LESSON TWO Factors that Influence Entrepreneurship

Outline Factors 1. The Economy 2. Markets 3. Demographics 4. Technology 5. Government Initiatives 6. Environmental Concerns 7. Availability of Financing 8. Trends and Fads ECONOMICS study of resources and how they are managed

1. The economy  Economy –a system that exists to manage production, distribution and consumption of goods.  Consumers have needs and wants and businesses supply the needs and wants  A prosperous economy allows for consumers to increase/change/improve needs and wants….stages of the economy

Stages of the Economy Prosperity Recession Recovery Depression Inflation

Cycle Inflation/*** Recession Depresseion Recovery Economic Prosperity

Define Prosperity Recession Inflation Recovery Depression

Prosperity times are good lots of jobs strong salaries affordable homes standard of lifestyle is good low unemployment rate inflation rate is average (i.e. 2% per years) defined…

Recession Recession – extended decline in business activity Two negative consecutive quarters of falling real gross national product Quarter – three months GDP – record Visible in industrial production, employment, consumer purchases, exporting/importing Interest rates will fall to help stimulate economy

Inflation persistent, substantial rise in the general level of prices related to an increase in the volume of money and resulting in the loss of value of currency inflation is high in Fort McMurray case of pop …doubled in price Could lead to recession

Canada GDPUnemploymentInflation –

Saskatchewan GDPUnemploymentInflation 2011 – 4.8% change (July) 2010 – 4.2 % change 5.22 (1.9 Aug)

Depression Period which employment rate is very very low Alberta and SK unemployment rate – 4.4% August (SK was 5.0 in Feb) National unemployment rate 7.3 (Canada was 7.6 in February) U.S. 8.1 Las Vegas 12.2%

Recovery

 1929 – 1939 – Great Depression  1939 – 1945 – Recovery (military demand stimulated economy)  1945 – 1965 Prosperity (post-world war II) Baby Boomers born during this time. (largest group)  Since 1945 there have been several recessions in Canada,  but there has also been times of prosperity.  1981 – 1982 – recession  1983 – 1989 – SLOW recovery  1990/ consumer spending weakened - recession  1992 – 2005 – recovery to prosperity  2008 – 2009 global recession  2009 and on recovery… running close..recession

Video

Example mortgage rates  %  2007 – 6%  1998 – 6.5%  1994 – 8%  1992 – 11%  1990 – 14-15%  1980 – 1981 – 18% 2008 – fixed 5-6 Variable %

Example  Complete mortgage calculation – 5% for 5 years, amortized over 25 years – 7% for 5 years, – 11% for 5 years  Complete vehicle calculation 6 years – 6% for five years – Value of loan $32,000, what was paid out

 A prosperous economy is good for business. definition is the study of how society uses its scarce resources.

2. The Markets  Definition  A market exists when buyers and sellers come together – the buyers as the money and the seller has the good or service  Market – economy is based on supply and demand,supply

economic-systems-presentation

Demand and Supply  Demand – consumer demand for a product/service  Very little demand – product or service will not sell  High demand – product or service will sell and prices will increase  Supply – of product or service  For some products demand is high – and prices stay high (i.e. name brand clothing for teenagers); For some products if the prices decrease (i.e. ipods -- demand will increase)

Example

 Once demand is established….there are two categories of markets: – 1. Consumer market – consumer buys from business – 2. Business to business – business buys from business (i.e. Dairy Queen buys product from Scott National – napkins, etc.)

3. Demographics  file file

4. Technology  Production  Communication  Diagnostic  Storage  Entertainment  Home/Car  Software and hardware – Programs and equipment e.g. Ipads Cell phones Netbooks Old technologies desktop com Work from home Fewer support -adv, acc

5. Government Initiatives  Energy Grants  Renovation Grants  Increase of taxation (pst and gst)

6. Environmental Concerns  Environmental restrictions/pollution

7. Availability of Financing  Interest rates, down payments, security

8. Trends & Fads

PICK TOPIC (I.E. CYCLE, DEMAND/SUPPLY, BORROWING RATES,) AND COMPLETE GLOGSTER

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