1.1.3 the role of business enterprise

Question 1

Purpose – to produce goods
and services

Answer 1

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

Question 2

Purpose – to meet
customer needs

Answer 2

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 3

Purpose – to add value

Answer 3

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 4

An entrepreneur – organises
resources

Answer 4

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 5

An entrepreneur – takes risks

Answer 5

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

The entrepreneur bears all
cost of the business fails

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