Notes, summaries, assignments, exams, and problems for Economy

Qualities of Entrepreneurs

1. Initiative

2. Drive and Determination

To turn ideas into practice.

3. An Ability to Plan Carefully

To minimize the risk of failure.

4. An Ability to Learn from Mistakes

And to see mistakes as "part of learning to succeed".

5. The Ability to Think Ahead

To identify opportunities for the future.

Factors to Consider When Selecting Suppliers

Quality

1. The quality of suppliers needs to be consistent.
2. Customers can be selective about quality.
3. Customers will associate poor quality with the business they buy from, not their suppliers.

Availability

1. If a supplier is often out of stock of items, it could affect the firm's production process.
2. So they need to make sure their supplier can provide stock in sufficient quantities.

Reliability and

Common Reasons Startups Fail

1. The team doesn't have what it takes to succeed.
2. The idea is not satisfying a market need.
3. Running out of cash too fast.
4. Not being able to support growth.
5. Poor allocation of resources and money.
6. Not realizing the competition in the market.
7. Ignoring customers.

Multipotentialities

1. Idea Synthesis: Being creative, bringing ideas into something real.
2. Rapid Learning: Being able to retain and analyze information quickly.
3. Adaptability: Managing, understanding, and adjusting to different situations.

Business Plan

A written description of what and how (operational, financial) of your business future. Attracts key employees. Includes business goals, strategies, potential problems, etc.

Business Plan Guide

1. Executive Summary
2. General Company

Key Stakeholder Groups and Their Expectations

Understanding the needs and expectations of various stakeholder groups is crucial for business success. Here's a breakdown of major stakeholder groups and what they typically expect:

1. Owners and Investors

   Owners and investors have a financial or other interest in the organization. They generally seek high profits, dividends, long-term growth, and a positive corporate image.

   Example: An owner of company ABC expects a financial return on their investment.

2. Suppliers

   Companies often build strong relationships with suppliers. This fosters shared goals, visions, and strategies. Collaboration between buyers and sellers can deliver the best value to end customers, benefiting all partners.

   Example: Lulu Hypermarket,

Stockholders' Equity

Rights of stockholders to share proportionately in:

1. Profits
2. Management
3. Corporate assets upon liquidation
4. Any new issues of stock of the same class (preemptive right)

Preemptive Right: Protects an existing stockholder from involuntary dilution of ownership interest.

Key Concepts

Additional Paid-in Capital: Indicates any excess over par value paid in by stockholders in return for the shares issued to them.

Retained Earnings: Represents the earned capital of the company.

Lump-Sum Sales: When a corporation issues two or more classes of securities for a single payment.

• Incremental Method: Company cannot determine the fair value of all classes of securities.
• Proportional Method: Determining relative value is available for each class of security.

Microeconomics vs. Macroeconomics

Microeconomics studies the individual decisions of economic decision-makers (companies and consumers as individuals).

• Macroeconomics studies the economy as aggregate decisions of economic decision-makers (groups of consumers, producers, and the government).
  • The government is a group that oversees a community, establishing rules and administering public policy.
  • Some governments are more interventionist at the economy (North Korea, Cuba) than others (US). They make key decisions about what will be produced, how it will be produced, and who will receive the outputs supplied by business.
  • The role of government is to create and administer policy at local, national, and international levels.
  • Locally: they establish rules,

The EU Single Market

Key Freedoms of the EU Single Market

1. Free Movement of Persons: All EU citizens can move freely, reside, and take up work within the EU area.
2. Free Movement of Goods: Goods are not subject to border controls, tariffs, or quotas within the EU. This simplifies and promotes trade between member states.
3. Free Movement of Services: Service providers from an EU state are free to offer their services in any state of the EU single market, even without settling there.
4. Free Movement of Capital: Restrictions on capital and payment transactions between states of the EU single market are prohibited.

Financial Statements

Income Statement

A financial statement that shows the revenues, expenses, and net income of a firm over a period of time.

Statement

What Drove the Progressive Era Movement?

A general belief that government reforms were needed to help end social problems and disorder.

Why Did Many Progressive Reformers Support Prohibition Legislation?

They believed alcohol was a cause of poverty and many other social problems.

What is the Nineteenth Amendment?

Gave women the right to vote.

What Did the Use of Initiative Allow Reformers to Do?

Propose issues and legislation directly to voters.

What Did Major Policies of Theodore Roosevelt's Presidency *Not* Include?

Using subsidies (government payments) to bolster the failing Standard Oil Company.

What Were Woodrow Wilson's New Freedom Platform and Proposals Directly Countering?

Roosevelt's New Nationalism ideas.

What Act Did Woodrow Wilson Seek to Reform

Angel Investors

An angel investor (also known as a private investor) is an individual who provides financial backing for small startups or entrepreneurs, typically in exchange for ownership equity in the company. The funds that angel investors provide may be a one-time investment to help the business get off the ground or an ongoing injection to support and carry the company through its difficult early stages.

Venture Capital

Venture capital is a type of funding for a new or growing business. It usually comes from venture capital firms that specialize in building high risk financial portfolios. With venture capital, the venture capital firm gives funding to the startup company in exchange for equity in the startup. This is most commonly found... Continue reading "Angel Investors, Venture Capital, Crowdfunding, and Patents: A Guide" »

Why Do Businesses Fail?

Businesses fail for various reasons, including:

• Creating products that customers do not want
• Running out of financial resources
• Failing to investigate their competitors

Competitive Analysis

1. Identifying Competitors

Direct Competitors: Products or services that are similar substitutes for yours and operate in the same geographic area.

Indirect Competitors: Products or services that are not the same but could satisfy the same need or solve the same problem.

2. Assessing Competitors' Strategies, Objectives, Strengths, Weaknesses, and Reaction Patterns

Benchmarking: Measuring the performance of a company's products or processes against industry leaders.

Business Analysis:

• Product line, quality, pricing, discounts

Sales Analysis:

• Sales