1.1.1 The Dynamic Nature of Business

Question 1

Why do new business ideas come about?

Answer 1

• changes in technology
• changes in what consumers want
• products and services becoming obsolete

Question 2

How do new business ideas come about?

Answer 2

• original ideas
• adapting existing products/services/ideas e.g. by making slight changes and improvements to the existing product or service

Question 3

What does changing technology lead to in businesses?

Answer 3

• new technology develops, new business opportunities arise
• new tech can make products and services:
  
  • faster
  • smaller (more compact)
  • cheaper
  • easier to use
  • safer

Question 4

What can a change in consumer wants and needs be caused by?

Answer 4

• changes in fashions
• changes in the economy
• changes in national demographics
• changes in lifestyle e.g. ways consumers spend their leisure time
• changes in technology

Question 5

What can cause a product/service to become obsolete?

Answer 5

• change in consumer needs
• introduction of new technology

Question 6

Obsolete:

Answer 6

out of date or not in use anymore

Question 7

Planned obsolescence:

Answer 7

many products are designed to only last short time and consumers encouraged to buy new and improved versions of these products

Question 8

What is the dynamic nature of business?

Answer 8

• Businesses are constantly faced with change - some of these changes will be outside the control of the organisation
• causes new business ideas to come about
• Successful businesses will be able to meet these changes and demonstrate flexibility in the way their business operates
• Examples of external changes that businesses face include new legislation, changes in the economy, new technology, political events and social trends i.e. changes in what consumers actually “want” to buy!

Question 9

What is the defining feature of a company?

Answer 9

having limited liability

Question 10

Are all businesses companies?

Answer 10

no

Question 11

Are all companies businesses?

Answer 11

yes

Question 12

Explain the ways in which business ideas come about:

Answer 12

• a business could use innovation - this means they take an existing idea and adapt it to be different - this leads to the business having an extra or unique features compared to competitors
• a business could use invention - this means they create a completely new idea/product - this leads to the business having a unique product that no other competitors may have