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Chapter 7

Chapter 7. The Business of Free Enterprise. Encouraging Enterprise. Entrepreneur —A person who takes a risk to create a new product or to develop a better way to operate a business. A true free enterprise system must encourage people to be entrepreneurs. Examples of Successful Entrepreneurs.

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Chapter 7

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  1. Chapter 7 The Business of Free Enterprise

  2. Encouraging Enterprise • Entrepreneur—A person who takes a risk to create a new product or to develop a better way to operate a business. • A true free enterprise system must encourage people to be entrepreneurs.

  3. Examples of Successful Entrepreneurs • Charles Darrow • Ray Kroc • Henry Ford • Clarence Birdseye • Debbie Fields • King Gillette • Liz Claiborne

  4. Who Becomes an Entrepreneur? • Some start at an early age. • Some develop and sell ordinary products. • Some find new ways to sell.

  5. Who Becomes an Entrepreneur? • Some spot new markets and develop new products for them. • Some work to perfect ideas they had for years. • Some work within an existing business.

  6. What Strategies do Entrepreneurs Use? • Unexpected Opportunities • Changing Market Conditions • Improving a Product or Process • Providing an Alternative Good or Service • Identifying Popular Trends

  7. Small Business • Small Business—Annual sale under $3.5 Million. • Have many advantages over big businesses

  8. Advantages of Small Business • Ability to adapt to change more quickly. • Ability to satisfy special markets.

  9. Challenges that Face Small Business • Poor management • Inadequate Financing • Inability to hire highly qualified workers

  10. Types of Business Organizations • Sole Proprietorship • Partnership • Corporation

  11. Special Types of Business Organizations • S Corporations • Not-For-Profit Corporations • Government-Owned Corporations • Limited Liability Companies • Cooperatives • Franchises

  12. S Corporations • Small business that can have no more than 35 stockholders. • Do not have to pay higher level of corporate taxes.

  13. Not-For-Profits • Serve an educational, social, charitable, or religious purpose. • Not subject to income tax.

  14. Government-Owned Corporations • Government usually opens a corporations when the market doesn’t adequately supply a needed good or service. • Example: Federal Deposit Insurance Corporation (FDIC)

  15. Limited Liability Companies • Combine the advantages of a corporation and a partnership. • Popular among internet start-up companies.

  16. Cooperatives • Associations of individual companies that perform business functions for their members. • Housing • Consumer • Producer

  17. Franchises • A license to operate and individually owned business as if it were a large chain of stores. • McDonald’s, Subway

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