Enterprise Flashcards
who is an entrepreneur
an individual who has an idea for a new business, starts it up but benefits from the rewards
what is the purpose of a business
Providing goods and services that customers want, at a price they are willing to pay
what are consumer goods
tangible good sold to customers, it includes durable products and non durable products that can only be used once
what are consumer services
intangible products that are sold to consumers that are not intended for resale
what do businesses do
business identify the needs of the customer, then the business buy resources to produce products that fulfill customers needs usually with the goal of making profit
what are the factors of production
Land, Capital, Labour, Enterprise
How is capital a factor of production
Finance is needed to pay for operation and resources.. this includes capital goods like computers, machines, factories
How is Land a factor of production
This includes Land and the renewable and non renewable resources of nature
how is Enterprise a factor of production
initiative and coordination provided by entrepreneurs. they combine the factors of production to make a unit. Enterprise provides the managing, decision making and coordinating roles
how is Labour a factor of production
manual and skilled labour make up the workforce of a business
what are capital goods
Physical goods used in the production of other goods and service
What are other resources needed by business
customers, suppliers and government
what is the concept of adding value
difference between materials and selling price of the product. Without adding value, businesses will not be able to survive as there are other costs and investors would expect a financial return
How do business add value to product without increasing cost
added value does not mean profit as there are other costs. profits can increase if the company can increase value without costs like increasing branding or adding features
what is branding
the process of differentiating a product by developing a symbol, name or trademark for it
What is the economic problem
There are insufficient goods to fulfill all our needs at any time.
what is oppurtunity cost
It is the next best option given up. while purchasing or obtaining an item, we must give up other goods as they cannot be afforded. this concept exists for all economic decision makers like consumers, producers and government
what are the changes in the business environment
Business environment is always dynamic. this include new competitors in the market, legal changes , economic changes that leave with customers with less money to spend or technological changes that make the product or process outdated. this also includes risk of change, which can make the original business idea less successful especially if the business plan is inflexible to changes
why do some businesses succeed
Some businesses have a good understanding of customers needs, efficient management of operations, flexible decision making and appropriate and sufficient sources of income
how does poor recordkeeping affect business
poor record keeping can lead to business failure because business can not keep transactions in order otherwise.
how does lack of cash affect business
finance is needed for day to day cash, for the holding of inventories, and to give trade credit to customers, who then become debtors. Without working capital, business wont be able to buy more supplies, pay suppliers or offer credit to important customers
what management skills do entrepreneurs need
Entrepreneurs need skills in leaderships and decision making, cash handling and cash management, planning, coordinating and communication and marketing, promoting and selling. these skills will ensure success. they can gain management experience beforehand or employing people that have management experience
what are local business
Local business operate in small, well-defined parts of a country. the owners do not expand so they do not make attempts to attract customers across the whole country.
what are national business
national business have branches or operations across a country. they make no attempt to establish operations in other countries or to sell internationally.
what are multinational business
business organization that has its headquarters in one country, but with operating branches, factories and assembly plants in other countries
what is an intrapreneur
business employee who takes direct responsibility for turning an idea into a profitable new product or business venture
what are the qualities of successful entrepreneurs and intrapreneurs
innovative, committed and self-motivated , multi skilled, leadership skills, self confident and have an ability to bounce back and taking risk
where can business opportunity for an entrepreneur come from
successful business opportunity can come from an entrepreneur’s own skills or hobbies, previous employment experience, conferences and exhibition offering start up ideas and small budget market research
how does finance affect entrepreneurship
entrepreneurs need capital. they have insufficient personal savings. no knowledge of financial support and grants available, no trading record to present to banks as evidence of past business success. poor business plan that fails to convince potential investors of the chances of a business’s success
how does cost of good locations affect entrepreneurship
expensive locations should not be considered. working from home keeps costs low,
how does competition affect entrepreneurship
A newly created business will often experience competition from established businesses The entrepreneur may therefore have offer a more unusual product or better customer service to overcome the low-cost advantages that bigger busine usually have
how does lack of customer base affect entrepreneurship
The long term success of the business will depend on encouraging customers to return to purchase products repeated .it could be provided by personal customer service or knowledgeable pre- and after-sales service or supplying one-off customer requests that large firm may be reluctant to provide
what is business risk
business risks are those factors that increase the chances of losses in a business and reduce opportunities of profit
role of enterprise in a countries economic development (employment creation)
new and old Businesses provide employment which reduces national employment
role of enterprise in a countries economic development (economic growth)
increase in output of goods or service increases gdp. enough small business increases living standards. increased output and consumption will result in higher tax revenues for the government
role of enterprise in a countries economic development (business survival and growth)
more employment boosts economic growth, take place of businesses that are declining or closing due to changing consumer tastes or technology.
role of enterprise in a countries economic development (what is innovation and technological change)
new businesses can be innovative. creativity adds dynamism to an economy and makes business sector more competitive.
role of enterprise in a countries economic development (what are exports)
increase value of nations exports and improve international competitiveness
role of enterprise in a countries economic development (what is personal development)
aid in development of useful skills will help an individual towards a sense of personal achievement. others will follow and successful new enterprises will boost the economy
role of enterprise in a countries economic development (what is increased social cohesion)
Unemployment often leads to serious social problems and these can be reduced if there is a successful and expanding small business sector. By creating jobs and career opportunities and by setting a good example for others to follow, entrepreneurship can help to achieve social cohesion
role of intrapreneurs
This is the process of encouraging risk taking and enterprise by employees within a business to help create and develop new opportunities.
what are the differences between entrepreneurs and intrapreneurs
entrepreneurs start up a new business and intrapreneurs develop an innovative product or project within an existing business.
risk taken by the entrepreneur and risk is Taken by the business for intrapreneurs.
rewards go to the entrepreneur and to the business by intrapreneurs
what are the benefits of intrapreneurs
developing new products to increase sales or creating exciting ways of selling existing products.
Developing new ways of doing business.
Driving innovation and change within the business
generating excitement within the business about a new opportunity makes change more acceptable.
developing more innovative products and creating competitive advantage.
Encouraging original thinkers and innovators to stay in the business
what is a business plan
written document that describes a business, its objectives, its strategies, the market it is in and its financial forecasts.
what are the key elements of a 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 to them.
management team and personnel - details of the entrepreneur’s skills and experience and the people they intend to recruit. operations premises to be used, production facilities, IT systems
what are the limitations of a business plan
it could create a false sense of certainty in business owners.
They might overlook the fact that it is based on forecasts and predictions.
The business plan must be detailed and supported by evidence such as market research. If it is not, prospective creditors and investors can delay in making a finance decision
The plan might lead entrepreneurs to be inflexible.
what are the benefits of a business plan
provides evidence to investors and lenders.
makes the finance application easy.
forces the owner to think seriously.
easy to identify strengths and any potential weaknesses.
gives owner and managers a clear plan of action to guide their actions and decisions.
helps entrepreneur to be successful and clear
what is economic activity
The purpose of economic activity is to provide for as many needs as possible. the short supply of products and the limited supply of resources forces us to make choices. we must choose between the needs that will satisfy us now and those that we will give up.
how can cash flow problems be reduced
cash flow forecast is made and kept up to date so the cash needs of the business can be assessed month by month. sufficient capital for business while starting up to operate during the first months till cash flow starts to build. good relations with bank so short term cash problems are financed by overdraft extension. effective control over customers accounts to make sure they pay on time
What is business uncertainty
situations in which businesses face risks that can’t be foreseen or measured. it may be hard for businesses to predict their performance due to unprecedented or constantly changing events
why do businesses need recordkeeping
Record keeping help make track of what happens in the business.
why do businesses use computing power
many company and startups use computers because of decrease in cost of computing power.
why should businesses that use computing power also keep paper records
paper records should kept like receipts or details of big deliveries. paper records also act as back up if computer fails. records can used as evidence to tax authorities if they dispute the company’s calculations.
drawbacks of working at home
It may not be close to the area with the biggest market potential.
It lacks status.
It can be difficult to separate private life from working life.
why is a business plan important
Without some evidence that entrepreneurs planned for the future, it is unlikely that bankers, venture capitalists or potential shareholders will invest money in a new business.
