3.00 Explain economic foundations relevant to the sports andentertainment marketing industry.
3.03 Discuss the free enterprise system.
Sports and Entertainment Marketing ISummer 200347
A. Identify the basic principles of a free enterprise system.1. The free enterprise system is also referred to as private enterprise.a. Encourages individuals to start and operate their own business with limitedgovernment involvement.b. Allows the market to determine prices through supply and demand.2. Basic economic freedomsa. Freedom of ownershipi. The ability to choose a house, car, job or business.ii. There are restrictions on how and where some businesses can operate.For example, the city of Wilmington might not allow a new movieproduction facility to be built in a residential area.b. Competitioni. A rivalry between two or more businesses to gain as much of the totalmarket share as possible.ii. Competition helps to maintain reasonable prices, provides consumers withnew and improved products and results in a wider selection of productsfrom which to choose.iii. Competition forces businesses to operate in the most efficient mannerpossible.c. Risk is the potential for loss or failure.d. Profit is the money earned from conducting business after all costs andexpenses have been paid.B. Identify the advantages and disadvantages of entrepreneurship.1. Advantagesa. Personal independence to make key business decisionsb. Personal fulfillment and feeling of self-worthc. Potential for increased income2. Disadvantagesa. Risk associated with potential loss of incomeb. Hours can be long and often irregularC. Discuss the forms of business ownership.1. A sole proprietorship is a business owned and operated by one person. Seventypercent of all businesses in the United States are sole proprietorships.a. Advantages:i. Ease of startupii. Limited government regulations including taxes. Sole proprietorships aretaxed less than other forms of business ownership.iii. Profits go to the owner.iv. Freedom in making business decisions.b. Disadvantages