1.1.3 The role of business enterprise

Question 1

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

Answer 1

1) To produce goods or services
2) To meet customer needs
3) To add value: convenience, branding, quality, design, unique selling points

Question 2

Purpose – to produce goods and services

Answer 2

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

These are the factors of production

Question 3

Purpose – to meet customer needs

Answer 3

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

Question 4

Purpose – to add value

Answer 4

Definition of added value:

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 5

Purpose – to add value

Answer 5

ways to add value to a service or product:

1) Branding
2) Design
3) Unique selling point (USP)
4) Quality
5) Convenience

Question 6

Ways to add value

Answer 6

1) Branding- Nike
2) Design- Dyson
3) USP- m&m
4) Quality- milk tray chocolate
5) Convenience- Healthy choice

Question 7

An Enterprise

Answer 7

Enterprise is about taking risks, being creative and innovative and using your initiative

Question 8

An entrepreneur

Answer 8

An entrepreneur develops a business idea and then hires and organises the factors of production to carry out the business activity

Question 9

An entrepreneur – takes risks

Answer 9

1) Risk taking – Setting up a business is risky, money has to be paid out in advance to buy materials, equipment and wages
There is no guarantee that the final product or service will be sold
2) The entrepreneur bears all cost of the business fails
3) If an entrepreneur gives up a regular job they will also lose that income and have to depend on the business to pay their bills