MGTA01H3 Lecture Notes - Lecture 6: Canada Revenue Agency, Smart People, Audit Risk

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25 Nov 2013
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Lecture 6- Oct 21, 2013
Entrepreneurs
Entre: to enter
Prendre: to take
> Someone who enters into a business or industry and takes a chance; it might be risky but
he’ll do it
Midterm exam: know degrees of competition and different markets
Only tested on ch 1-3, but all 6 lectures
There’s about 2.5 billion businesses in this country
We believe that the fourth factor of production is the culture, spirit said we need people
with enterprise and want people who want to start business.
Review:
It’s easy to start a small business.
It’s easy for a small business to FAIL.
Not only does the Canadian culture and society says start a business, but by making it easy
to start a business, we get a huge turnover of businesses that fail.
the word fail is not entirely accurate but what we do know for sure is that after 2 or
5 years, a large percentage of businesses that got started up are no longer paying
taxes.
Revenue Canada tells us that if you started 100 businesses in October of 2003, by
Oct 2005, 39% of those would no longer be sending tax cheques. By 2008 64% of
them were no longer reporting taxable income.
Research suggests that people who want to run their own show think the odds of
success are worst than they really are.
Every university in this country and in North America, continue to get people who
want to start their own businesses.
‘Entrepreneur’ Explained
‘Entrepreneur’ is not a job
‘Entrepreneur’ is a role
‘Entrepreneur’ is a personality type
someone who enters a market
It’s an attitude
Personality Types
Risk Tolerance
High ‘Need for Achievement’
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Internal Locus of Control
Risk Tolerance
Risk defined: uncertainty of outcome
People See risk:
From new situations, complexity, or the unknown
Wide dispersion -> high uncertainty
Threatening or inviting
Entrepreneurs: Risk Tolerant
Entrepreneurs start new businesses
Entrepreneurs try new opportunities
Entrepreneurs know: they might fail
Entrepreneurs are risk tolerant : ‘I’ll get a job soon enough, since I studied so
much, so I’m not worried’
Prof. gives example of eating haggis as a way to take risk
“Locus of Control”
A person's belief about what causes good or bad results in his or her life.
The extent to which people believe that they can control events that affect them.
“Internal” Locus of Control
People belief that events result from their own behavior and actions.
“internals” try to influence others.
“internals” assume their efforts will succeed
“External” Locus of Control
People who believe that powerful others, fate, or chance determine events.
Less likely to be leaders
Less likely to take risks
Less likely to start their own business
Internal: ‘ I control my destiny’
External: They control my destiny
Entrepreneurs:
o recognize opportunities
o assemble and mobilise resources
o assume risks to realise rewards
o Entrepreneurs are “internals”
Norwegians are rich because of smart people, great resources.
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