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Business Studies GCSE 2022-24 (Units 1-3) > Chapter 3: Enterprise, business growth and size > Flashcards

Chapter 3: Enterprise, business growth and size Flashcards

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1
Q

Notes on entrepreneurs

A
  • Have an idea for a new business
  • Prepared to invest their own savings
  • Accept the risks of failure
  • Want to make all the decisions about the management of the business
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2
Q

What are the ideas for an enterprise (project or business)?

A
  • A new idea for a good or service
  • Offering an existing good or service in a way that hasn’t been offered before
  • Offering an existing good or service in a new location
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3
Q

9 characteristics of successful entrepreneurs

A
  1. Innovative
  2. Self-motivated and determined
  3. Self-confident
  4. Multi-skilled
  5. Strong leadership qualities
  6. Initiative
  7. Results driven
  8. Risk-taker
  9. Good at networking
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4
Q

Innovative

A

They’re good at thinking up new ideas for goods and services or new ways of presenting existing goods and services.

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5
Q

Self-motivated and determined

A

They have the drive to keep going, even when things get difficult.

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6
Q

Self-confident

A

They have a strong belief in their own ability and ideas.

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7
Q

Multi-skilled

A

They have the ability to see an idea through from development to profitable sales. This requires a good understanding of the functions of finance, operations, human resources and marketing.

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8
Q

Strong leadership qualities

A

They have good communication skills, the ability to motivate others and good decision-makers.

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9
Q

Initiative

A

They not only have good ideas, but are also able to develop a good plan for achieving the business’s objectives.

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10
Q

Results driven

A

They are focused on achieving results and make sure products are sold for profit.

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11
Q

Good at networking

A

They are prepared to learn from others.

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12
Q

What does a business plan describe?

A
  • The business (details of the entrepreneur, idea for the business, information about skills and expertise of managers or employees who need to be recruited)
  • The business opportunity (information about the product, why the entrepreneur believes customers will buy it, market research)
  • The market (current size, potential for growth and product’s main competitors)
  • The objectives of the business (what it hopes to achieve)
  • Financial forecasts (cash-flow forecast, projected sales, revenue and profit for at least the first year of trading)
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13
Q

How does a business plan assist entrepreneurs?

A
  • The information it contains can be used to persuade lenders such as banks and investors to provide finance to the business.
  • The plan gives the business a sense of purpose and direction.
  • Sets out the resources required by the business such as finance, number and skills of employees needed, and how the goods and services will be marketed to customers.
  • The objectives and financial forecasts provide the business with targets to aim at and enable the business to monitor its progress.
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14
Q

How does the economy and government benefit from start-up businesses?

A
  • Job creation
  • News ideas from entrepreneurs
  • More competition
  • Production of goods and services
  • Growth of the small business
  • Costs
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15
Q

Job creation

A

Although small firms may not individually employ many workers, together they employ a very large percentage of the working population.

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16
Q

New ideas from entrepreneurs

A
  • The entrepreneurs who start up new businesses bring ideas for goods and services that increase the variety of products available.
  • This helps to create a greater consumer choice in the market
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17
Q

More competition

A
  • The more businesses there are in the marketplace, the greater the competition
  • Competition usually results in lower prices and better quality of goods and services
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18
Q

Production of goods and services

A
  • Small businesses often provide specialist goods and services to consumers which larger businesses are less interested in supplying because they’re only interested in mass marketing.
  • Smaller businesses often provide the goods and services needed by the larger firms in the industry
  • E.g. a small firm that produces electronic components used by large computer manufacturers
19
Q

Growth of the small business

A
  • Start-up businesses begin life as a small business, but some will grow and become the larger businesses of the future
  • Country will benefit from the advantages larger businesses bring to the economy
20
Q

Costs

A

Some start-up and smaller businesses often have much lower costs than larger businesses and can pass this on to the consumer through lower prices.

21
Q

Types of government support for business start-ups

A
  • Grants and interest-free or low-interest loans
  • Lower taxation rates on profits in the early years
  • Rent-free premises for a certain period of time
  • Free or subsidised (lower priced) training schemes for employees
  • Information, advice and support from specialist agencies
22
Q

Executive Summary

A
  • You need to describe ‘the problem you’re going to solve, and why that problem needs to be solved right now.’
  • You need to be able to communicate that deeper purpose to others otherwise you’ll have a hard time convincing investors to fund your idea and people to join your team
23
Q

Business Details

A
  • Brand, location, key people
  • If you have an attractive, eye-catching brand that people will be happy to associate with then more customers will buy your products
24
Q

Marketing + Sales strategy

A

If you know how to engage people and reach them with your products, this will encourage others to give you money for the business.

25
Q

People

A
  • To know who’s leading the business or if there’s more than one person
  • The business won’t work if you employ people with the wrong skills
  • Shows you know what you’re doing
26
Q

Facilities/setup

A
  • Present your business in a good light
  • Promote efficient business operation
  • Shows quality of the machinery
27
Q

Financial projections

A
  • Help plan your startup budget
  • Can help set goals and set you on track
28
Q

What are the 6 parts of a Business Plan?

A
  • Executive Summary
  • Business Details
  • Marketing and Sales Strategy
  • People
  • Facilities/setup
  • Financial Projections
29
Q

Types of industries in business

A
  • Food industry
  • Health care
  • Transport
  • Retail
  • Manufacturing
  • Finance
  • Publishing
30
Q

What are the 4 ways of measuring business size?

A
  • Capital employed
  • Value of output
  • Number of employees
  • Market share
31
Q

Capital employed (Card 1)

A
  • The value of all long-term finance invested in a business.
  • It’s used to buy the things that a business needs before it produces goods and services.
  • E.g. factory/office buildings, machinery and inventory - these are known as assets
  • A small business will invest less capital than a large business in the same industry.
32
Q

Capital employed (Card 2)

A
  • For example, a small baker will only need one shop, one food mixer, one oven and a small inventory of raw materials
  • However, a large bread manufacturer will need production lines, industrial mixers, large ovens and a large inventory of raw materials
33
Q

Capital employed (Card 3)

A
  • Using capital employed to compare the size of businesses in different industries is a problem because some industries, such as car manufacturing, need a very large capital investment in factories and machinery
  • The business may be small, but the cost of materials may be very expensive
  • Other industries, such as computer software design, don’t need a large capital investment in factories and machinery
34
Q

Value of output

A
  • The amount businesses earn from selling their products is often used to compare the size of businesses in the same industry.
  • A small business will have a much lower revenue (earnings from sales) than a larger business
  • However, it’s not a good measure when comparing businesses in different industries
35
Q

Number of employees (Card 1)

A
  • Large businesses need to produce a much greater output
  • Or provide their services to a much larger market than smaller businesses
  • This means that large businesses usually employ more workers than smaller businesses
36
Q

Number of employees (Card 2)

A
  • However, this measure may be misleading
  • Two businesses can produce similar levels of output, but if one business uses more machinery that the other then they’re likely to have less employees
  • For example, two drinks manufacturers produce the same level of output
  • One firm has invested in an automated production process, while the other still uses more traditional methods of production
  • Therefore, the firm with automated production will require far less employees than the one using traditional methods
37
Q

Market share

A

The larger the share of the total market, the larger the business.

38
Q

Why may owners want to expand their business?

A
  • For an increase in profits
  • For an increase in market share
  • Economies of scale
  • Greater power to control the market
  • Protection from the risk of takeover
39
Q

Increase in profits

A
  • When a business grows, its profits may increase
  • Growth must result in an increase in output - goods and services produced
  • If this output is sold, then sales increase
  • Increased sales usually increase revenue (the amount a business earns from the sales of its products)
  • If the business has kept control of its costs during its growth, it should also increase profits
40
Q

Increase in market share

A
  • An increase in market share may also result from business growth
  • This benefits the business because its products and brand become more widely known
  • This makes it easier for the business to continue to grow
41
Q

Market share explanation (BBC Bitesize)

A

Market share is the proportion of total sales in a market made by one business. It is an important piece of marketing data, as many businesses will use it as an indication of how well they are doing compared to their competitors.

42
Q

Economies of scale

A
  • As a business grows it may benefit from reduced average costs as a result of economies of scale
  • If a business can lower the cost of producing its products, its profits will increase
  • Instead, it may decide to lower the price of its products and become more competitive, resulting in higher sales

*We’ll learn about economies of scale in a later chapter

43
Q

Greater power to control the market

A
  • Larger businesses have greater power to control market activities
  • Greater control over their own prices
  • Powerful firms may even be able to influence government policy to their advantage
44
Q

Protection from the risk of takeover

A
  • Public limited companies are often at the risk of takeover
  • A takeover is achieved by buying at least 51% of the company’s shares
  • Sometimes the takeover is welcomed by the company’s directors and shareholders
  • Or a hostile or unwanted takeover might happen
  • The larger the company, the more difficult and more expensive it is for this to happen because a greater number of shares must be bought

Business Studies GCSE 2022-24 (Units 1-3) (21 decks)

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