Entrepreneurs and Business Models

Objectives Define and give examples of entrepreneurs Analyze what makes a successful entrepreneur Identify 3 different types of business models Compare and Contrast business models for a business each student might create. C2 PO1c

Entrepreneurs Entrepreneurs provide leadership while combining FOP’s in order to bring a new good/service into the market The Profit Motive is the strongest reason why entrepreneurs take the risks of ownership Richest family in the world: Heirs of Sam Walton are worth 81 Billion dollars!

Oprah Winfrey b. 1954

Oprah Winfrey-Harpo Productions est. net worth=$2.7 billion Internship at TV station turned into daily chat show addressing women’s issues Revolutionized talk show market with syndication agreements, product placement during show (Oprah’s Book club) World’s richest African American woman now owns TV production companies, magazines, film companies

William “Bill” Gates b.1955

William Gates-Microsoft est. net worth=$53 billion Won contract to write new Disk Operating System for IBM while still a college student IBM turned down offer for exclusive rights to MS-DOS Revolutionized PC industry by separating Hardware from Software and licensing MS- DOS to PC manufacturers. Windows 3.1 integrated MS-DOS with a Graphic User Interface (GUI) derived from Steve Job’s Macintosh Apple computer. Microsoft software runs 92% of the world’s computers.

Carlos Slim-Helu b. 1940

Carlos Slim-TelMex est. net worth=$53.5 billion Bought part of Mexico’s telephone industry when the government went through privatization (sold gov. businesses to private ownership) Invested heavily in discount telephone cards, marketing them in the USA to Hispanics. Also bought construction companies, land, invested in retail stores and wire transfers /top-billionaire-slim-gates- buffett?partner=videoslide_topthree%3f /top-billionaire-slim-gates- buffett?partner=videoslide_topthree%3f

Entrepreneurs and Philanthropy William Gates- donated $2 billion to help improve education (3 TGB students scholarships) Oprah Winfrey- donated $1.5 billion building schools for girls across South Africa Carlos Slim- donated money for schools, churches, parks, health clinics across Mexico.

4 Business Types Businesses are described by their ownership structure. The more FOP’s you need, the more complex the structure Sole Proprietorship – One owner, full responsibility & liability Partnership – Few owners, shared responsibility & liability Limited Liability Corporation – Few shareholders, proportional responsibility and corporate liability Corporation – Unlimited potential shareholders, Board of directors responsibility and corporate liability

Sole Proprietorship – One owner, full responsibility & liability Small stores, Gas stations, artists – Owner gets all of profits Profits are Income minus expenses – Owner takes all of responsibility/management Controls every major decision – Owner takes all of liability Liability means if their products/employees hurt someone, the owner may lose business and/or personal property.

Partnership – Few owners, shared responsibility & liability Family businesses, trainers/instructors, the NFL Cardinals – Owners split profits Levels of work may be unequal – Owners split responsibility/management Allows for specialization – Owners split liability However, if one partner is found liable for damages, then all the owners have to pay

Limited Liability Corporation – Few shareholders, proportional responsibility and corporate liability Doctors, Lawyers, Mechanics, the Diamondbacks – Owners pool profits, then split based on percentage of business they own – Owners may self manage, or hire management – Owners relieved of liability Corporation may be liable, but personal assets protected

Corporation – Unlimited potential shareholders, Board of directors responsibility and corporate liability Car Manufacturers, Media Companies, Banks, Airlines – Owners pool profits, receive dividends and hope for equity growth in stock value – Dividends are profits reinvested in company – Professional management structure – Owners have no liability Chief management officers may have liability to stockholders

Oldest Corporation in the World Stora Kopparberg Bergslags Aktiebolag (Storaenso) Documented back to 1288 Swedish Copper mining and other metal refining NYSE Company Code SEO

Business Environments Monopoly- market supply and price dictated by sole producer Monopolistic competition- market supply controlled by few producers who compete on price – High barriers to entry prevent more competition Perfect competition – Many firms, limited price controls, many products, low barriers to entry

The Business Cycle Businesses cycle between growth and contraction on a regular basis – Expansion=Growth in profits, employees – Contraction= Decrease in profits, employees – Businesses may grow along with each other, or may grow counter to the main group of businesses Retail clothes stores grow during an expansion Re-sale clothes stores (Buffalo Exchange, Goodwill) grow during a contraction

Economic Descriptors Economic Expansion- when most businesses are experiencing growth at the same time – longest expansion in US history Economic Recession- when most businesses are experiencing a minor contraction at the same time – Two consecutive quarters of mild contraction Economic Depression- when most businesses are experiencing a major contraction at the same time – One year or more of severely bad economic conditions. Great Depression from