1.1 - Enterprise and Entrepreneurship Flashcards
Why do businesses exist? How do they do this?
In order to meet a specific need or to fill a gap in the market.
To do this, they sell goods or services or both.
Entrepreneur
A calculated risk taker who sets up a business for financial return.
What is a dynamic market?
A market that is in a rapidly changing business environment.
Why do new business ideas come about?
- changes in technology
- changes in what consumers want
- products and services becoming obsolete
How do new business ideas come about?
- original ideas
- adapting existing products/services/ideas.
What is the difference between innovation and invention?
- Innovation - The adaptation
of a product over time to improve its features. It involves changing existing processes or creating new, more effective processes, products and ideas. - Invention - creating products/services that did not previously exist.
E-commerce
any business transaction that takes place using the internet
M-commerce
any business transaction that takes place through a mobile device such as a mobile phone or tablet
Why do customer needs and wants change? What are they influenced by?
- Changes in lifestyles and technology have an impact on what consumers want - e.g: delivery
- customers’ tastes regularly change, as do trends in society
- changing demands of certain products and services
Obsolete
Out of date
Why does obsoleting of products take place?
One of the main reasons is technological advancement. For example, less cash transactions are taking place and more card payments
What are the types of adaptation of a product?
- changing a product’s brand name
- changing the format of a product
- adapting strategies used for promotion and advertising of goods and services
- some products can be adapted with new innovations
Adaptation of the product
Changing a product so that it is more suitable to meet customer needs and wants.
Risk
An estimate of the probability of an unwanted outcome. It depends upon the chance of it happening and the consequences if it did happen.
What are the types of risk presented to entrepreneurs?
- financial loss - losing money that was invested into the business if it is not successful.
- lack of security - no safety relating to a regular income.
- business failure - lack of cashflow, or failing to meet cash demands relating to bills, resulting in insolvency and having to close the business down.
How to minimise risks while running a business?
- carrying out market research to find out what customers want
- making a business plan to outline all the possible risks that the business could face
- managing cash flow and ensuring that there is enough cash flow in the business.
What is reward?
This is the return of making the business to the entrepreneur.
What are the different rewards of a business?
- profit
- business success - can lead to having a good reputation which can be appealing for the business
- independence - some people want to do something that interests them and they may not want to work for someone else.
What are the measures of business success?
- a growing business
- a positive reputation
- winning business awards
- becoming a well-known business person
What is the role of enterprise?
- to produce goods and services that meet customer needs and wants
- to add value
Goods
These are tangible items that can be bought.
Services
These are intangible actions that cannot be stored.
What is the role of an entrepreneur?
Organise resources
Make business decisions
Taking risks
What are the four things that an entrepreneur needs to consider before setting up a business?
- Land
- Capital
- Labour
- Enterprise
