1.1 Enterprise and the Entrepreneur Flashcards
Year 9 Summer 2/Year 10 Autumn 1
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, e.g. air freshener for the car, whereas a service is intangible and you don’t take something physical away, e.g. car wash.
What does it mean when ‘value is added’ to a product?
There are different sectors of industry and in each sector, value is added to the product, e.g. in the primary sector (extraction), the secondary sector (manufacturing) and the tertiary sector (transport/selling - providing a service). Think of how a potato changes from a simple potato with a cost of 2p - into a bag of tasty crisps - at each stage, value is added until the bag of crisps sells 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:
Capital – money and physical resources such as equipment, machinery and buildings
Enterprise – the ideas, innovation and resilience
Land – physical and extractable natural resources
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 involved in making a decision with the opportunity cost, e.g. 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 having carefully assessed the advantages and disadvantages of taking that risk. Successful entrepreneurs will see the opportunity offered by a potential risk, and know when to take that risk.
What are the key risks of an entrepreneur balance?
The risks that an entrepreneur must balance against the potential rewards are:
Lack of security
Financial loss
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:
Original ideas
Adapting existing products
Business experience
Personal experience
Observation.
Why does a business need to be dynamic?
A business needs to be able to adapt to a constantly changing business environment, e.g. think Covid-19 pandemic and the impact on business.
What four external factors can have an impact on business activity?
The four external factors that can have an impact on business activity include:
Economic issues
Environmental issues
Technological development
Social networking.
