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December 13, 2018 

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FDI: The abbreviation for Foreign Direct Investment, this is the acquisition of controlling interest in foreign firms and businesses from one country in another country. FDI can also take the form of constructing factories, structures and equipment (or any form of physical capital) in foreign soil. FDI does not include foreign investment into the stock markets (portfolio investment). Most economists consider foreign direct investment more useful than portfolio investment since this last one is generally regarded as temporal and can leave the foreign country at the first sign of trouble. FDI on the other hand, is considered more durable and with larger economic (potential) benefits.

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ENTERPRISE:

An organization that combines scarce resources for the production and supply of goods and services. The term enterprise is generally used synonymously with other terms such as business, firm, and company. If a distinction exists, enterprise can be profit oriented, nonprofit, privately owned, or government controlled. Alternatively, the term enterprise might also be used more in reference to the production activity itself rather than the organization.
The key role of an enterprise is the production of output using scarce resources. An enterprise is the means used by entrepreneurship to transform less satisfying resources into more satisfying goods and services.

Institutionalizing Entrepreneurship

An enterprise provides the institutional structure used by entrepreneurship to organize production. Entrepreneurship undertakes the risk of bringing together the other factors of production and engaging in production. An enterprise provides focus and often legal standing to this process.

The overarching motivation of entrepreneurship need not be the pursuit of profit. The entrepreneur organizing the production might be primarily interested in pursuing charitable works or improving the operation of government. In such cases, the result might be a nonprofit firm or government enterprise.

Profit Seekers

Here are a few examples of standard business enterprises?
  • The Wacky Willy Company is an excellent example of an enterprise. This corporation was formed by William J. Wackowski, an aspiring entrepreneur who had the dream that every toddler could cling lovingly to a stuffed armadillo. Mr. Wackowski (Wild Bill) formed The Wacky Willy Company to make this dream a reality. The Wacky Willy Company, is a modest operation with a couple of factories, but it is the means used by Willy the Wackmeister to produce and distribute Stuffed Amigos, this enterprise provides the mechanism he uses to combine labor, capital, and raw materials needed to produce Stuffed Amigos.

  • An enterprise need not be legally incorporated like The Wacky Willy Company to qualify. Phil Gardener grows zucchinis in his backyard. Phil's zucchini-grower business is also an enterprise. His enterprise, however, consists of him, making it a proprietorship. Phil also had a dream, a dream of growing the best zucchinis Shady Valley has ever seen. To implement this dream, Phil has a section of his backyard set aside for zucchini production. He purchases the necessary supplies from his local garden center, spends a few hours a day tending to his crop, then sells his produce upon harvest. His firm is NOT a corporation. It is nothing more than a guy who grows zucchinis. But it is an enterprise nonetheless.

  • At the opposite end of Phil's zucchini growing proprietorship lies OmniConglomerate, Inc. Like The Wacky Willy Company, OmniConglomerate is a certified corporation. However, unlike The Wacky Willy Company, OmniConglomerate produces more than a single good. In fact, OmniConglomerate is the parent enterprise overseeing the production of a multitude of different goods. OmniMotors produces cars, OmniCell is a wireless telephone company, OmniFoot manufactures athletic shoes, OmniHealth runs a chain of medical clinics, and the list goes on. OmniConglomerate is itself an enterprise, which owns and controls a score of other enterprises OmniMotors, OmniCell, and OmniFoot.

Not For Profit

Not all enterprises are motivated by profit. A couple of examples will serve to illustrate:
  • One example of an enterprise, falling in the nonprofit category, is provided by Madison Kunkleburgton. Madison, sensitive to the plight of pedestrians with foot ailments, formed a charitable organization to offer assistance to those in need. He acquired funding, collected donations, rented office space, and brought together some of the finest podiatrists available to study foot-related problems. His nonprofit enterprise (United Foot) provides a valuable service to thousands of needy pedestrians. However, unlike other enterprises such as The Wacky Willy Company, United Foot is not in pursuit of profit.

  • Another example of the not for profit variety of enterprise can be had with the Mayor of Shady Valley, Victor Thurgood. Looking for ways to generate more revenue, Mayor Thurgood enticed the City of Shady Valley to establish a casino and resort hotel. Although it operates like any casino found in Las Vegas or Atlantic City, this particular enterprise is owned by the government of Shady Valley. As such, it is not a "for profit" enterprise. While it does generate an excess of revenue over expenses (a lot of excess revenue), which is used by the city to pay for assorted public services, as a government-owned enterprise, this excess revenue is not technically considered profit.

<= ENERGY PRICES, AGGREGATE SUPPLY DETERMINANTENTREPRENEURIAL BEHAVIOR =>


Recommended Citation:

ENTERPRISE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2018. [Accessed: December 13, 2018].


Check Out These Related Terms...

     | business | company | firm | government enterprises | legal business organizations | ownership liability | business objectives | profit maximization | natural selection | plant | factory | industry |


Or For A Little Background...

     | production | production cost | supply | entrepreneurship | microeconomics | private sector | institution |


And For Further Study...

     | business sector | business cycle | political views | corporate profits | second estate | free enterprise | laissez faire |


Related Websites (Will Open in New Window)...

     | U.S. Chamber of Commerce | World Chamber of Commerce | Better Business Bureau |


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