1.1 - Enterprise and Entrepreneurship

Question 1

What is business enterprise?

Answer 1

+The process of identifying new business opportunities and taking advantage of them.

+Can involve starting a new business or helping an existing one to expand by coming up with new ideas.

Question 2

What does all business activity need to have at least?

Answer 2

+ONE purpose eg:

• Provide people with a good or service
• Meeting customer needs
• Adding value

Question 3

What is a good?

Answer 3

A physical item such as a book or furniture

Question 4

What is a service?

Answer 4

An action performed by other people to aid the customer.

+Eg: Hairdressing,Plumbing

Question 5

What is a product?

Answer 5

A good or service [usually] available in a market designed for consumer use.
+Customers buy products to meet a need.

Question 6

What are meeting customer needs?

Answer 6

+Providing goods and services that people will want to buy.

+Customer needs often change so firms may need to change the products they sell to keep up.

Question 7

What is adding value?

Answer 7

+Businesses find a way to improve an existing product, so consumers are willing to pay more for it compared to competitors’ products.
+There are several ways a business can add value to a product - Eg:
-Make a product more convenient for customers to get
-Build a good brand image
-Improve product design/quality
-Give the product a USP

Question 8

How can a business add value?

Answer 8

+Make a product more convenient for customers to get/use [eg. a mobile hairdresser might be more convenient for customers than having to visit a hairdresser’s salon]
+Build good brand image for product - customers will be more willing to spend money on the product as they’ll recognise the brand and know it’s trustworthy and desirable
+Improve design
+/quality of product
+Give product a USP [Unique Selling Point] -This is some feature that makes it different from its competitors, which makes it an original product.

Question 9

The world is always changing - so what do businesses need to do?

Answer 9

Be dynamic and adapt to these changes.

Question 10

What do changes in lifestyle result in?

Answer 10

People coming up with new business ideas.

Question 11

Where do new business ideas come about from?

Answer 11

+Changes in technology
+Changes in customer needs
+Obsolescence

Question 12

How do new business ideas come about from changes in technology?

Answer 12

+Eg, the invention of tablets meant lots of people came up with ideas for apps that could be used on these devices.

Question 13

How do new business ideas come about from changes in customer needs?

Answer 13

Eg, these days people are much more concerned about the environment, so many businesses have started up offer more environmentally friendly products.

Question 14

How do new business ideas come about from Obsolescence?

Answer 14

+Obsolescence is when a product is no longer used, usually because it has become outdated and has been replaced by something else.
+Business owners have to come up with new ideas so that their business survives. [Eg, as video tapes become obsolete, video rental stores started stocking dvds in order to survive.]

Question 15

What will new business ideas either be?

Answer 15

+Completely original [there hasn’t been anything like it before]
+Or an adaptation of an existing product or idea [but the business will have found a way to improve it or make it more relevant to customers at the time]

Question 16

Name a example of an original business idea.

Answer 16

+In the 1970s, James Dyson came up with the idea of a vacuum cleaner that didn’t need dust bags.
+Customers wanted to buy the vacuum cleaner, as it meant they no longer had to buy replacement bags and the new vacuum cleaner didn’t lose suction.

Question 17

What is an entrepreneur?

Answer 17

Someone who takes on the risks of enterprise activity

Question 18

Why are entrepreneurs important?

Answer 18

Without them, we wouldn’t have any new businesses

Question 19

To successfully run a new business what must an entrepreneur be able to do?

Answer 19

+Organise resources
+Take risks
+Make business decisions

Question 20

Why do entrepreneurs have to organise resources to successfully run a new business?

Answer 20

+They need to have good organisational skills to keep on top of all the day-to-day tasks of running the business as well as planning for the future.
+Eg, they have to make sure the business has all the right resources [such as money and supplies] at the right time.

Question 21

Why do entrepreneurs have to take risks to successfully run a new business?

Answer 21

+There are lots of unknowns in running a business - the entrepreneur will probably give up their current job and invest money they could lose if the business fails.
+They can write a business plan to work out if the business is a good idea - but they can’t know exactly what’s going to happen before they start, so they have to be willing to take calculated risks.

Question 22

Why do entrepreneurs have to make business decisions to successfully run a new business?

Answer 22

+There are lots of decisions that need to be made when running a business, and not all of them are easy to make.
+Eg, the entrepreneur needs to be able to decide on the business’s aims, its structure, who to employ, how to grow and what to do if things go wrong.

Question 23

What are the risks involved in running a business?

Answer 23

+business could struggle to pay back money that has been borrowed
+Job security is at risk which could affect quality of life
+Risk of failure

Question 24

Why is raising finance a risk in running a business?

Answer 24

+An entrepreneur needs money to buy equipment and pay workers.
+They will often use their own money, but they’ll probably need to raise more capital from banks or other investors.
+If the business makes a financial loss, it won’t be able to pay back all the money that’s been borrowed [may struggle to survive]

Question 25

Why is job security a risk in running a business?

Answer 25

+Entrepreneurs don’t have much job security when they are starting a new business.
+They’ll usually have given up another job to follow their business idea.
+If things go wrong they could lose money and end up without any job which could have a huge impact on their quality of life.

Question 26

Why is business failure a risk in running a business?

Answer 26

+There’s always a risk that a business will fail.

+So the entrepreneur risks money, time and effort to try and make the business work.

Question 27

What are the rewards involved in running a business?

Answer 27

+Business success
+Profit
+Independence

Question 28

Why is business success a reward in running a business?

Answer 28

+For many entrepreneurs, one big reward is seeing their business idea become a success.
+This gives entrepreneurs satisfaction that their business has helped many consumers in their day-to-day lives.

Question 29

Why is profit a reward in running a business?

Answer 29

+If the business makes lots of profit, the entrepreneur could earn more money than they did before they started.
+This could give them a better quality of life

Question 30

Why is independence a reward in running a business?

Answer 30

+Being an entrepreneur can be rewarding as it gives the entrepreneur the independence to choose what they do day-to-day, and what direction the business goes in.