1_Entrepreneurship

Chapter 1: What is Entrepreneurship?

• Introduction to the concept of entrepreneurship and its significance in business and risk management.

1.1 Role of Small Business and Entrepreneurship in the Economy

• Discusses the economic systems and how entrepreneurship fits into these systems.

• Economic Systems: Structures that determine the production, distribution, and consumption of goods and services.

• Making Choices: Economics focuses on the choices individuals make given limited resources to satisfy unlimited wants.

• Economic Indicators and Business Cycles: Indicators such as GDP help measure economic health and predict changes.

• Entrepreneurs' Contributions: Entrepreneurs stimulate economic growth by creating jobs, serving needs, and driving innovation.

Understanding Entrepreneurship

• Entrepreneur: An individual who initiates, organizes, and manages a business, accepting its associated risks and rewards.

• Entrepreneurship Defined: The act of creating and running a new business venture.

Skills in Entrepreneurship

• Creating and managing a business requires a diverse skill set including problem-solving, negotiation, and risk management.

Entrepreneurial Mindset

• Traits of Entrepreneurs: Recognizing opportunities, evaluating market viability, and mobilizing resources effectively.

• Differentiation between entrepreneurship and the entrepreneurial mindset focuses on proactive thinking and market testing before commitment.

Prevalence of Entrepreneurship

• Approximately one in three households engage in some form of entrepreneurial activity.

• Small businesses make up about 90% of all enterprises, typically having fewer than 100 employees.

Changing Landscape of Business Ownership

• Current trends show that business ownership involves different challenges and opportunities compared to the past, largely due to globalization and advances in information technology.

Entrepreneurs and the Economy

• Examines how entrepreneurs affect economies through innovation, job creation, and by addressing societal needs.

Economics and Entrepreneurship Interaction

• Economics is the study of resource allocation in face of scarcity.

• Entrepreneurs need to understand economic principles to succeed.

Economic Systems Overview

• An economic system comprises laws, practices, and institutions shaping decision-making processes in an economy.

Four Fundamental Questions of Economic Systems

1. What goods/services to produce?

2. How much should be produced?

3. How to produce those goods/services?

4. For whom should production be intended?

The Free Enterprise System

• Also known as capitalism, this system allows individuals the freedom to choose what to purchase and to own property or start a business.

• Incentive of Free Enterprise: Profit is the main motivation for engaging in business activities.

Basic Economics Concepts

• Goods and Services: Outputs of an economy responding to consumer demands.

• Factors of Production:

  • Land: Natural resources.

  • Labor: Human effort.

  • Entrepreneurship: Innovative ideas and decision-making.

  • Capital: Financial resources and equipment.

Scarcity and Economics

• Scarcity necessitates trade-offs; choices involve giving up one thing for another.

Demand and Price Relations

• Demand Curve: A graphical representation showing the relationship between price and quantity demanded; a vital tool for entrepreneurs to gauge consumer appetite.

• Elastic Demand vs. Inelastic Demand: Refers to how the quantity demanded changes in response to price variations.

Supply Dynamics

• Supply Curve: Shows how the quantity of goods supplied changes with price.

• Market dynamics dictate that excessive demand with low supply increases prices, while oversupply lowers prices.

Economic Indicators

• Economic indicators are statistics that inform entrepreneurs about economic conditions and future market potential. E.g., Gross Domestic Product (GDP).

GDP by Country (2013)

• Presents GDP figures for various countries, showcasing the economic size and output on a global scale.

Business Cycle Components

• Discusses phases of economic growth and decline: growth, prosperity, recession, depression, and recovery.

Contributions of Entrepreneurs

• Entrepreneurs convert demand into supply, create jobs, provide venture capital, promote innovation, and meet consumer wants.

Distinction Between Small Businesses and Entrepreneurial Ventures

• Small businesses generally aim to secure personal livelihoods, while entrepreneurial ventures focus on innovation, growth, and value creation.