1 Entrepreneurship and Wealth Building a Intro i Success happens if you adapt ot the market ii Business activity that seeks to provide goods and services to others while operating at a profit iii Goods tangible products iv Services intangible products like healthcare education insurance v Entrepreneur person who risks time and money to start and manage a business b Revenues Profits and Losses i Revenue total amount of money a business takes in during period by selling goods and services ii Profit amount of money a business earns above and beyond what is spends on salaries and other expenses needed iii Loss occurs when a business s expenses revenue 1 80 000 businesses close each year c Matching Risk with profit i Risk chance an entrepreneur takes of losing time and money on a business that may not prove profitable 1 Businesses at highest risk make most profit d Standard of Living and Quality of Life i Businesses are apart of economic system that contributes to ii Standard of living amount of goods and services people can standard of living buy with money they have iii Quality of life general well being of society in terms of political freedom natural environment education health care safety amount of leisure 1 More money businesses create more potential to e Responding to Various business stakeholders improve quality of life for everyone i Stakeholders people who stand to gain or lose by policies and activities of a business and whose concerns the business needs to address 1 Customers employees stockholders suppliers and dealers bankers community media environmentalists and government leaders ii Outsourcing contracting with other companies to do some iii all functions of a firm Insourcing foreign companies setting up design and production facilities in US 1 Ex Japanese automakers producing cars in US 2 Creates many new jobs in US and helps offset those f Using business principles in nonprofit organizations being outsourced i Nonprofit organization goals don t include making personal profit for owners or organizers 1 Social entrepreneurs use business principles to start and manage nonprofits and help address social issues 2 Entrepreneurship vs Working for others Intro i a b In order to succeed in business you either rise through ranks of large companies or become an entrepreneur Importance of entrepreneurs to the creation of wealth i 5 factors of production that contribute to wealth 1 Land natural resources 2 Labor workers 3 Capital machines tools buildings other factors of production NOT money because money used to buy factors of production 4 Entrepreneurship 5 Knowledge ii What makes rich countries rich is the combination of entrepreneurship and effective use of knowledge 3 The business environment a Intro i Business environment consists of surrounding factors that either help or hinder development of business 1 B F show the 5 different elements in the business b The economic and legal environment environment i Policies that tend to favor business government can minimize spending and keep taxes and regulations to a minimum ii For government to promote entrepreneurship should allow private ownership of business 1 If government owns most businesses little incentive for people to work hard 2 Leaders of developing countries should minimize interference with free exchange of goods and services 3 Government can also pass laws that allow business people to write enforceable contracts 4 Government should establish a tradable currency a Allows for easy exchange of goods and services anywhere in world 5 Government should minimize corruption in business and in its own ranks a With corruption difficult to build things or open things up and it can threaten competitors and unlawfully minimize competition c The technological environment d The competitive environment i Technology leads to efficiency because it produces goods and services using least amount of resources ii Productivity amount of output you generate given amount of input like number of hours you work more you can produce in a certain amount of time the more you are considered productive iii Ecommerce business to business and business to consumer transactions 1 Purchasing of used things via eBay very helpful and convenient and cheap iv Database electronic storage file for info 1 Store info and allow other companies to mail you things v Identity theft obtaining individuals personal info such as social security card numbers i Goal for companies is 0 mistakes ii In order for company to stay competitive have to offer high quality products and good value iii Competing by exceeding customer expectations iv Competing by restructuring and empowerment v Empowerment giving frontline workers responsibly order and equipment needed to respond quickly to customers i Demography study of human population with regard to size density and other characteristics like age race gender and income ii Managing diversity iii Increase in number of older citizens 1 Problems with social security and pay as you go system where there eventually won t be enough social security funds anymore iv Increase in number of single parent families e The social environment f The global environment i Globalization world trade 1 Has improved living standards all around world ii War on terrorism iii How global change affects you new jobs will be created in manufacturing and service industry 1 Means global competition iv The ecological environment 4 The evolution of US business 1 a Progress in the agricultural and manufacturing industries i Technology has created fewer farms lost farm workers isn t negative it s a sign that U S agricultural workers are most productive in the world b Progress in services industries i Fastest growing firms law health finance entertainment and telecommunications ii Makeup 70 of value of US economy iii More high paying jobs here c Your future in business
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