1.1.3 The role of business enterprise

Question 1

The role of business enterprise and the purpose of business activity:

Answer 1

*To produce goods or services
*To meet customer needs
*To add value: convenience, branding, quality, design, unique selling points

Question 2

The role of entrepreneurship:

Answer 2

*An entrepreneur: organises resources, makes business decisions, takes risks

Question 3

Purpose – to produce goods and services

Answer 3

To produce goods and services 4 things are needed:

Land – somewhere to produce the goods e.g. a farm
Labour – people to work in the business e.g. farm workers
Capital – money to get the business started
Enterprise – This is the drive or motivation from the owners to start a business

These are the factors of production

Question 4

Purpose – to meet customer needs

Answer 4

Some of the most common and basic expectations customers have for most businesses include:

Fast, efficient and accurate service
High quality products at a competitive price
Friendly, helpful service staff to provide information and answer questions
Prompt responses to their inquiries, whether online, by phone or in person
Sufficient stock to meet their needs without long waits
A trained staff that can handle their questions without referring them on
A clean shop or easy to navigate website

Question 5

Purpose – to add value

Answer 5

Added value – the difference between what a business pays its suppliers, and the price it is able to charge for its product or service

Question 6

An entrepreneur – organises resources

Answer 6

Enterprise is about taking risks, being creative and innovative and using your initiative
An entrepreneur develops a business idea and then hires and organises the factors of production to carry out the business activity

Question 7

An entrepreneur – takes risks

Answer 7

Risk taking – Setting up a business is risky, money has to be paid out in advance to buy materials, equipment and wages