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chapter 1 changes in sector importance

De-Industrialization

occurs when there is a decline in the importance of the secondary sector/manufacturing sector.

many developed economies such as the uk and other developed countries for example the uk have now experienced a decline in the importance of the secondary sector/manufacturing sector since the 1970s this is true because the tertiary sectors of the uk nowe employs well over 70 percent of all workers that reduces unemployment which could also mean that it could be more difficult to find workers to work in the manufacturing industry.

chapter 1 (continued)

mixed economy

nearly every country in the world has a mixed economy with a:

private sector-businesses not owned by the government these businesses will make their own decisions on what should be produce how they should produce it and what price should be priced for it, most businesses in the private sector aim to run profitably ie their main aim is to make profit and although these businesses mainly take their own decisions their is still some control of the business by the government.

public sector:businesses in this sector are likely to be controlled by the government or they could be state-owned. the government or the public authority makes decisions about what to produce and how much to charge consumer,such as state health and education services. the money from those comes not from the user but from the tax payer.

objectives of public sectors and private sectors are often different (see chapter 4)

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chapter 1 (continued)

in the following countries the government controls the following important industries or activities:

health

education

Defence

public transport

water supply

electricity supply

in recent years the government has changed the balance between the private sector and the public sector in their businesses, they have done this by selling some of their public sector businesses to private sector businesses. this is called privatization in many countries the water supply, the electricity supply,and the public transport systems have been privatised.

why have governments done this?

it is often claimed that private sector businesses are more efficient than public sector businesses, this might be because their main objective is profit and therefore private businesses control their costs, also private sector owners might invest in more capital than the government can afford.

competition between private sectors can help to improve product quality,however, a business in the private sector might make workers unemployed.than a public sector business in order to cut costs, a privater sector business is also less likely to focus on social objectives

so different motives could lead to better services/products which could also mean why privatization occurs.

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chapter 1 enterprise and business growth and size

enterprise and entrepreneurship

an entrepreneur is a person who organizes and takes the risk of a new business venture.

benefits of being an entrepreneur

independence-able to choose how to use time and money

able to put own ideas into practice.

may become famous and successful if the business grows.

may be higher profitable and the income might be higher than as working as another employee for a business.

able to make use of personal interests and skills

disadvantages of being an entrepreneur

risk-many new entrepreneurs businesses fail especially if there is poor planning.

capital- entrepreneurs will have to put their own money into the business and possibly find other sources of capital.

lack of knowledge and experience in starting and operating a business.

opportunity cost-lost income from not being an employee of another business.

characteristics of successful entrepreneurs

hard working long hours and short holidays are typical for entrepreneurs in making their business successful.

Risk taker making decisions to produce goods and services that people might buy is potentially risky.

creative a new business needs new ideas-about products and services, ways of attracting customers- to make it different from existing firms

optimistic looking forward to a better future is essential- if you think only of failure you will fail.

self confident being self confident is necessary to convince other people of your skills and to convince banks,other lenders and customers that your business is going to succeed

innovative being able to put new ideas into practice in interesting and different ways is also important

independent entrepreneurs will often have to work on their own before they can afford to employ others entrepreneurs must be well moitivated

effective communicator: talking clearly and confidently to banks,other lenders,customers and other government agencies about the new business will raise the profile of the new business.

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chapter 1 (continued)

why governments support business start-ups

most governments offer support to entrepreneurs. this encourages them to set up new businesses. there are several reasons why this support is given.

reduce unemployment-new businesses will often create jobs which will reduce unemployment.

increase competition-new businesses gives consumers more choice and compete with already established businesses.

increase output-the economy benefits from increased output of goods and services.

benefit society;entrepreneurs may create social enterprises which offer benefit to society other than jobs