Chapter 1 Enterprise And Business Functions

Question 1

Explain what is meant by an entrepreneur and enterprise

Answer 1

Enterprise is another term for a business and it refers to the actions of a risk taker who starts up his/her business

And an entrepreneur is a risk taker who sets up their own business and they will have always wanted to run his or her business and is prepared to take risks. They see an opportunity others don’t fully recognize

Question 2

How can successful entrepreneurs bring benefits to the businesses stakeholders

Answer 2

As if the firm is profitable and growing as a result of the entrepreneur then its more likely the stakeholders will reach their objectives. More people are likely to be employed as employees and secure jobs with the chance of better pay and conditions. The uk trade balance will improve as the government will receive more tax revenue from e.g. income tax, corporation tax, national insurance and VAT.

Question 3

Explain what is meant by the factors of production land capital enterprise and labor

Answer 3

The inputs that are used in the production of goods/services. Land, labour, capital and enterprise.

Land is natural resources
Labor is the human resources available
Capital is buildings machinery and tools and the money
Enterprise is the entrepreneur who organizes the other three factors

Question 4

Evaluate the impact and importance of the availability of factors of production for the stakeholders of a business

Answer 4

Shareholders
Importance-the availability and cost of factors of production directly influence the profitability of the business

Impact- if factors are scarce or expensive profits may shrink leading to much lower returns but if there cost effective the business can achieve economies of scale.

Employees
Importance- the availability of labor affects employment opportunities and job security.

Impact- the availability of resources determines the ability of a business to operate and grow which influences job creation and work environment

Customers
Importance- the availability of factors of production can impact the cost, quality and availability of products or services

Impact- if businesses can’t secure factors of production customers may experience shortages, higher prices or reduced quality which can read to a decreased satisfaction.

Suppliers
Importance- the suppliers business deeds on the availability of production factors for their clients

Impact- the suppliers relationship with the business can strengthen or weaken depending on the businesses access to production factors

Question 5

What is value added

Answer 5

What a business achieves by ensuring that the price of the finished goods or service is in excess of the cost of the inputs

Question 6

What is adding value

Answer 6

This means that a business can sell the product at a price that is higher than the cost of producing it. Any extras that can be added to a product tat are priced above the additional cost result in value added.

Question 7

Whatis a constraint of a business

Answer 7

A constraint is a restraining facotr on a business that limits how a business operate.

-Legislation
-economy
- environment
- competition

Question 8

Functions within a business- accounting and finance

Answer 8

• they monitor and control the businesses financial resources, ensuring the costs are kept under control and that their are sufficient funds available to pay all the day to day running costs of the business

Question 9

Functions within a business- operations management and production

Answer 9

Process of transforming resource inputs into finished outputs. Designing and controlling the process of production and make it as efficient as possible

Question 10

The functions within a business- marketing and support services

Answer 10

Role of marketing to ascertain the needs of consumers by conducting market research and to attempt to satisfy the consumers in order to make a profit. Adding value and ensuring consumers are informed of the product or service in a manner of desire to buy

Question 11

Functions within a business- human resource management

Answer 11

They are responsible for the wellbeing of the employees

Question 12

Evaluate the impact on and the importance of the economy of entrepreneurship and enterprise

Answer 12

Importance
1. Economic growth-
Entrepreneurs introduce innovative products and services enhancing productivity and driving growth in gdp this will create competitive markets leading to greater efficiency and better resource allocation e.g. advancements in technology

2. Job creation-
   New businesses provide employment opportunities reducing unemployment and increasing household incomes. High levels of entrepreneurship can address structural unemployment and improve the standards of living.
3. Diversification of the economy
   Entrepreneurship encourages the growth of new industries reducing dependence on traditional sectors. Economic diversification makes the economy more resilient to external shocks.

Impact
Positive impacts
1. Economic stability- if this is thriving it reduces dependency on foreign investments and imports by promoting self reliance
2. Export growth- innovative enterprises often target global markets increasing a country’s export revenues
3. Adaptability-
4. Skill development
Negative impacts
1. Market saturation- excessive entrepreneurship in certain industries may lead to oversupply, price wars and business failures
2. Resource allocation- if it’s inefficient it can waste resources pollute environment or exploit workers
3. Economic inequality

Question 13

Explain the role of the entrepreneur in making business decisions

Answer 13

Identifying business opportunities
- they analyze market gaps, consumer needs and emerging tends to identify profitable business opportunities and they decide on the type of product/service to offer and the target market to focus on

Resource allocation
- there responsible for acquiring and managing the factors of production and they decide how to allocate resources efficiently to maximize returns

Risk management
- entrepreneurs take calcaualted risks by investing resources and entering markets knowing there is no guarantee of success and they evaluate potential risks and decide on strategies to mitigate them

Setting objectives and strategy
- entrepeurs establish the vision, mission and long term goals of the business and they create strategies to achieve these goals such as deciding on pricing strategies, marketing approaches or growth plans

Innovation and problem solving
— they drive innovation by creating new products, processes or business models and they decide how to implement innovative ideas e.g. solving problems such as inefficiencies or meeting unmet customer needs

Financial management
- they make crucial financial decisions that affect the businesses profitability and sustainability and they decide how to raise funds, budget for expenses and reinvest profits

Leadership and team management
- they hire, motivate and manage teams to achieve business goals and they decide organsitonal structure, team roles and performance incentives.

Adapting to change
- entrepreneurs operate in dynamic markets requiring them to adapt to technological economic or social changes and they make timely adjustments to strategies such as shifting to online sales or redesigning products to meet new regulations

Ethnical and social responsibility
They decide how their business will balance profit making with ethical considerations and corporate social responsibility and they determine policies regarding sustainability, employee welfare and community engagement.

Question 14

Evaluate the impact and importance of entrepreneurial activity for the stakeholders of a business

Answer 14

Entrepreneurs
Importance- they play a central role as they invest their time, money and resources into starting and growing the business. Their activity determines the success or failure of the venture

Positive impact
- financial rewards from profits if the business succeeds
- personal fulfillment and recognition for creating value and innovation

Negative impact-
- high levels of financial risk and potential for losses if the business fails
- stress and time commitment involved in managing the business

Employees
Importance- entrepreneurial activity creates job opportunities, improves skills and fosters career growth for employees

Positive impact-
- job creation and income security
-opportunities for skill development through training and innovation
- potential for promotion and growth in a dynamic expanding business

Negative impact
-Job insecurities in small businesses especially during the startup phase
- high work demands in fast growing entrepreneurial firm leading to stress or burnout

Customers
Importance- customers benefit from the innovation and improved products or services that entrepreneurship delivers

Positive impact-
- better products and services due to competition and innovation
-lower prices if entrepreneurial activity fosters competition in the market

Negative impacts
- unethical entrepreneurial practices such as poor quality products or false advertising can harm customers
- startups may struggle to meet demand leading to service disruptions

Suppliers
Importance- entrepreneurial businesses create demand for raw materials for raw materials, goods and services impacting suppliers

Positive impact
- steady income and growth opportunities as startups expand
- long term partnerships with successful entrepreneurs