
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
Section 1.1 Entrepreneurship and the Economy
12
What Is Entrepreneurship?
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
Section 1.1 Entrepreneurship and the Economy
13
What Is Entrepreneurship?
Factors of Production
There are four basic
factors of production:
land
labor
entrepreneurship
capital
Section 1.1 Entrepreneurship and the Economy
factors of production the resources
businesses use to
produce the goods and
services that people
want
14
What Is Entrepreneurship?
Scarcity
The principle of scarcity
means giving up one thing
in order to have something
else.
Section 1.1 Entrepreneurship and the Economy
scarcity the difference
between demand and
supply; limited resources
15
What Is Entrepreneurship?
Supply and Demand Theory
In a free enterprise system,
the price of a product is
determined by demand.
Section 1.1 Entrepreneurship and the Economy
demand the quantity of
goods or services that
consumer are willing and
able to buy at various
prices
16
What Is Entrepreneurship?
Supply and Demand Theory
The degree to which
demand for a product is
affected by its price is either
governed by elastic
demand or inelastic
demand.
Section 1.1 Entrepreneurship and the Economy
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
17
What Is Entrepreneurship?
Supply and Demand
Theory
Due to the law of
diminishing marginal utility,
even when a product’s
price is low, people will not
keep buying it indefinitely.
Section 1.1 Entrepreneurship and the Economy
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
18
What Is Entrepreneurship?
Supply and Demand
Theory
supply the amount of
Supply is continually
shifting in the marketplace.
goods or services that
producers are willing to
provide
Supply and Demand Theory
high demand + short supply =
prices go up.
heavy supply + short demand =
prices go down.
Section 1.1 Entrepreneurship and the Economy
19
What Is Entrepreneurship?
Supply and Demand
Theory
Because supply and
demand are continually
shifting in the marketplace,
the change creates
surpluses, shortages, and
equilibrium.
Section 1.1 Entrepreneurship and the Economy
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
20
What Is Entrepreneurship?
Economic Indicators and
Business Cycles
There are four stages of the
business cycle: growth,
recession, depression, and
recovery.
Section 1.1 Entrepreneurship and the Economy
business cycle the
general pattern of
expansion and
contraction that the
economy goes
through
21
What Is Entrepreneurship?
Check Your Understanding
1. What are some ways that entrepreneurs
affect the economy?
2. What are some examples of elastic and
inelastic goods and how do they differ?
3. Explain the relationship between cost and
profit and supply and demand
Section 1.1 Entrepreneurship and the Economy
22
What Is Entrepreneurship?
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.
23
What Is Entrepreneurship?
1.2
Discuss the five components of the
entrepreneurial start-up process.
Explain how to achieve business success.
Section 1.2 The Entrepreneurial Process
24
What Is Entrepreneurship?
An idea plus a market
equals an opportunity.
1.2
The entrepreneurial start-up process includes:
the entrepreneur
the environment
the opportunity
start-up resources
the organization
Section 1.2 The Entrepreneurial Process
25
What Is Entrepreneurship?
The Entrepreneurial
Start-Up Process
The five components of the entrepreneurial
start-up process work together to create a new
business.
The entrepreneur is the
driving force of the start-up
process.
the entrepreneur
the environment
Entrepreneurs recognize
opportunities and pull together
the opportunity
the resources to exploit
start-up resources
opportunities.
the new venture organization
Section 1.2 The Entrepreneurial Process
26
The Environment
The nature of
the environment
The availability
of resources
Four Categories of
Environmental Variables
Ways to
realize value
Section 1.2 The Entrepreneurial Process
Incentives to
create new
businesses
27
What Is Entrepreneurship?
The Environment
New businesses seek
enterprise zones that
provide incentives.
Section 1.2 The Entrepreneurial Process
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
28
What Is Entrepreneurship?
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
Section 1.2 The Entrepreneurial Process
29
What Is Entrepreneurship?
The New Venture
Organization
The fifth component of the
start-up process is the
execution of the new
venture organization.
Section 1.2 The Entrepreneurial Process
new venture
organization
the infrastructure or
foundation that supports
all the products,
processes, and services
of a new business
30
What Is Entrepreneurship?
The Facts About Business Failure
Most new businesses fail - MYTH!!
The truth is more will succeed than fail.
66% survive the first 2 years.
A business failure files
Chapter 7 bankruptcy.
A business that disappears
from the tax rolls may be a
failure or a discontinuance.
Section 1.2 The Entrepreneurial Process
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
31
How Entrepreneurs Can Succeed
4. Plan and manage effectively
3. Assemble an expert team to execute
the business concept
2. Test the opportunity in the marketplace
1. Recognize opportunity
Section 1.2 The Entrepreneurial Process
32
What Is Entrepreneurship?
Ch 1.2
Check Your Understanding
1. What are the five components of the
process of new venture creation?
2. How does an enterprise zone encourage
new business?
3. Why shouldn’t discontinuances be
counted as business failure?
Section 1.1 Entrepreneurship and the Economy
33