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Unit 1 Entrepreneurship and the Economy

Unit 1 Entrepreneurship and the Economy. What is Entrepreneurship?. Chapter 1. What is Entrepreneurship?. Definitions. Venture new business that involves risk. Entrepreneurs are people who take on creating, organizing, and owning a business.

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Unit 1 Entrepreneurship and the Economy

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  1. Unit 1 Entrepreneurship and the Economy What is Entrepreneurship?

  2. Chapter 1 • What is Entrepreneurship?

  3. Definitions • Venture new business that involves risk. • Entrepreneurs are people who take on creating, organizing, and owning a business. • Entrepreneurship is the process of recognizing an opportunity, testing it in the market, and gathering resources necessary to go into business. Pages 6-7 in text

  4. Questions • What kind of resources would you need to start a retail business (where you sell products directly to the person that will use them)? • What kind of resources would you need to start a service business like landscaping, house cleaning, or pet sitting?

  5. Definitions • GOODSare tangible (or physical) products • SERVICES are intangible (nonphysical) products • A NEEDis a basic requirement for survival, such as food and shelter. • A WANTis something that you do not have to have for survival, but would LIKEto have. page 11 in text

  6. Economic SystemsFour Economic Questions • What goods and services should be produced? • What quantity of goods and services should be produced? • How should goods and services be produced? • For who should goods and services be produced? page 7in text

  7. Cost, price and profit • Products and services are usually sold for a certain amount of money. This is the PRICE of the item. • The PRICE of and item must include all of the COSTS plus some additional markup to make a PROFIT. page 7in text

  8. Free Enterprise System • Also called CAPITALISM or MARKET ECONOMY. • People can make economic decisions: • People can choose what products to buy. • People can choose to own private property. • People can choose to start a business and compete with other businesses. • Making a PROFIT is the primary incentive of free enterprise. page 8in text

  9. Market structures • A MARKET STRUCTURE is the nature and degree of competition among businesses in the same industry. • A MONOPOLY has only one seller (phone company). • An OLIGOPOLY has a few competitors (auto industry).

  10. Five Key Components of the Entrepreneurial process • The entrepreneur • The environment • The opportunity • Startup resources • The new venture organization

  11. #1 The Entrepreneur… • …is the driving force of the start-up process • …recognizes opportunity • …pulls togetherthe resources to exploit that opportunity • …creates a company to execute the opportunity in the marketplace • …brings to the process all of his or her life experiences • ..is a calculated risk taker • …has the passion and persistence to see the venture through from idea to market

  12. #2 The Environment Four categories of environmental variables that affect a new venture’s ability to start and grow: • The nature of the environment, whether it’s uncertain, fast-changing, stable or highly competitive. • The availability of resources, such as skilled labor, start-up capital, and sources of assistance

  13. #2 The Environment • Ways to realize value, such as favorable taxes, good markets, and supportive government policies. • Incentives to create new business. Enterprise zones are specially designated areas of a community that provide tax benefits to new businesses locating there. They also provide grants for new product development.

  14. #3 The Opportunity • A good opportunity can be turned into a business. • An opportunity is an idea that has commercial value. The idea has value only when customers are ready and willing to buy the product. • An idea plus a market equals opportunity. • New businesses are founded on recognized opportunities in the environment.

  15. #4 Start-up resources • When an entrepreneur is ready to execute a concept for a new business, he or she must use creative talent to pull together the necessary resources. • The start-up resources include: • capital • skilled labor • management expertise • legal and financial advice • Facility (aka-physical plant) • equipment • customers

  16. #5 The New Venture Organization • The execution of the new business concept • The new venture organization is the infrastructure of the business. • It is the foundation that supports all of the products, processes, and services of the new business. • Through the new venture organization, the entrepreneur can create value to benefit himself or herself and the employees, customers, and economy.

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