1.1 - Enterprise and Entrepreneurship Flashcards
What is business enterprise?
+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.
What does all business activity need to have at least?
+ONE purpose eg:
- Provide people with a good or service
- Meeting customer needs
- Adding value
What is a good?
A physical item such as a book or furniture
What is a service?
An action performed by other people to aid the customer.
+Eg: Hairdressing,Plumbing
What is a product?
A good or service [usually] available in a market designed for consumer use.
+Customers buy products to meet a need.
What are meeting customer needs?
+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.
What is adding value?
+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
How can a business add value?
+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.
The world is always changing - so what do businesses need to do?
Be dynamic and adapt to these changes.
What do changes in lifestyle result in?
People coming up with new business ideas.
Where do new business ideas come about from?
+Changes in technology
+Changes in customer needs
+Obsolescence
How do new business ideas come about from changes in technology?
+Eg, the invention of tablets meant lots of people came up with ideas for apps that could be used on these devices.
How do new business ideas come about from changes in customer needs?
Eg, these days people are much more concerned about the environment, so many businesses have started up offer more environmentally friendly products.
How do new business ideas come about from Obsolescence?
+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.]
What will new business ideas either be?
+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]
Name a example of an original business idea.
+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.
What is an entrepreneur?
Someone who takes on the risks of enterprise activity
Why are entrepreneurs important?
Without them, we wouldn’t have any new businesses
To successfully run a new business what must an entrepreneur be able to do?
+Organise resources
+Take risks
+Make business decisions
Why do entrepreneurs have to organise resources to successfully run a new business?
+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.
Why do entrepreneurs have to take risks to successfully run a new business?
+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.
Why do entrepreneurs have to make business decisions to successfully run a new business?
+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.
What are the risks involved in running a business?
+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
Why is raising finance a risk in running a business?
+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]
Why is job security a risk in running a business?
+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.
Why is business failure a risk in running a business?
+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.
What are the rewards involved in running a business?
+Business success
+Profit
+Independence
Why is business success a reward in running a business?
+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.
Why is profit a reward in running a business?
+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
Why is independence a reward in running a business?
+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.
