Chapter 1: Enterprise

Question 1

Who is an entrepreneur?

Answer 1

An individual who takes the risks to start up a business.

Question 2

Enterprise:

Answer 2

The initiative taken by an entrepreneur to start up a business.

Question 3

Who is a customer?

Answer 3

An individual consumer/organisation that purchases goods or services from a business

Question 4

Purpose of business activity

Answer 4

Meets the needs of customers by providing a product or service that they demand

Question 5

What do businesses do?

Answer 5

1. Idetify customer needs and wants
2. Purchase necessary resources to allow production
3. They produce goods/services to satisfy customer needs

Question 6

Who is a consumer?

Answer 6

An individual who purchases goods/services for personal use

Question 7

Consumer goods

Answer 7

Tangible goods not intended for resale can be durable(Cars, washing machines) or non-durable (toothpaste, coal).

Question 8

Consumer services

Answer 8

Non-tangible products are also not intended for resale. E.g. hotel accommodation, insurance etc.

Question 9

Factors of production

Answer 9

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.

Question 10

Capital goods

Answer 10

Physical goods used by industry to aid in the production of other goods and services such as machines and commercial vehicles.

Question 11

Adding value

Answer 11

Increasing the difference between the cost of materials and the selling price of the finished goods.

Question 12

Added value

Answer 12

Difference between the cost of materials and the selling price of the finished goods.

Question 13

Branding

Answer 13

The process of differentiating a product by developing a symbol, name, image or trademark for it.

Question 14

Opportunity cost

Answer 14

The next best alternative given up when making a choice.

Question 15

Changes in the business environment

Answer 15

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Technological changes that make products/processes of making a product outdated.

Question 16

Why do some businesses succeed?

Answer 16

Good understanding of customer needs
Efficient management of operations
Flexible decision-making
Appropriate and sufficient finance

Question 17

Why do some businesses fail?

Answer 17

Poor record keeping
Lack of cash
Poor management skills

Question 18

Local business

Answer 18

Businesses that operate in small, well-defined parts of a country. Their owners often do to aim to expand. E.g shops.

Question 19

National business

Answer 19

Businesses with branches or operations across a country, make no attempt to establish operations in other countries. E.g. large car retailing firms.

Question 20

Multinational business

Answer 20

Businesses with headquarters in one country, but with operating branches, factories and assemblies in other countries. E.g. Car manufacterers.

Question 21

Intrapreneur

Answer 21

A business employee who takes direct responsibility for turning an idea into a profitable new product or business venture.

Question 22

Role of an entrepreneur

Answer 22

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

Question 23

Barriers to entrepreneurship

Answer 23

Lack of a business opportunity
Obtaining sufficient capital
Cost of good locations
Lack of customer base

Question 24

Role of an enterprise in a country’s economic development

Answer 24

Employment creation
Economic growth
Business survival and growth
Innovation and technical change
Exports
Personal development

Question 25

Elements of a business plan

Answer 25

1. Executive summary: Overview of a
   business and its strategies
2. Description of business opportunity:
   Details of the entrepreneur’s skills and experience, the nature of the product, and the target market
3. Marketing/sales strategy: Why the entrepreneur thinks the product will succeed
4. Management team/personnel: Who the entrepreneur wishes to recruit
5. operations: premises to be used, facilities, IT systems

Question 26

Benefits of a business plan

Answer 26

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.

Question 27

Limitations of a business plan

Answer 27

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.

Question 28

What are the benefits of Intraprenuership to a country?

Answer 28

Injecting creativity and innovation into the business

Developing new ways of doing business

Driving innovation and change within the business