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)Microsoft Canadian Air Farce commentary on Microsoft Canadian Air Farce 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)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)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 % 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