Private Enterprise System (Capitalism) - an economic system that rewards firms for their ability to percieve and serve the needs and demands of consumers. Businesses that are adept at satisfying customers gain access to necessary factors of production and earn profits.
Competition- battle amount businesses for consumer acceptance.
Smith believed that competition among firms would lead to consumers recieving the best possible products and prices because less efficient producers would gradually be driven from the market place.
The "invisible hand" concept is a basic premise of the private enterprise system.
Competitive Differentiation- the unique combination of orginazational abilities, products, and aproaches that sets a company apart from competitors in the minds of consumers.
Firms that fail to adjust to shifts in consumer preferences or ignore the actions of competitors leave themselves open to failure.
For capitalism to operate effectiely the citizens of a private enterpise economic economy must have certian basic rights.
Private Property- the most basic freedom under the private enterprise system.Every participant has the right to own ,use , buy , sell and bequeth most forms of property including land, buildings, machinery, equipment, patents on inventions, individual possessions, and intangible properties. The private enterprise system also guarantees business owners the right to all profits (after taxes) they earn through their activities.
Freedom of choice means that a private enterprise system relies on the potential for citizens to choose their own employment, purchases, and investments. (Example: change jobs, negotiate wages, join labor unions etc.) A private enterprise economy maximizes individual prosperity by providing alternatives. The private enterprise system permits fair competition by allowing the public to set rules for competitive activity. U.S pass laws prohibit cutthroat competition(practicing eliminating compeition). Outlaws price discrimination, fraud in financial markets, and deceptive advertising and packaging.
Private Enterprise Entrepeneur- a risk taker in the private enterprise system. Individuals who recognize marketplace opportunities are free to use their capital, time and talents to pursue those opportunities for profit. Willingness of individuals to start new ventures drive economic growth and keeps pressure on existing companies to continue to satisfy customers. Entrepreneurship provides the benefits of innovation.
Private Enterprise Statistics
Article from Facts About Business
1 in 7 firms started operation during the past year and create more than one of every five new jobs in the economy)
There are 20 million U.S. business in operation (15 million self employed) and 12 million working for fewer than 10 people. (24 percent college graduate / 19 postgraduate degrees)