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 (e.g. food companies)

Monopoly: one seller has control over supply & prices (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