1.1 Enterprise Flashcards
Business and its environment
Purpose of business activity
Combines factors of productions to produce goods and services to satisfy people’s needs and wants while employing people as workers and pay them wages to allow consumption of products by others
what do businesses do
Businesses identify the needs of consumers or other firms.
- They then purchase resources - or factors of production - in order to produce goods and services that satisfy these needs, usually with the aim of making a profit.
What is a consumer?
A person who purchases goods and services for personal use
consumer goods
products and services that satisfy human wants directly
Consumer Services
Businesses that provide services primarily to individual consumers, including retail services and education, health, and leisure services
factors of production needed by business
Land - renewable and non renewable resources of nature ( e.g oil, crude oil, timber)
Labour
Capital - finance & manufactured resources used in production (e.g computer, vehicle, machine)
Enterprise - provides the managing, decision making and coordination roles
Concept of adding value
Producing goods and services and selling them at a higher price than the cost of brought in materials
Concept of added value
selling price of a product sold by business - the cost of the materials that it brought in
opportunity cost
what you give up when you make a choice, the BEST alternative given up in making a decision
capital goods
Buildings, machines, technology, and tools needed to produce goods and services
Branding
A marketing function that identifies products and their source and differentiates them from all other products
Dynamic Business Environment
The idea that business is ever-changing because external factors, such as technology, are always changing.
Changes in the Business Environment
-New competitors
-Legal changes
-Economic changes
-Technological changes
Why do businesses fail?
- Poor management skills - (e.g planning, cash management, marketing leadership)
- Lack of cash
- Poor record keeping
local businesses
operate in a small and well-defined part of the country.
- They do not aim to expand so do not make attempts to attract customer across the country
(e.g hairdressing business)
National Business
A business that operates within just one country.
(E.g large car retailing firms , retailer shops, banks with branches in one country )
multinational business
business organization that has its headquarters in one country, but with operating branches, factories and assembly plants in other countries
what is an intrapreneur
someone who works inside an existing organization who sees an opportunity for a product or service and mobilizes the organization’s resources to try to realize it
What is the role of an entrepreneur?
Organizes resources
Make business decisions
Take risks
Create business plans
Invests their own money in the business
Accept responsibility for managing business
qualities of successful entrepreneurs
Multi-skilled
Innovation
Committed & self motivated
Leadership skills
Risk taking
Barrier to entrepreneurship
Lack of business opportunities
Obtaining sufficient capital
Cost of good location
Competition
Lack of customer base
role of enterprise in a country’s economic development
Employment created
Economic growth - ( increase living standards )
Innovation and technological change - ( makes business sector more competitive)
Exports - ( improves international competitiveness)
Personal development
Role of Intrapreneurship
Injecting creativity and innovation into the business
-Developing new ways of doing business
-Driving innovation and change within the business
-Creating a competitive advantage
-Encouraging original thinkers and innovators to stay in the business
Business plans are
written before the company is launched and forces entrepreneurs to consider vital issues important to the company
- Also provides evidence
Main elements of a business plan
the executive summary - ( e.g nature of the product)
- description of the business opportunity
- marketing and sales strategy ( how the business will sell them)
- management team and personnel ( skills & experience & the people intend to recruit)
- operations
- financial forecasts
Benefits of a business plan
- provides evidence to business investors & lenders
- Makes financial applications more successful
- Forces you to think critically
- Reduces risk
- Gives owners and managers a clear action plan & guidance
limitations of a business plan
If forecasts are unreliable
Doesn’t guarantee success
Owners may have biased view
Might Lead entrepreneur to be inflexible
