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Objective 3.03

Objective 3.03

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Published by heatherhaymer

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Published by: heatherhaymer on Jul 12, 2011
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05/07/2014

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CONTENT/TEACHING OUTLINECOMPETENCY:
3.00 Explain economic foundations relevant to the sports andentertainment marketing industry.
OBJECTIVE:
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
 
CONTENT/TEACHING OUTLINECOMPETENCY:
3.00 Explain economic foundations relevant to the sports andentertainment marketing industry.
OBJECTIVE:
3.03 Discuss the free enterprise system.
Sports and Entertainment Marketing ISummer 200348
 
i. Unlimited liability. The business owner is liable for all business lossesincluding the initial investment and the ability of the owner to pay.ii. Sole responsibility for all aspects of the business including skills andfinances.iii. Life of the business is limited to the life or interest of the owner.2. A partnership is a business owned and operated by two or more people. Lessthan 10% of all businesses in the United States are partnerships.a. Types of partnerships:i. General partnership.(a) An agreement in which both partners agree to share equally in theprofit and/or loss of the business.(b) Each partner is liable for all debts incurred by the business.ii. Limited partnership(a) Each limited partner is liable for any debts of the business up to theamount of his/her investment.(b) Limited partnerships must have at least one partner who has unlimitedliability.b. Advantagesi. Relatively inexpensive to start.ii. Combined financial resources and knowledge.iii. Shared management responsibilities.iv. Increased potential for profits.v. Shared responsibility for risk.vi. Taxed less than a corporation.vii. A change in ownership does not alter the continuity of the business.c. Disadvantagesi. Partners can disagree on business decisions.ii. The decision or action of one partner is legally binding on the otherpartner, including financial decisions.iii. If one partner dies, the business is dissolved.3. A corporation is a business owned by stockholders.a. A corporation is a legal entity that is chartered by the state in which thebusiness is located.b. Boards, directors and officers manage the daily operations of a corporation.c. The three main types of corporations include:i. Private (closed) corporations do not offer shares of stock for sale to thegeneral public.ii. Public (open) corporations offer shares of stock for sale to the generalpublic.iii. Subchapter “S” corporations are taxed like a sole proprietorship andlimited to 35 or less shareholders.(a) Advantages
 
CONTENT/TEACHING OUTLINECOMPETENCY:
3.00 Explain economic foundations relevant to the sports andentertainment marketing industry.
OBJECTIVE:
3.03 Discuss the free enterprise system.
Sports and Entertainment Marketing ISummer 200349
 
(i) Delegation of specific management skills(ii) Limited liability for stockholders(iii) Life of the corporation is unlimited(iv) Easier to secure capital(v) Stockholders can easily enter or leave the business by purchasingor selling stock(b) Disadvantages(i) Numerous legal restrictions(ii) Complex to start up and dissolve(iii) Taxed heavily(iv) Complex record keeping4. A franchise is a business or organization with the right to use an establishedname and sell trademarked products. Franchises are granted to a retailer or awholesaler for a fee.a. Advantagesi. Name recognition and common products or services result in reducedliability.ii. Management training is typically provided by the franchisor (parentcompany).iii. Business plan is established by franchisor, modified for the location andfranchisee (person purchasing the franchise).b. Disadvantagesi. Freedom to make business decisions is usually limitedii. Franchise fees may be expensiveiii. Supplies and products must be purchased directly from the franchisor.

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