LESSON TWOLESSON TWOFactors that Factors that

Influence Influence EntrepreneurshipEntrepreneurship

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 EconomyProsperity

Recession

Recovery

Depression

Inflation

Cycle

Inflation/***

Recovery

Economic Prosperity

Recession

Depresseion

Define

Prosperity

Recession

Inflation

Recovery

Depression

Prosperity

Prosperitytimes are goodlots of jobsstrong salariesaffordable homesstandard of lifestyle is goodlow unemployment rateinflation 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 McMurraycase of pop …doubled in price

Could lead to recession

CanadaGDP Unemployment Inflation

2011 2.4 – 2.6 7.2 1.6 2011

2010 3.2 8 2.0

SaskatchewanGDP Unemployment Inflation

2011 – 4.8% change

5.5 2.8 (July)

2010 – 4.2 % change

5.2 2 (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. 8.1Las Vegas 12.2%

SMART Response QuestionTo set the properties right click and selectSMART Response Question Object->Properties...

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 1990/1991 - consumer spending weakened - recession 1992 – 2005 – recovery to prosperity 2008 – 2009 global recession 2009 and on recovery…...........2011 .....running

close ..recession

Video

Example mortgage rates

2012- 4.5% 2007 – 6% 1998 – 6.5% 1994 – 8% 1992 – 11% 1990 – 14-15%

1980 – 1981 – 18%

2008 – fixed 5-6Variable 3.52011- 4 - 5%

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 A prosperous economy is good for business.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,

http://www.slideshare.net/Geckos/the-four-types-of-economic-systems-presentation

Demand and Supply

Demand – consumer demand for a product/serviceDemand – consumer demand for a product/service Very little demand – product or service will not sellVery little demand – product or service will not sell High demand – product or service will sell and prices will High demand – product or service will sell and prices will

increaseincrease Supply – of product or serviceSupply – of product or service For some products demand is high – and prices stay high For some products demand is high – and prices stay high

(i.e. name brand clothing for teenagers); For some (i.e. name brand clothing for teenagers); For some products if the prices decrease (i.e. ipods -- demand will products if the prices decrease (i.e. ipods -- demand will increase)increase)

Example

0102030405060

100 75 50 20

Price

Price

Number available for sale

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

4. Technology Production Communication Diagnostic Storage Entertainment Home/Car

Software and hardware– Programs and equipment

e.g. IpadsCell phonesNetbooks

Old technologiesdesktop com

Work from homeFewer 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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