Enterprise Flashcards
purpose of business activity?
A business is an organization that uses resources to meet the needs of the customer by providing a product or service that they demand.
entrepreneur
an individual who has an idea for a business starts it up and carries most of the risks but benefits from the rewards.
customer
an individual consumer or organisation that purchases goods and services from a business.
what do businesses do ?
- businesses identify customer needs.
- They purchase resources to allow production to take place.
- satisfy customer needs by providing goods and services which they demand with an aim of making a profit.
consumer
an individual who purchases goods and services for personal use.
consumer goods
physical and tangible goods which are sold to the consumer and are not intended for resale. includes durable and non-durable consumer goods.
consumer services
the non-tangible products sold to consumer which are not intended for resale. e.g hotel accomodation, train journey and insurance services.
factors of production
the resources needed by a business to produce goods and services.
1.Land
includes the land itself and all the renewable and non-renewable resources of nature.
2.Labour
manual and skilled labour that make up the workforce of business.
3.Capital
man-made things use in production of other goods and services.
4.Enterprise
the action of showing initiative to take risk to set up a business.
capital goods
the physical goods used by industry to aid in the production of other goods and services such as machines.
adding value
increasing the difference between the cost of bought in in-puts and the selling price of finished goods.
branding
the process of differentiating a product by giving it a name, symbol, image, or trademark for it.
opportunity cost
the next most desired thing that is given up.
change in business environment include.
i.e. business environment is very dynamic.
- New competitors entering the market.
- legal changes - exampled include new safety regulations or limits on who can buy the product.
- economic changes that leave customers with less money to spend.
- technological changes that make the products or processes of the new business outdated.
Bonus concept
the dynamic business environment is a major cause of change within businesses. Decision-making by entrepreneurs is often focused on responding to change.
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why do some businesses succeed?
- Good understanding of customer needs - leads to sales target being achieved.
- Efficient management of operations - keeps costs under control.
- flexible decision making to adapt to new situations - allows investment in new business opportunities.
- appropriate and sufficient sources of finance - prevents cash shortage and allows for expansion.
why do businesses fail?
- poor record keeping
i. e. includes everything to be noted down because everything can’t be remembered. can be physical or computerized. - lack of cash flow
- poor management skills
how to reduce cash flow problems?
- A cash flow forecast is made and kept up-to date. the cash needs of the business can be assessed month by month.
- Sufficient capital is injected into the business at start-up allowing it to operate during the first months when cash flow from customers may be slow to build up.
- Good relations are established with bank so that short-term cash problems may be financed with an overdraft extension.
- There is effective credit control over customers accounts to make sure they pay on time.
multinational company
A business organization that has its headquarters in one country, but with operating branches, factories and assembly plants in other countries.
intrapreneur
a business employee who takes direct responsibility for turning an idea into a profitable new product or business venture.
the role of entrepreneur when creating and starting a new business.
- have an idea for a new business.
- create a business plan.
- invest some of their own savings and capital.
- accept the responsibility of managing the business.
- accept the possible risks of failure.
qualities of successful entrepreneurs.
Innovative Committed and self-motivated. Multi-skilled Leadership skills Self-confidence and an ability to bounce back Risk-taking
barriers to entrepreneurship
lack of business opportunities obtaining sufficient capital cost of good locations lack of customer base competition
role of enterprise in a country’s economic development.
Employment creation Economic growth Business survival and growth innovation and technological change Exports personal development Increased social cohesion
the benefits of intapreneurship to existing business.
- injecting creativity and innovation into the business.
- Developing new ways of doing business.
- Driving innovation and change with in business.
- creating competitive advantage.
- Encouraging original thinkers and innovators to stay in the business.
Main elements of business plan.
- executive summary - an overview of the new business and its strategies.
- description of the business opportunity - details of the entrepreneur’s skills and experience; nature of the product; the target market at which the product is aimed.
- marketing and sales strategy - details of why the entrepreneur thinks customers will buy the product and how the business will sell them.
- management team and personnel - details of entrepreneurs skills and experience and the people the intend to recruit.
- operations - premises to be used, production facilities, IT systems.
- financial forecasts- the future projections of sales, profit and cash flow for at least one year ahead.
Benefits of business plan
forces owner to think seriously about the proposal, its strengths and possible weaknesses.
gives the owner and manager a clear plan of action to guide there actions and decisions in the early month and years of the business.
how to make a business plan succesful
include market research
include flexible decions to overcome the dynamic business model
limitations of business plan
owners might rely to much in plan that they may overlook the fact that its based on preictions and forecasts.
might lead entrepreneurs to be inflexible.
if not includes market reseach delay in making finance decision until brought to standard.
