ECON 4th mastery

• Customers -is an individual or business that purchases another company's goods or services. Customers are important 
• Competition

  -the contest between several firms selling similar goods or services.
• Advantages of Competition

  •       Competition makes your customer services better.

  •       Competition fosters innovation.

  •       Competition helps identify your strengths and weaknesses.

  •       Competition is good for consumers.

  •       Competition reminds you to focus on your key customers.

   

  •       Competition provides the opportunity to serve.

  •       Competition makes way for creative thinking.

  •       Competition helps identify threats to your business.

  •       Competition helps identify your strengths and weaknesses.

  •       Competition stops complacency.

   
• Suppliersis usually known as either the manufacturer who manufactures the product itself or a distributor who purchases the goods from Manufacturers
• Customers are important  because they drive revenues.                                                               
• Substitutes

  -is a product or service that can be easily replaced with another by consumers. In economics, products are often substitutes if the demand for one product increases when the price of the other goes up.
•  

  Strength

  • They are the positive internal characteristics that the organization can exploit to achieve its strategic performance goals. These are the qualities that help the firm achieve its objectives
• Weaknesses

  -These are the internal characteristics that might inhibit the organization’s performance. Weaknesses are the very qualities that the firm restrict to reach their objective and potential to the fullest.
• Opportunities

  -These are the characteristics of the external environment that have the potential to helps the organization achieve or exceed its strategic goals. They are the avenues for improvement and success which are present in the business environment.
• Threats

  -There are the characteristics of the external environment that may present organization from achieving its strategic goals. They arise when the efforts of the firm to attain a high level of profitability are jeopardized
• Steps in Creating a SWOT Analysis

  Step 1: Determine the objective.

  Step 2: Create a gird.

  Step 3: Label each box.

  Step 4: Add strengths, weaknesses, opportunities, and threats.

  Step 5: Draw conclusion
• Poster’s Five Forces of Competitive Analysis

  Is another tool that uses five industry forces to determine the intensity of competition in an industry and its profitability level. Michael E. Porter from Harvard University studied a number of business organizations
• The Five Competitive Forces

  •       Potential new entrants

  •       Bargaining power of buyers

  •       Bargaining power of suppliers

  •       Threats of substitute products

  •       Rivalry among competitors
• Steps used in Porter’s Five Framework

  •       Gather the information on each of the five forces.

  •       Analyze the result and display them on a diagram.

  Formulate strategies based on the conclusions
• The Five Competitive Forces

  •       Potential new entrants

  •       Bargaining power of buyers

  •       Bargaining power of suppliers

  •       Threats of substitute products

  •       Rivalry among competitors
• Entrepreneurship

  -refers to the process of identifying , creating, and pursuing opportunities to develop and manage innovative business ventures.
• Entrepreneur

  -"A person who sets up a business or businesses, taking on financial risks in the hope of profit.“

   "The entrepreneur is commonly seen as a business leader and innovator of new ideas and business process”.
• Employees

  -"A person employed for wages or salary, especially at non-executive level.“

   -"A person who is hired to work for another or for a business, firm, etc. in return for payment."
• Inventors

  -a person who invented a particular process or device or who invents things as an occupation.
• Types of Entrepreneurial Business

  •       Manufacturing                                                     *Retailing

  •       Wholesaling                                                          *Service
•  

  Characteristics of a Successful Entrepreneur

  •       Successful entrepreneurs are independent

  •       Successful entrepreneurs are self- confident

  •       Successful entrepreneur have determine and perseverance

  •       Successful entrepreneur are goal-oriented

  •       Successful entrepreneur know what they want, and they are able to focus on achieving it

  •       Successful entrepreneur have a need to achieve and to set high standards for themselves

  •       Successful entrepreneur are creative

  •       Successful entrepreneur are able to act quickly
• Advantage of Entrepreneurship •       Entrepreneurs are their own bosses

  •       Entrepreneurs can choose a business that interests them

  •       Entrepreneurs can be creative

  •       Entrepreneurs can make lots of money
• Disadvantages of Entrepreneurship•       Entrepreneur is risky

  •       Entrepreneur face uncertain and irregular incomes

  •       Entrepreneur work long hours

  •       Entrepreneur must make all decisions by the themselves
•  

  There are four Entrepreneurial process

  •       Identification and evaluation of the opportunity

  •       Development of the business plan

  •       Determination of the required resources

  •       Management of the resulting enterprise
• Different kinds of Investment 1. Business Investments                                                                                       2. Real Estate
• • Business Investments spending by private businesses and nonprofits on physical capital long lasting assets used to produce 
• . Real Estate - the land and any permanent structures, like a home, or improvements attached to the land, whether natural or man-made.

   
• Indirect Investments 1. Savings Account   2. . Bonds 3. Stocks 4. Mutual Funds 5. Life Insurance 6. Rent
• . Savings Account-an interest-bearing deposit account held at a              bank or other financial institution
• . Bonds - used by governments or companies to to raise money by borrowing from investors.
• Stocks

      -a type of security that gives stockholders a share of ownership in a company.

   
• Mutual Funds

  • a company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt.
• Life Insurance

  -as a contract between an insurance policy holder and an insurance company, where the insurer promises to pay a sum of money in exchange for a premium, upon the death of an insured person or after a set period.

   
• Rent

  -is a payment of a factor of production in excess of its opportunity cost.
• Four types of Rent

  •      Inframarginal Rent

  •      Pure Economic Rent

  •      Quasi Rent

  •      Monopoly Rent
• •      Unemployment

               a situation where a person actively searches for employment but is unable to find work.

   
• Types of Unemployment

  •      Fictional Unemployment                  

  •      Cyclical Unemployment

  •      Structural Unemployment