Presentation1 CHP 1.1

What is
1 Entrepreneurship?
Section 1.1 Entrepreneurship and the Economy
Section 1.2 The Entrepreneurial Process
Entrepreneurship: Building a Business

Section Objectives
• Define the role of small business and entrepreneurship

in the economy.
• Compare and contrast economic systems.
• Explain how economics is about making choices.
• Define the role of economic indicators and business
cycles.
• Describe what entrepreneurs contribute to the
economy.
Content Vocabulary
entrepreneur factors of production
venture scarcity
entrepreneurship market structure
entrepreneurial monopoly
economics demand
free enterprise system elastic demand
profit inelastic demand
oligopoly diminishing marginal utility
goods supply
services equilibrium
need Gross Domestic Product
want business cycle
Small Business and Entrepreneurship
entrepreneur venture
an individual who undertakes the a new business undertaking that involves risk
creation, organization, and
ownership of a business
economics
entrepreneurship
the study of how people allocate scarce
the process of recognizing an
resources to fulfill their unlimited wants
opportunity, testing it in the
market, and gathering the
resources necessary to go into
business
Multiple Choice Questions(MCQS): About one in three

households is involved in an entrepreneurial enterprise.
The Free Enterprise System
profit
Making a profit is a money that is left over after all
primary incentive of expenses of running a business
have been deducted from the
free enterprise. income
services goods
tangible products of our
intangible products that economic system that
satisfy consumers’ satisfy consumers’ wants
wants and needs and needs
want
need
something that you do
a basic requirement not have to have for
for survival survival, but would like
to have
Q: Explain the difference between goods and services and needs and wants?
Q: What does Economic System include?
Ans: An economic system includes a set of laws,

institutions, and activities that guide economic decision
making.
Q: What are the four basic questions all
economic systems attempt to answer?
What goods and What quantity of

services should be goods and services
produced? should be produced?
? ?
How should goods For whom should
and services be goods and services be
produced? produced?
9
The Free Enterprise System
profit
money that is left over after all
expenses of running a business
Making a profit is a have been deducted from the
income
primary incentive of
free enterprise.
Q: What is meant by free enterprise system?
Q: What are the Basic concepts of economics?
goods and services factors of production
supply and demand

scarcity
theory
12
factors of production
the resources businesses use to produce the goods and services that people want
Q: Explain four Factors of Production with

examples ?
scarcity
the difference between demand
and supply; limited resources
Q: What is the principle of scarcity ?

Ans: means giving up one thing in order to have something else.
demand
the quantity of goods or services that consumers are willing and able to
buy at various prices
Q: In a free enterprise system, how price of a product is determined?

Ans: by demand.
supply
the amount of goods or services that producers are willing to provide
What Entrepreneurs Contribute
provide
turn demand
venture
into supply
capital
What
Entrepreneurs
create Contribute
provide
more jobs
wants
promote
changes in
society
16
After You Read
1. Define the role of small business and

entrepreneurship in the economy.
Entrepreneurs start by responding to society’s wants and end

up changing society, thereby creating even more wants to be
satisfied. As a result, entrepreneurs are the catalysts that make
economic progress happen.
After you Read
Compare and contrast economic systems.
Economic systems include a set of laws, institutions,

and activities that guide economic decision making.
There are several kinds: traditional, pure market,
command, and mixed.
After you Read
3. Explain how economics is about making choices.
Because resources are in limited supply, if the consumer wants

one thing, he or she may have to give up something else.
After you Read
4. Define the role of economic indicators and

business cycles.
The federal government provides statistics (economic

indicators) that help entrepreneurs understand the state of the
economy and predict possible changes. Business cycles are
general patterns of expansion and contraction that the economy
goes through.
After you Read
5. Describe what entrepreneurs contribute to the

economy.
Entrepreneurs recognize consumer wants and see the economic

opportunities in satisfying them. Entrepreneurs are a principal
source of venture capital. Entrepreneurs provide jobs. In doing
so, they provide for their own and others’ financial security.
Entrepreneurs change society through the businesses they
create and by responding to society’s wants and needs.
Section Objectives
• Analyze entrepreneurship from a historical
perspective.
• Name the five components of the entrepreneurial
start-up process.
• Explain how to achieve business success.
The Main Idea
The entrepreneurial start-up process includes:
• the entrepreneur
• the environment
• the opportunity
• start-up resources
• the new venture organization
Content Vocabulary
enterprise zones discontinuance

opportunity new venture organization
start-up resources business failure
The History of Entrepreneurship
Entrepreneurship has been a distinct feature of
American culture since the American Revolution, but
it was not until the 1980s that it became a popular
topic.
The History of Entrepreneurship
More government
Large diversified
regulation; smaller
companies
companies emerge
1960s 1970s 1980s 1990s
Volatile economic No job security; move to

climate; beginning of service-based economy
technology revolution influenced by technology
26
The Entrepreneurial Start-Up Process
The five components of the entrepreneurial start-
up process work together to create a new business.
• the entrepreneur
• the environment
• the opportunity
• start-up resources
• the new venture organization
The Entrepreneurial Start-Up Process
The entrepreneur is the driving force of the start-up
process.
Entrepreneurs recognize opportunities and pull

together the resources to exploit opportunities.
The Environment
The nature of The availability

the environment of resources
Four Categories of
Environmental Variables
Ways to Incentives to
realize value create new
businesses
29
The Environment
New businesses seek enterprise zones

enterprise zones that specially designated areas of a
community that provide tax
provide incentives. benefits to new businesses
locating there; communities may
also provide grants for new
product development
The Opportunity
A good opportunity opportunity

can be turned into a an idea that has commercial value
business.
An idea plus a market
equals an opportunity.
Start-Up Resources
When entrepreneurs are start-up resources

ready to start up a new the capital, skilled labor,
business, they must use management expertise, legal and
creative talent to put financial advice, facilities,
equipment, and customers
together the necessary needed to start a business
start-up resources.
The New Venture Organization
The fifth component new venture organization

of the start-up the infrastructure or foundation
that supports all the products,
process is the processes, and services of a new
execution of the new business
venture organization.
The Facts About Business Failure
A business failure files business

discontinuance
failure
Chapter 7 bankruptcy. a business that has
disappears
stoppedfrom
operating,
the tax rollswith
because
a loss ittomay
creditors,
be
A business that and
operating
no longer
underappears
a new nameon theor
tax
disappears from the tax rolls
because the owner has purposely
rolls may be a failure or discontinued in order to start a
a discontinuance. new business
How Entrepreneurs Can Succeed
4. Plan and manage effectively
3. Assemble an expert team to execute

the business concept
2. Test the opportunity in the marketplace
1. Recognize opportunity
35
After You Read
1. Describe entrepreneurship from a historical

perspective.
Entrepreneurship has been a distinct feature of American

culture since the American Revolution. Enterprising colonists
found innovative ways to introduce new products and services.
In the 1980s entrepreneurship became a popular topic.
After You Read
2. Discuss the five components of the

entrepreneurial start-up process.
The entrepreneurial start-up process includes the entrepreneur,

the environment, the opportunity, start-up resources, and the
new venture organization.
After You Read
3. Explain how to achieve business success.
The chances of a new business succeeding are good with

effective planning and management. Entrepreneurs must learn
how to recognize opportunity, test that opportunity in the
marketplace, and assemble a team with the necessary expertise
to execute the business concept.

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What is

Section 1.1 Entrepreneurship and the Economy

Section 1.2 The Entrepreneurial Process

Entrepreneurship: Building a Business

• Define the role of small business and entrepreneurship

Multiple Choice Questions(MCQS): About one in three

Ans: An economic system includes a set of laws,

What goods and What quantity of

goods and services factors of production

supply and demand

Q: Explain four Factors of Production with

Q: What is the principle of scarcity ?

Q: In a free enterprise system, how price of a product is determined?

1. Define the role of small business and

Entrepreneurs start by responding to society’s wants and end

Compare and contrast economic systems.

Economic systems include a set of laws, institutions,

3. Explain how economics is about making choices.

Because resources are in limited supply, if the consumer wants

4. Define the role of economic indicators and

The federal government provides statistics (economic

5. Describe what entrepreneurs contribute to the

Entrepreneurs recognize consumer wants and see the economic

enterprise zones discontinuance

1960s 1970s 1980s 1990s

Volatile economic No job security; move to

Entrepreneurs recognize opportunities and pull

The nature of The availability

New businesses seek enterprise zones

A good opportunity opportunity

When entrepreneurs are start-up resources

The fifth component new venture organization

A business failure files business

4. Plan and manage effectively

3. Assemble an expert team to execute

2. Test the opportunity in the marketplace

1. Describe entrepreneurship from a historical

Entrepreneurship has been a distinct feature of American

2. Discuss the five components of the

The entrepreneurial start-up process includes the entrepreneur,

3. Explain how to achieve business success.

The chances of a new business succeeding are good with

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