Evaluate the influence of Georgia-based businesses on the State’s economic growth and development.
a. Describe how profit is an incentive for entrepreneurs. b. Explain how entrepreneurs take risks to develop new goods and services to start a business. c. Evaluate the economic impact of various industries in Georgia including agricultural, entertainment, manufacturing, service, and technology.
As entrepreneurs create new business plans, a major goal is to establish protocols that will generate a profit (the amount of money an entrepreneur or business earns after paying their expenses). The expectation of earning a profit motivates entrepreneurs to accept the risk of acquiring and organizing resources to meet market opportunities. The entrepreneur deals with whatever profit or loss results from business enterprises. Avoiding a loss and making a profit requires innovation in reducing the cost of providing goods and services and to attempt to improve product quality and service.
The entrepreneur must remain focused on consumer wants in order to build a dynamic, profit-oriented business. Entrepreneurs must have innovative skills in acquiring and managing the factors of production (labor, natural resources – raw materials, and capital – factories and equipment). The power of profit is used in market economies as an incentive and ensures that consumer demand is met. Some entrepreneurs share profits with employees, which helps to generate employee dedication to and support of the business.
Georgia is known for producing entrepreneurs of great skill and success. The following list includes Georgia entrepreneur from different historical periods and their areas of success:
Alonzo Herndon (1858-1927) - founder and president of the Atlanta Life Insurance Company
Anne Cox Chambers (b. 1919) - primary owner of Cox Enterprises, a privately held media empire that includes newspapers, television, radio, cable television, and other businesses
Ted Turner (b. 1938) - media titan, cable-TV pioneer, father of the Goodwill Games, owner of a World Series champion baseball team, skipper of a yacht that won the America's Cup, feature film producer, and restaurateur
Arthur Blank (b. 1942) - cofounder of the Home Depot corporation and the owner of the Atlanta Falcons football team
Bernie Marcus (b. 1929) - cofounder of the Home Depot and a well-known philanthropist
Truett Cathy (1921-2014) - founder and chairman of the Chick-fil-A restaurant chain
John Stith Pemberton (1831-1888) - the inventor of the Coca-Cola beverage
Asa Candler (1851-1929) - founder of the Coca-Cola Company, a banker and real estate developer and noted for his philanthropy
Robert W. Woodruff (1889-1985) - made Coca Cola a world-renowned corporation and known for his philanthropy
For those who are able to create a successful business, there are many benefits. Some of these benefits include being your own boss, working long hours for yourself as opposed to someone else, and receiving the majority of the profit that the business earns. In some cases, an extremely successful business is purchased by someone else, providing the entrepreneur with a huge profit.
However, the U. S. Small Business Administration indicates that over 50% of all businesses fail to be productive within their first five years in operation while other resources indicate that 60% - 90% fail within the first 18 months of operation. Factors include:
lack of experience in operating a business
lack of capital
too much competition in the market region
lack of consumers
lack of unique product offerings
misguided marketing strategies
failure to innovate
bad hiring decisions
Entrepreneurs who start their own businesses and fail often lose their own money and time in the process. Protecting personal financial security (and that of your family) should be a priority for entrepreneurs. An entrepreneur can minimize financial risks by limiting how many assets are risked.
Economic Impact of the Agriculture Industry Blessed with a relatively mild year round climate, Georgia offers tremendous opportunities for the agriculture industry. Taking pride in their work, farmers utilize modern conservation and production practices that help protect the environment and grow healthier, safer crops. As Georgia’s leading industry, a well-established business infrastructure combined with the resources of higher education facilities enable agribusiness firms to take new products to market faster. Georgia is a leading producer of commodities like soybeans, peanuts, cotton, broilers (chickens) and blueberries and is developing new products such as wine, cheeses, ice creams, peach products among other goods. During 2012, the Census of Agriculture indicates that Georgia’s agriculture industry sold more than $9.2 billion worth of agricultural products. The census reveals that more than 42,000 farms operated with 9.6 million acres in production. More than 17,000 of the farms raised cattle, both beef and dairy cows. The state’s forestry industry contributes $17.7 billion to Georgia’s economy and supports 73,300 jobs in the state. Georgia boasts the most commercial forest land than any other state. In 2011, $72.5 billion of Georgia’s $786.5 billion economy was related to Georgia’s agriculture industry. This industry, however, is a primary source of unemployment in the state.
Economic Impact of the Entertainment Industry
A variety of enterprises comprise the entertainment industry. The arts, film/TV, music and tourism businesses impact the state each in its unique way.
The arts and arts organizations are important to tourism and local economic growth. The arts significantly offer cultural opportunities to Georgia’s citizens, creates jobs, supports arts education, and helps revitalize communities. Creative industries in Georgia represent a combined $37 billion in revenue, and includes 200,000 employed generating $12.1 billion in earnings, and $62.5 billion in total economic impact.
The film, television, and interactive entertainment industry is booming in Georgia. Since 1972, 800 film and television projects (short term and long term) have provided job opportunities to 30,000 working professionals. A growing digital media industry, university developed talent, abundant tax incentives, proximity to a well-connected transportation system, and location diversity for filming are among the reasons that Georgia has become a “camera ready” state. In 2015, Georgia feature films and television production generated an economic impact of $7 billion. Qualifying productions can earn 20% tax credits and additional credit for embedding a Georgia promotional logo in the film’s title or credits.
The music production industry in Georgia has a well-known history of producing celebrated musicians. Metro Atlanta has recently become recognized as an industry hub for music production. The industry has generated approximately 9,500 job opportunities in the state and approximately $3.5 billion in revenue per year. The music industry generates about $50 million in tax revenues for the state per year. The industry has impacts beyond the music production industry. The network of support industries that are associated with music production increases the overall impact of the industry on Georgia’s economy.
The tourism industry in Georgia provides a $59 billion impact on the state’s economy. As the fifth largest employer in the state, the industry supports 439,000 job opportunities, or 10.3% of all payroll employment in the state. Taxes of $3 billion from the tourism industry were pumped into Georgia’s economy in 2015. If Georgia’s tourism industry was absent from the economy, each Georgia household would have to be taxed an additional $843 by state and local governments each year.
Domestic travel to Georgia brought over 102 million visitors to the state in 2012, an increase of almost 4% over 2014. Leisure travel was up 3.3%, while business travel increased at 4.8%. International visitors increased by 2.4% to an estimated $3 billion in 2015. While visitor volume increased by 13.8%, visitor spending impacted the state’s economy by $767.9 million. In response to the upward projection of tourism in the state, hotel revenue is tracking in the same direction. Hotel revenue in Georgia is enjoying another consecutive year of upward trending growth, growing by 10% to $3.9 billion. Demand for hotel facilities is rising as occupancy rose to 64.4%, an increase from 2014. Clearly, the hotel industry is reacting to the positive growth in the travel and tourism industry.
Economic Impact of the Manufacturing Industry
The manufacturing industry employs 6.4 million people creating a large workforce. However, representatives from the manufacturing sector have concluded that the industry is suffering in finding employees that have the right skills and experience to fill available positions. While many people perceive jobs in the manufacturing industry to be blue-collar and “dirty”, most manufacturing jobs pay better than average salaries, offer clean work environments, and offer significant opportunities to advance within the industry. According to Hire Dynamics, the demand in Georgia’s manufacturing industry has increased 30%, but the manufacturing workforce is not keeping up with the demand for workers. It is believed that this shortage of workers will become more severe in the coming years. The industry has become more efficient due to automation, resulting in a smaller workforce that requires skilled workers who require years of training to perform the industry jobs efficiently and effectively.
Regardless of the downward trend in the number of job opportunities, manufactured goods exports are a very strong part of Georgia’s economy. Manufacturers in Georgia produced 11.50% of the total output in the state and employed 8.75% of the workforce, a significant impact on Georgia’s economy.
Economic Impact of the Service Industry
The service industry provides a type of economic activity that is intangible, does not require storage, and does not result in ownership. Services are consumed at the point of sale. As a major component of economics (the other component being goods), services are vital to the successful functioning of Georgia’s economy. The service industry is difficult to define because it encompasses a wide variety of industries and businesses. The industry, however, can be divided into two broad, general subdivisions: customer services and professional services.
Service industries are the largest sector of Georgia's economy led by wholesale (food, petroleum products, transportation equipment) and retail (automobile dealerships, discount stores, grocery stores, restaurants) trade activities.
Most professional services, which include legal, accounting, investment management, engineering and health care, have seen a steady increase in new positions in recent years. The growth in this division is linked to three broad economic developments relevant to those services: contractual arrangements, expanding construction activity, and innovations in technology. Of the professional services, health services are expected to grow the fastest, with an estimated 30% or more rise in employment. In 2015, it was predicted that the professional services industry would maintain a 1.5% - over 4% growth rate, higher than the Georgia statewide totals.
Economic Impact of Technology
Georgia’s technology industry is growing and is currently one of the nation’s top 10 U.S. technology employment markets. Compared to other states with similar industry characteristics, employment in Georgia’s technology industry grew 2.5% in 2016. Most industry leaders anticipate that this growth trend will continue. Georgia’s major strengths in the technology industry include health technology, medical devices, software development, digital entertainment and network and cyber security. While the cities of Atlanta (the technology hub), Savannah and Columbus are the leading technology locales, the technology industry is spreading throughout the state. The payroll impact of the technology industry in the state could reach $30 billion by 2020. Georgia’s technology industry wages fall below the national average; however, technology wages are growing rapidly. From 2015 to 2016, the wage increase rate was over 6.5%, significantly higher than the national average growth rate.
While the outlook for the technology industry is promising, a major concern is the ability of the industry to attract and retain key talent to the state. Finding enough employees with the right skills to fill vacancies is a very real problem for technology companies in Georgia. Many employers have had to recruit from talent pools outside of the state, resulting in relocation costs and potential satellite offices. Industry leaders believe that a focus on re-structuring technology learning opportunities in the state’s K-12 educational system will help produce a highly skilled technology workforce. A talent pool is being groomed for the workforce in the nationally ranked programs at the Georgia Institute of Technology and Georgia State University.
Chad J. DeWolf is an educator at Madison County Middle School (Comer, GA) in the Madison County School District (Danielsville, GA). This website is not affiliated with MCMS or MCSD. ETS is used as an educational tool for anyone interested and should be viewed as a resource for an awesome online learning experience. Tell your friends about this. You know you want to.