chapter 3 Flashcards
what is a reward?
something given in recognition of effort or return for something you achieve
what is an opportunity?
a time or event that makes it possible to do something.
what are some things that can create opportunities in terms of enterprise?
changes in need for a product/service - increase/decrease in income, changes in fashion, changes in population size/demographic
devels. in tech making new products possible and old ones out of date
changes in the ability to meet needs or wants - failure of competition (yay) or access to equipment
changes in government policies like availability of grants/subsidies or changes in taxation and laws.
what is a risk?
the chance of gaining or losing something as a result of an action taken
what are some risks involved in starting an enterprise?
- it is not certain you will make a profit
- choosing the wrong pricing or advertisement can result in the loss of customers
- having to many customers can also be as much of a problem
what are some different categories of risks an enterprise may have to deal with?wh
- financial risks - having access to sufficient finance or what to do about unexpected costs
- economic risks - what to do about changes in income, customer tastes, or interest rates
- health/environmental risks - how laws and regulations will play into how you operatte
- HR risks - having the right number of peopel with the right skills in he ent.
- production risks - having access to the right materials or what to do if a machine breaks down
what are the stages of risk management?
- identify risks
- analyse the implications of each risk
- decide if it is worth it and if not stop the project
- plan how to manage the risk
- monitor and review the risk
what is a pest analysis?
identifying political, economic, social, technological externat factors that could have an impact on an enterprise.
what is a swot analysis?
identifying current internal strengths and weaknesses and poternal external opportunities and threats for an individual idea or projec
what to think about when analysing a risk?
- what are the chances of it happening?
- what are the potential consequences for the project if it did happen?
how do you decide whether a risk is worth it?
only an entrepreneur can do this, you must decide if the risk ios iextremely detrimental to the project/yourself or not.
what are some strategies to manage risk MATE?
- mitigate - try to reduce it by changing what you do
- accept - if there is nothing you can do be prepared or set aside money in the budget
- transfer - let someone else take the risks
- eliminate - dont do the hazard, might have to give up a positive opportunity then.
how can you reduce risk?e
- detailed market research, financial projections use, and cash flow forecast - using pest + swot.
- asking for advice from formal and informal sources of help and support
- careful planning by producing a business plan or action plan
- spreading the risk (also known as diversification) by selling differet products or selling to different markets
why is it important to monitor a risk?
risks can change over time so its important to review and reasses them.
what are 3 different attitudes to risk?
risk averse - avoids all risk
risk keen - willing to accept high level of risk
risk reducer - attempt to limit the likelihood and amount of possible risk
what are some legal obligations that might impact your enterprise
employment - contracts state the terms of the job. minimum wage laws guaruntee all workers a basic amount
production - health and safety laws set minimum standards to ensure safe working conditions
marketing/selling - an enterprise has to be careful about what they say about the product or service they are offering, cannot mislead
finance - providing/offering finance and completing business deals - there are many laws to ensure correct docs. are used
what are some ethical considerations for an enterprise?
- how much should it pay its workers
- should child labor be used
- should fair trade products be used or sold
- paying a fair price to suppliers might lower your profits…
- what should the enterprise do with profits
what are some advantages and disadvantages of being ethical
- better reputation
- seen asz a good employer for employees
- suppliers offering better terms
- lenders offering help and support
0- could be difficult for the ent. to source materials and products
- increased cost of purchasing raw materials can force the ent to charge higher
- ent. could gain support from fair trade movement
- can provide usp
