Chapter 1: Enterprise Flashcards
Who is an entrepreneur?
An individual who takes the risks to start up a business.
Enterprise:
The initiative taken by an entrepreneur to start up a business.
Who is a customer?
An individual consumer/organisation that purchases goods or services from a business
Purpose of business activity
Meets the needs of customers by providing a product or service that they demand
What do businesses do?
- Idetify customer needs and wants
- Purchase necessary resources to allow production
- They produce goods/services to satisfy customer needs
Who is a consumer?
An individual who purchases goods/services for personal use
Consumer goods
Tangible goods not intended for resale can be durable(Cars, washing machines) or non-durable (toothpaste, coal).
Consumer services
Non-tangible products are also not intended for resale. E.g. hotel accommodation, insurance etc.
Factors of production
Land: renewable/non-renewable resources of nature like coal, crude oil and timber. Also includes land itself.
Labour: Manual and skilled labour
Capital: Finance to start up, manufactured resources like capital goods (computers, machines, factories…)
Enterprise: The initiative taken by an entrepreneur to start up a business.
Capital goods
Physical goods used by industry to aid in the production of other goods and services such as machines and commercial vehicles.
Adding value
Increasing the difference between the cost of materials and the selling price of the finished goods.
Added value
Difference between the cost of materials and the selling price of the finished goods.
Branding
The process of differentiating a product by developing a symbol, name, image or trademark for it.
Opportunity cost
The next best alternative given up when making a choice.
Changes in the business environment
New competitors entering the market
Legal changes regarding the product
Economic changes that affect customer spending power
Technological changes that make products/processes of making a product outdated.
Why do some businesses succeed?
Good understanding of customer needs
Efficient management of operations
Flexible decision-making
Appropriate and sufficient finance
Why do some businesses fail?
Poor record keeping
Lack of cash
Poor management skills
Local business
Businesses that operate in small, well-defined parts of a country. Their owners often do to aim to expand. E.g shops.
National business
Businesses with branches or operations across a country, make no attempt to establish operations in other countries. E.g. large car retailing firms.
Multinational business
Businesses with headquarters in one country, but with operating branches, factories and assemblies in other countries. E.g. Car manufacterers.
Intrapreneur
A business employee who takes direct responsibility for turning an idea into a profitable new product or business venture.
Role of an entrepreneur
Have an idea for a new business
Create a business plan
Invests some of their savings
Accepts responsibility of management
Accepts the possible risks of failure
Barriers to entrepreneurship
Lack of a business opportunity
Obtaining sufficient capital
Cost of good locations
Lack of customer base
Role of an enterprise in a country’s economic development
Employment creation
Economic growth
Business survival and growth
Innovation and technical change
Exports
Personal development
Elements of a business plan
- Executive summary: Overview of a
business and its strategies - Description of business opportunity:
Details of the entrepreneur’s skills and experience, the nature of the product, and the target market - Marketing/sales strategy: Why the entrepreneur thinks the product will succeed
- Management team/personnel: Who the entrepreneur wishes to recruit
- operations: premises to be used, facilities, IT systems
Benefits of a business plan
Forces the owner to think seriously about the business and gives the owner/managers a clear plan of action which guides them in te beginning few months.
Limitations of a business plan
Creates a false sense of certainty that the business will succeed. Must be detailed otherwise investors may not find it appealing. Might lead to inflexibility of decisions because the owners focus too much on the plan.
What are the benefits of Intraprenuership to a country?
Injecting creativity and innovation into the business
Developing new ways of doing business
Driving innovation and change within the business
