econ

• Entrepreneurship


  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
• 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
  • Wholesaling
  • Retailing
  • Service
• Characteristics of a successful entrepreneur

  • Independent
  • Self-confident
  • Determined and perseverant
  • Goal-oriented
  • Know what they want, and are able to focus on achieving it
  • Have a need to achieve and to set high standards for themselves
  • Creative
  • Able to act quickly
• Advantages of entrepreneurship

  • Are their own bosses
  • Can choose a business that interests them
  • Can be creative
  • Can make lots of money
• Disadvantages of entrepreneurship

  • Is risky
  • Face uncertain and irregular incomes
  • Work long hours
  • Must make all decisions by the themselves
• 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

  • Direct investment
  • Indirect investment
• Direct investment

  • Business investments - spending by private businesses and nonprofits on physical capital long lasting assets used to produce goods and services
  • Real estate - the land and any permanent structures, like a home, or improvements attached to the land, whether natural or man-made
• Indirect investment

  • Savings account - an interest-bearing deposit account held at a bank or other financial institution
  • Bonds - used by governments or companies to raise money by borrowing from investors
  • Stocks - a type of security that gives stockholders a share of ownership in a company
• Kinds of indirect investments

  • 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
• 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

  • Frictional unemployment
  • Cyclical unemployment
  • Structural unemployment
• Competition


  The contest between several firms selling similar goods or services
• Advantages of competition

  • Makes your customer services better
  • Fosters innovation
  • Helps identify your strengths and weaknesses
  • Is good for consumers
  • Reminds you to focus on your key customers
  • Provides the opportunity to serve
  • Makes way for creative thinking
  • Helps identify threats to your business
  • Helps identify your strengths and weaknesses
  • Stops complacency
• Customers


  Individuals or businesses that purchase another company's goods or services
• Suppliers


  Usually known as either the manufacturer who manufactures the product itself or a distributor who purchases the goods from manufacturers
• Substitutes


  A product or service that can be easily replaced with another by consumers
• SWOT analysis


  A tool for business analysis that every organization needs to get through greater heights of success
• Strengths

  The positive internal characteristics that the organization can exploit to achieve its strategic performance goals
• Weaknesses

  The internal characteristics that might inhibit the organization's performance
• Opportunities


  The characteristics of the external environment that have the potential to helps the organization achieve or exceed its strategic goals
• Threats


  The characteristics of the external environment that may present organization from achieving its strategic goals
• Steps in creating a SWOT analysis

  1. Determine the objective

  2. Create a grid

  3. Label each box

  4. Add strengths, weaknesses, opportunities, and threats

  5. Draw conclusion
• Porter's five forces of competitive analysis

  A tool that uses five industry forces to determine the intensity of competition in an industry and its profitability level
• 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


  1. Gather the information on each of the five forces

  2. Analyze the result and display them on a diagram

  3. Formulate strategies based on the conclusions