1.3 The Role Of Business Enterprise

Question 1

Name 3 purposes of business activity:

Answer 1

• To produce goods and services
• To meet customer need
• To add value

Question 2

How does producing goods and services affect the economy?

Give 2 ways

Answer 2

• Entrepreneurial activities and competition increases the standard of living.
• It provides job and wealth.

Question 3

What will happen if a business fails to meet customers’ needs?
(5 points)

Answer 3

• A business won’t succeed.
• A business won’t make much profit.
• The customer won’t purchase from the business, or recommend others to.
• A business won’t have a positive relationship with the customer.
• Won’t receive feedback from their customer to improve their existing product of service.

Question 4

What is added value?

Answer 4

The increase in a product’s value as a result of the business producing that product.

Question 5

Name 4 ways in which a business can add value:

Answer 5

• Branding
• Convenience
• Quality and design
• Unique selling point (USP)

Question 6

What is branding?

Answer 6

• A way of defining a business, and its aims and values in a way that can be communicated with the customer.

Question 7

Name two advantages of good branding:

Answer 7

• When a customer can connect emotionally to a brand or share the same value, they are more likely to buy its product.
• It can create customer loyalty (brand loyal)

Question 8

What is the advantage of a person being brand loyal?

Answer 8

• It can protect a business that sells higher-priced goods when the competitor offers promotional discounts to increase their market shares.

Question 9

What is market share?

Answer 9

The proportion of sales in a market that are taken by one business.

Question 10

What is the advantage of good quality and design?

3 points

Answer 10

• It shows customers that they can depend on its products.
• Customers are more willing to pay a higher price for an attractive product.
• Communicates the businesses values and encourages them to buy from that business.

Question 11

What is USP?

Answer 11

• Unique selling point

- Something that differentiates a product or service from its competitors.

Question 12

Name 3 roles of entrepreneurship:

Answer 12

• Organise resources
• Making business decisions
• Take risks

Question 13

Give 2 points on organising resources:

Answer 13

• An entrepreneur needs to organise resources required to set up and run their business.
• One kept resource is finance - ensuring that they have enough finance for the set up of the business.

Question 14

Give two points on making business decisions:

Answer 14

• Entrepreneurs are responsible for making their own decisions, as the employees depend on them for their wages.
• They need to have a long term vision on how the business will develop and focus on each short-term stage.

Question 15

How can an entrepreneur minimise risks:

Answer 15

• They need to gather evidence such as market research.

- They need to have good knowledge of the market.