Enterprise Flashcards
Define enterprise.
What a person uses when running a business.
What is a small to medium-sized enterprise?
SMEs are businesses whose personnel numbers fall below certain limits.
What is an entrepreneur?
Someone who is willing to take the risk involved in starting a business.
What does an entrepreneur do?
1) Provides goods and services that customers want or need.
2) Creates and sets up a business, which involves having a business idea and the financial capital to make this idea a reality.
Define the term good.
A physical product.
Define the term service.
An intangible product.
Define need.
Things that are necessary to human survival e.g. heating, food, water.
Define want.
Things that people desire but is not essential to their survival these can be infinite.
What is a business plan?
A set of documents prepared by a firms managements to summarise it’s operational and financial objectives for the near industry.
What are the characteristics of an entrepreneur?
1) Being a risk taker.
2) Hard worker.
3) Being Passionate.
4) Organised.
5) Innovative.
6) Determined.
What is innovation?
The process of of translating an idea or invention into a good or service that creates value for which customers will pay.
What are reasons for becoming an (financial) entrepreneur?
1) Make a profit.
2) Profit maximization.
What are reasons for becoming an entrepreneur (non-financial)?
1) Satisficing: The motive is to make sufficient profits to satisfy the entrepreneur but not necessarily the greatest profit possible.
2) Ethical stance: Starting a business with the intention of helping others.
3) Social entrepreneurship: The motive is to create a sustainable, profit making business that also benefits the community.
4) Independence and home working: The entrepreneur wants more freedom to work when and where they please, perhaps to fit around family or other commitments.
Why are SMES’s and entrepreneurs so important to the UK economy?
1) SME’s and entrepreneurs have combined sales $1.8 trillion which accounted for 47% of all business sales in 2016.
2) They generate a large amount of direct employment - 15.7 million jobs in the UK in 2016. And indirect employment through the goods and services such businesses purchase. SME’s accounted for 60% of all private sector jobs in 2016.
3) Many SMEs offer innovative products and often grow significantly quicker than established larger businesses. Growth means more jobs and wealth creation for the economy and is vital to the sustainable success of a country. For example, Facebook launched in the UK in 2006 with 1 million users in it’s first and had got 32 million users by 2016.
4) The largest industries in the UK are retail, manufacturing and vehicle repairs SMEs account for 46% of these businesses. SMEs make up a large proportion of the primary sector. SMEs also make up a considerable proportion of the secondary sector and make up a large proportion tertiary sector.
What is the primary sector?
First stage of production whereby, raw material are extracted or produced.
What is the secondary sector?
This is the second stage of production whereby, the raw materials are manufactured into products.
What is the tertiary sector?
The final stage of production, whereby services are provided.
How has employment in the primary sector risen/ declined?
It has declined as raw materials have run out and are now found elsewhere in the world.
How has employment in the secondary sector risen/ declined?
It has decreased:
1) De-industrialisation. Decline in once prosperous industries such as ship building, steel, textiles and car manufacturing.
2) Changes in consumer demanded in favour of foreign goods. Better quality products from countries such as Japan or korea at very competitive prices / better quality/ reliability/ innovation.
3) Lack of competitiveness of UK manufacturing. Firms in world markets/ increasing overseas competition.
4) Lack of investment in manufacturing. Both by government and industry.
5) Technology has replaced workers trade union problems. Can cause markets to be lost to foreign competition.
6) Relocation of UK manufacturers abroad due to lower costs.
7) Education system not producing as many graduates e.g. engineers who are able to work in manufacturing has become more unfashionable.
What is a stakeholder?
A person, group or organisation that is affected by and/ or has an interest in the operations and objectives of a business.
What is an internal stakeholder?
Groups within a business for example, owners, workers and shareholders.
What is an external stakeholder?
Groups outside of a business for example, suppliers, local community, suppliers, customers and lenders.
What are examples of internal stakeholders?
1) Employees.
2) Manager.
3) Owners / employers.
4) Shareholders.
What are examples of external stakeholders?
1) Suppliers.
2) Government.
3) Creditors.
4) Customers.
5) Local community.
How can a business have an effect on staff?
Growth: New technology by product, not process, means greater production and more jobs; rising profits means rising wages ( particularly if they are shared with staff).
How can a business have an effect on managers / directors?
Growth: new technology by process or product means a more efficient and productive business; rising profits (especially if bonuses are available) means greater pay.
How can a business effect shareholders?
Rising profits, short term and long term, mean greater payments for investment and more valuable shares. Falling profits risk the opposite.
How can a business effect suppliers?
Growth means more orders and greater profits.
How can a business effect customers?
Quality of product and service: innovative new products and improving customer service mean a better customer experience and reliability from products.
How can a business effect banks?
Stable profits mean the business is able to payback any current loans and be seen as a lower risk for any future finance required.
