Chapter 1- Enterprise and business functions Flashcards
1
Q
Enterprise definition
A
- Another term for ‘a business’
- Refer to the actions of a risk taker who starts up their own business
2
Q
Entrepreneur definition
A
- A risk taker who sets up a business
- Prepared to take risks
- They will usually have always wanted to run a business
3
Q
Characteristics of a self-employed person
A
- Hardworking
- Competent
- Reliable
- Diligent
4
Q
Characteristics of an entrepreneur
A
- Self-belief and confidence
- Persistance and drive
- Ability to work under pressure
- Creativity and imagination
- Leadership skills
5
Q
Benefits of successful entrepreneurs to the businesses stakeholders
A
- More likely it’s stakeholders will be able to reach their objectives
- More people are likely to be employed
- Employees will have more secure jobs
- Chance of better pay and conditions
- Suppliers will receive larger and more regular orders
- Firm will pay more tax
- Exporting goods to other countries may start so help improve the UK’s trade balance
6
Q
Why is the government keen to encourage enterprise and entrepreneurship?
A
- The government will receive more tax revenue from sources such as income tax, corporation tax, national insurance and VAT
7
Q
Definition of factors of production
A
The inputs that are used in the production of goods or services
8
Q
What are the factors of production?
A
- Land
- Labour
- Capital
- Enterprise
9
Q
Land
A
- Natural resources
(E.g. fields, what lies below them, what can be grown on it)
10
Q
Labour
A
- All the Human Resources available except the entrepreneur
11
Q
Capital
A
- Refers to buildings , machinery and tools rather than money
12
Q
Enterprise
A
- The entrepreneur who organises the other 3 factors
13
Q
If there is a shortage in a particular factor, what will occur?
A
- It’s price will rise
- But it’s a cost to the business so it reduces profit margins
14
Q
How might the firm react to a rise in factor costs?
A
- Raising prices
- Lower some other cost
- Cut back on non essential areas of expenditure
15
Q
What is the extent of the ability to rise prices depend on?
A
- How many competitors there are in the market
- Firms brand loyalty
16
Q
What may lowering some other costs impose?
A
- Worse terms and conditions on its suppliers in an attempt to do so.
17
Q
What would happen to the community if non essential areas of expenditure are cut?
A
- Local community may suffer in terms in terms of fewer community initiatives such as sponsorship
18
Q
Definition of adding value
A
- When a business sells the product at a price that is higher than the cost of producing it
19
Q
How can value be added?
A
- Creating an image for the product
20
Q
Definition of constraint
A
- It’s a restraining factor on a business and it limits how a business operates
21
Q
What are the constraints on a business?
A
- Environment
- Legislation
- Economy
- Competition
22
Q
What are the functions within a business?
A
- Accounting and finance
- Operations management and production
- Marketing and support services
- Human resource management
23
Q
Accounting and finance
A
- Monitors and controls the businesses financial resources
- keeps detailed records of all the products a business has made and sold
- Has overall responsibility for ensuring costs are kept under control and that there are sufficient funds available to pay all the day-day running costs of the business
24
Q
Operations management and production
A
- Production can be thought of the process of transforming resource inputs into finished outputs
- Refers to the designing and controlling the process of production to make it as efficient as possible
- maintenance of capital equipment, stock control, quality control and managing technological change
25
Q
Marketing and support services
A
- 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
26
Q
Human Resource management
A
- responsible for the well being of the employees
- includes recruitment and training and if necessary terminating
employment - HRM department increases with the more employees to look after
27
Q
Evaluate the impact and importance of the availability of factors of production for the stakeholders of a business
A
- Business owners/ Shareholders
Importance:
- If factors of production are readily available and affordable the business can produce goods and services efficiently leading to higher profits
Impact:
+) Access to skilled labour/cheap raw materials enhances productivity and reduces costs, increasing dividends for shareholders
-) Scarcity of resources can increase costs, delay projects and lower profitability - Employees
Importance- The availability of labour impacts job opportunities and working conditions. If labour is in high demand but scarce, employees may benefit from higher wages or better benefits
Impact:
+) Skilled workers become more valuable, increasing their job security and earning potential
-) In industries with surplus labour, employees may face job insecurity, lower wages/ limited growth opportunities - Customers
Importance: The cost and availability of production inputs affect product pricing and quality, which directly impacts customers
Impact:
+) If resources are abundant and production costs are low, businesses can offer high-quality products at competitive prices, benefitting consumers
-) Resource shortages may lead to higher prices, lower quality, or delays in product availability, reducing customer satisfaction - Supplier
Importance: Suppliers depend on businesses for demand. If a business struggles to secure factors of production, it may reduce orders affecting suppliers profitability
Impact:
+) If businesses need more raw materials, suppliers may experience growth and increased revenues
-) Businesses facing rising input costs may pressure suppliers to reduce prices, cutting supplier margins
28
Q
A
