1.1. Enterprise and the Entrepreneur Flashcards
What is enterprise?
Enterprise is the innovation, the new ideas, the creativity that leads to the development of new products and services.
What is the difference between a product and a service?
A product is something tangible that you can see and touch, whereas a service is intangible and you don’t take something physical away.
Example: Air freshener for the car (product) vs. car wash (service).
What does it mean when ‘value is added’ to a product?
Value is added to the product through different sectors of industry, such as extraction, manufacturing, and providing a service.
Example: A potato changes from a simple potato costing 2p to a bag of crisps selling for about 80p.
What is an entrepreneur?
Someone who has a business idea and develops it, making decisions, managing resources and taking risks.
What are the four factors of production?
The four factors of production are:
1. Capital – money and physical resources such as equipment, machinery and buildings.
2. Enterprise – the ideas, innovation and resilience.
3. Land – physical and extractable natural resources.
4. Labour – the people, or human resources needed to run a business.
What is an opportunity cost?
Making a decision means that the opportunity to benefit from an alternative decision is lost. An entrepreneur must balance the potential benefit with the opportunity cost.
Example: Spending money on improvements to the building or giving yourself a big bonus.
What is a calculated risk?
A calculated risk is where a chance of exposure to loss is undertaken after carefully assessing the advantages and disadvantages of taking that risk.
What are the key risks of an entrepreneur balance?
The risks that an entrepreneur must balance against the potential rewards are:
1. Lack of security.
2. Financial loss.
3. Business failure.
What is the difference between limited and unlimited liability?
Owners of Limited companies have ‘limited liability’ meaning they are not personally liable for the business debts, whereas owners of small businesses such as sole traders and partnerships are personally responsible for all the debts of the business.
Give an example of monetary reward.
Profits, salary, commission, bonuses etc.
Give an example of non-monetary reward.
Positive reviews, good reputation etc.
What is a philanthropist?
A philanthropist promotes the welfare of others by making generous donations to good causes.
Where do business ideas come from?
New business ideas could come from:
1. Original ideas.
2. Adapting existing products.
3. Business experience.
4. Personal experience.
5. Observation.
Why does a business need to be dynamic?
A business needs to be able to adapt to a constantly changing business environment.
What four external factors can have an impact on business activity?
The four external factors that can have an impact on business activity include:
1. Economic issues.
2. Environmental issues.
3. Technological development.
4. Social networking.
