Understanding Business Structure Distinguishing between types of enterprises

Star Trek - Enterprise

Enterprise Enterprise is simply defined as Business Organization Examples: –If you raise sheep, you have a sheep enterprise –If you grow crops, you have a crop enterprise. But if you grow corn & wheat, you also have a corn enterprise and a wheat enterprise.

Types of Enterprises Competitive Enterprises Complementary Enterprises Supplementary Enterprises

Competitive Enterprises Most enterprises are competitive ones. That is they compete for resources. Make up most farm enterprises, compete for economic resources: – Land – Labor – Capital – Management Increasing the level of one enterprise reduces the resources available to have another competing enterprise.

Show What You Know List at least two of the four resources that competitive enterprises compete for. If I increase the level of one enterprise, it _____the resources available to have another competing enterprise.

Complementary Enterprises Adds to another enterprise when resources are limited. One that increases its output while at the same time increases the output of another enterprise within the same farming system. Extremely rare and only exist for a very few combinations.

Show What You Know A complementary enterprise adds to another enterprise when resources are _______. Which is more rare, a competitive enterprise or a complementary one?

Supplementary Enterprises Neither competes with nor adds to the production of another enterprise. May have use for some existing resources that would otherwise go unutilized or at least underutilized. Would supplement the farm income and not compete for any resources that might be utilized by other enterprises. The relationship ends as that enterprise becomes larger and starts competing for resources. Typically utilize resources with low opportunity costs.

Opportunity Costs The cost of using a resource based on what it could have earned if used for the next best alternative. –For example, the opportunity cost of farming your own land is the amount you could have received by renting it to someone else.

Show What You Know A supplementary enterprise neither ______ nor _______ to the production of another enterprise. Are the opportunity costs high or low with supplementary enterprises?

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