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Unit 2 Enterprise

Unit 2 Enterprise. Part I Entrepreneurship. Important Words: Nonmonetary: adj. Upgrade: v. Saturate: v. Intrapreneur: n. Boost: v. Catch on. The Entrepreneur. Definition of Entrepreneur:

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Unit 2 Enterprise

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  1. Unit 2 Enterprise

  2. Part I Entrepreneurship • Important Words: Nonmonetary: adj. Upgrade: v. Saturate: v. Intrapreneur: n. Boost: v. Catch on

  3. The Entrepreneur • Definition of Entrepreneur: • Entrepreneur is a person who shifts economic resources out of an area of lower and into an area of higher productivity and yield. • Entrepreneur is the one who starts his or her own new and small business. • The entrepreneur is a person who takes the risks necessary to organize and manage a business and receives the financial profits and nonmonetary rewards.

  4. Distinction between Entrepreneur and Professional • The former situation: • The present situation: • The reasons for this change: Increased competition, saturated markets and a more price-conscious public

  5. Typical Behaviors of Entrepreneurs: • Viewing change as the norm • Searching for change • Responding to change • Treat change as an opportunity • Creative, experience and confident character

  6. The Enterprise • Intrapreneurs—— a person with entrepreneurial characteristics, who is employed within a large corporation. • Examples • Interpret the example of 3M. • Wider application of entrepreneurship.

  7. The Growth-oriented Entrepreneur —— entrepreneurial personality • Need for achievement • Low need to conform • Persistence • High energy level • Risk taking tendency

  8. Risks of Entrepreneurship • Description of the present situation: Substantial business risk--- over 3 million new businesses are started each year, and two out of three new jobs are in small businesses. From 25 to 33 percent of all independent small businesses fail at the beginning stages. 80% businesses failed within 10 years. • Significant financial risk:

  9. Reasons for failures of businesses: • To begin a business out of passion. • To run out of money. • Failures in plan.

  10. Review • 1. What does the author define an entrepreneur as? • 2. What is an intrapreneur? • 3. What are the personal characteristics of the growth-oriented entrepreneur?

  11. 4. What are the reasons why thousands of businesses fail each year? • 5. Suppose you were an entrepreneur in a small business, what would you do to maintain your business? (refer to Table 2-1)

  12. Part II: The Sole Proprietorship and the Partnership • The sole proprietorship is the oldest and is still the most common form of ownership in the U.S. A sole proprietorship is a business owned and managed by one person. • A sole proprietor can be called the company.

  13. Advantages of the Sole Proprietorship • Simplicity in starting the business • Ownership of all the profits • Enjoyment and satisfaction from personal involvement • The ability to make management decisions without others’ approval • Tax only on the owner’s personal income • Simplicity in dissolving the business

  14. Disadvantages of the Sole Proprietorship • Unlimited financial liability • Difficulty in raising funds • No sharing of the managerial burden • Impermanence of the business

  15. The Partnership Definition: a partnership is an association of two or more persons to carry on as co-owners of a business for profit. Partnership agreement:

  16. Advantages of the Partnership • Simplicity in starting the business • Pooling of funds and talents • Greater borrowing power • Enjoyment and satisfaction from personal involvement • Tax only on owners personal incomes

  17. Disadvantages of the Partnership • Unlimited and joint financial liability • Potential Personal disagreements • Impermanence of the business • Freezing of each partner’s investment

  18. The Corporation Definition: a corporation is an artificial being, invisible, intangible, and existing only in contemplation of law. ---John Marshall

  19. Advantages of the Corporation • Existence as separate legal entity • Limited financial liability of the owners • Long life of the business • Easy transfer of ownership • Greater financial capability

  20. Disadvantages of the Corporation • Special and double taxation • Complicated and costly formation • Considerable government regulation and reporting requirements • Lack of secrecy in operations

  21. The Organization of a Corporation • Board of Directors • Responsibilities for Board of Directors: 1)To govern the corporation’s affairs and to make general policy 2) To select the corporation’s officers 3) To account for the actions of the corporate officers to the stockholders

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