Vocabulary
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PIZZA INC.
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...an entrepreneurial simulation in a market economy, gives students
an opportunity to apply the information presented in Lessons 112.
Students are divided into several communities where they become co-owners of
one of three competing pizza shops.
In cooperative learning groups, these pizza entrepreneurs make
decisions that concern their businesses and the people they serve. Decisions
include developing a business concept, planning the business, choosing a form
of business organization, ordering resources, selecting a wholesaler,
establishing job descriptions and hiring workers, determining a price for
pizza, increasing productivity, choosing store locations, designing floor
plans, increasing advertising, negotiating salaries and dealing with
government regulations. In preparation for each decision, they learn about
economic concepts, like scarcity, opportunity cost, price, supply and
demand, incentives, competition, interdependence, productivity and the role
of government.
Pizza shops record their monthly sales and expensesand bonuses
for good decisionson their store Statement of Income, competing with
other stores to earn profits.
PIZZA INC. is part of the Taking Charge curriculum, but it can
stand alone as a four-week economic decision-making unit.
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Overview
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PIZZA INC. simulates competing pizza businesses in a typical
community with a population of 3,000 to 4,000 people serving an outlying area two
to three times that number. The class is divided into three such
communities and each community is divided into three cooperative learning
groups of three to four students. Each group will open, operate anc compete as
a pizza shop in that community.
Before each business can open its doors, the owners must make
several decisions and necessary preparations. They draw floor plans,
create newspaper ads, establish job descriptions and work schedules,
select resources to make pizza, and hire employees.
During succeeding classes, these pizza entrepreneurs make decisions
that concern their businesses and the people they serve. The twelve
decisions cover an array of economic problems encountered during the
twelve-month period of operation. In each class session, time is set aside
for discussion, and the entrepreneurs make a group decision, selecting
what they think is the best economic choice. One of the group members
writes a Store Decision for the group, and then each member writes his
own comments. Depending upon the decisions of other pizza shops in
their community, the businesses learn the consequences of their
various choices and are awarded bonuses for good
Store Decisions which they record on their
Statements of Income. A discussion of the
economic implications of the decisions follows each economic problem.
To simulate unexpected events without spending a lot of time,
Fate Cards are added randomly, affecting sales income and expenses
(see Time Chart).
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Before you Begin
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- Read over all materials in the simulation.
- Make arrangements for outside speakers you intend to invite
to speak to your students.
- Determine how you will divide your classroom into three
communities. If the class size is small, you may want to consider one or
two communities instead of three.
- Consider how you will arrange the desks so partners face one
another and still feel part of their community (see sample
diagram below).
- Carefully consider how to divide your students into
cooperative learning groups.
Cooperative learning groups combine the different academic
abilities of three to four students. Ideally one student is a high achiever, one
or two are middle achievers, and one is a low achiever. For this
simulation, it is helpful for one student to possess strong math skills,
another good language skills, a third creative or artistic skills, and
a fourth strong leadership skills.
Carefully selected groups are more likely to be productive
and enhance student self-esteem.
- Examine the Time Chart to get a feel for daily goals.
- Copy student worksheets and make transparencies as directed.
- Request appropriate audiovisual equipment. You will also need
one calculator per pizza store.
- Become familiar with the Statement of
Income so you can explain it to your students. You may wish to use a computer spread sheet
to record revenue and expenses.
- Cut out one set of the Monthly Sales Cards, Monthly
Expense Cards, and the Fate Cards. Stores will draw cards monthly
and record the figures on their Statements of
Income as directed.
- Stores will be rewarded for good decision making with
bonuses which will be recorded on their Statements of
Income as directed.
- Decide how to store the group Store Decision
Sheets and worksheets (in folders or envelopes) so they can be kept in
the classroom.
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Objectives
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As competing pizza store owners in simulated communities, students
face a series of economic decisions which acquaint them with the
day-to-day operations of small businesses. While the simulation emphasizes
individual and group decision-making skills, it also exposes students to
the economic concepts and terms listed below.
Upon completion of the simulation, students will:
- Use available resources to research the pizza industry.
- Be able to write a Business Concept Description.
- Give examples of entrepreneurial funding sources and
define interest.
- Name three types of business
ownership (sole-proprietorship, partnership, and corporation) and give advantages and disadvantages
of each.
- Define a franchise and give its advantages and disadvantages
over an independent business.
- Identify the purpose of a statement of income and define the
terms on it.
- List the four productive resources and give examples of each.
- List skills a successful entrepreneur possesses.
- Define scarcity and opportunity cost and give one example of
each from the simulation.
- Identify information contained in an advertisement and the
role advertising plays in a market economy.
- Identify what should be considered when determining the number
of employees to hire and setting up a work schedule.
- Define natural and capital resources and explain how a
resource market operates.
- Give examples of how competition helps keep the price of
resources low.
- Identify the components which determine the price of pizza.
- List the operating expenses of a business and explain their effect
on price.
- Explain how an entrepreneur identifies customer demand through
a market survey.
- Define supply and demand and explain how they relate to
price determination.
- List the qualities and skills entrepreneurs look for in
prospective employees.
- Identify information found on an application form and be able
to complete an application form.
- Give examples of questions asked in an interview.
- Define the law of diminishing returns as it applies to advertising.
- Define productivity and explain how it enhances economic growth.
- Give examples of how specialization and division of labor can
increase productivity.
- Explain how current events affect customer wants.
- Give examples of how current events affect the prices of
productive resources.
- Give examples of how current events create surpluses or shortages.
- Explain how wages are set in a market economy through supply
and demand.
- Explain why skills, attitude and education are valued in a
market economy.
- Explain differing interests of workers and owners when
negotiating a wage dispute.
- Define profit and calculate it in various situations.
- List two reasons governments intervene in a market economy.
- Explain how government intervention can influence
productivity, costs and prices.
- Give both costs and benefits of government intervention to
consumers, workers and entrepreneurs.
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Time Chart
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1
Introduction to PIZZA INC.
Divide into communities and stores. |
2
Lesson 1:
Investigating Pizza |
3
Lesson 1:
Preparation of industry analysis. |
4
Lesson 2:
Business Concept |
5
Lesson 2:
Writing the Business Concept
Drawing the storefront |
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6
Lesson 2:
Starting the Business
Name stores |
7
Lesson 3:
Starting Our Business:
How Should We Organize?
Reading the State-ment of Income |
8
Lesson 4:
Productive Resources, Opportunity Cost
Entrepreneur Decision: What Resources Should We Buy? |
9
Lesson 5:
Preparation for Grand Opening
Draw floor plans, design ads. |
10
Lesson 5:
Entrepreneur Decision: Labor Decisions
Who works when?
Expense Card |
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11
Lesson 6:
Choosing a Wholesaler
Entrepreneur Decision: From Whom Should We Buy?
Expense Card |
12
Lesson 7:
Pricing Pizza
Entrepreneur Decision: What Price Should We Charge? |
13
Lesson 7:
Pricing Pizza Game
Expense Card |
14
Lesson 8:
Hiring Employees
Entrepreneur Decision: Whom Should We Hire?
Sales Card and Expense Card |
15
Lesson 8:
Speaker or Videos
Application Form
Mock Interview |
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16
Lesson 9:
Advertising
Entrepreneur Decision: Should We Increase Advertising?
Sales Card, Expense Card, Fate Card |
17
Lesson 10:
Competition and Productivity
A Lesson in Pizza Productivity |
18
Lesson 10:
Entrepreneur Decision: How Can We Increase Productivity?
Sales Card, Expense Card, Fate Card |
19
Lesson 11:
Changing Prices
Entrepreneur Decision: Why Do Prices Change?
Sales Card, Expense Card, Fate Card |
20
Lesson 12:
Negotiating Salaries
Entrepreneur Decision: Should Our Employees Get a Raise? |
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21
Lesson 12:
Labor Negotiating Exercise
Sales Card
Expense Card
Fate Card |
22
Lesson 13:
The Government and Pizza
Entrepreneur Decision: Why Government? |
23
Lesson 13:
Role of Government
Sales Card
Expense Card
Fate Card
Complete Statement of Income |
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Vocabulary
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Business Plan: The document which outlines the goals and
strategies of a new business
Capital resources: Tools, machines, equipment, buildings used
to make goods or services
Competition: Rivalry among sellers in a market economy
Competitive advantage: An advantage one business has over
its competitors due to a unique product, location, talents, setting. etc.
Consumer: Someone who buys goods and services to satisfy wants
Corporation: A business owned by stockholders
Demand: Number of goods, services or resources customers are
willing and able to buy at various prices in a specific time period
Division of labor: Process by which workers perform one or only a
few steps in the production of a good or service so that each
worker can become more skilled at a particular job, increasing
efficiency and productivity
Economic wants: Wishes that can be satisfied by consuming goods
and services
Economics: Study of the resource choices that people make in
their roles as consumers, workers, voters and savers to satisfy
their wants
Entrepreneur: A person who takes the risk of starting a new
business or introducing a good or service in hopes of earning a
profit; person who organizes productive resources to produce a good
or service
Equilibrium price: Price at which the amount producers are
willing and able to sell is equal to the amount that consumers are
willing and able to buy
Good: An object that can satisfy a consumer want, like pizza,
shoes, house, baseball
Human resources: Skills of workers hired by entrepreneurs to
produce goods and services; labor
Incentives: Rewards that motivate a person to take action
Interdependence: Reliance upon others so that actions in one part
of the economy affect decisions and events in another part
Market: Any place or process which enables buyers and sellers
to exchange a good or service
Market share: Percentage of potential customers who will buy
your products instead of those of your competitors
Marketing strategy: A plan that attracts customers to your business
Money: Anything accepted in exchange for goods and services;
coins, currency, checks
Monopoly: A market in which one firm sells a product for which
there are no close substitutes
Natural resources: Gifts of nature used to produce goods and
services such as land, timber, fish, oil, and minerals
Opportunity cost: The second best choice that is given up
when another option is chosen
Partnership: Form of business organization in which a firm is
owned by two or more people who make all business decisions,
share profits, and take responsibility for any losses
Price: Amount of money people pay for a good or service
Productive resources: Natural, human, capital and
entrepreneurial resources used to produce a good or service
Producer: People who make goods or services
Product: Any good or service
Productivity: Amount of goods and services produced per unit of
input during a specific period of time
Profit: Difference between a firm's income and expenses; the
incentive that motivates entrepreneurs to start new businesses and
stimulates owners to make firms more efficient
Revenue: Money coming into the business
Scarcity: Lack of sufficient resources to produce all the goods
and services that people want
Service: Work someone does for someone else that satisfies a
consumer want
Shortage: Amount of a good or service that consumers want to buy
in excess of the amount businesses want to sell
Sole proprietorship: Business firm owned by a single individual
Specialization: When a business owner or worker concentrates
on producing a specific good or service
Supply: Amount of a good or service that firms are willing and able
to provide at various prices in a specific period of time
Surplus: Amount of a good or service produced by businesses in
excess of the amount consumers want and are able to buy
Taxes: Mandatory payments to governments which pay for public
goods and services, such as schools, roads, fire and police protection
Trade offs: Choosing less of one thing to get more of something else
Wages, salaries, income: Payments for labor services
