ENTERPRISE Flashcards
What is the primary aim of business activity?
To add value to raw materials and semi-finished goods to satisfy consumer needs and wants
This helps raise living standards by creating employment opportunities.
What are the factors of production?
- Land
- Labour
- Capital
- Enterprise
Each factor has a specific return: rent for land, salary/wages for labour, interest for capital, and profit for enterprise.
What is the return for land in production?
Rent
What is the return for labour?
Salary or wages
What is the return for capital?
Interest
What is the return for enterprise?
Profit
How is added value calculated?
Added value = selling price - cost price
True or False: Added value is the same as profit.
False
How can a business increase added value?
- Increase selling price by providing higher-quality goods
- Decrease cost price through reduced wastage and increased efficiency
This can include better raw materials, enhanced advertising, and improved packaging.
What is opportunity cost?
The benefit of the next most desired option that is given up
What does a dynamic business environment mean?
The business environment is always rapidly changing
What are some reasons businesses may fail?
- Lack of record-keeping
- Lack of cash and working capital
- Poor management skills
- Changes in the business environment
These include new competitors, legal changes, economic changes, and technological changes.
What are internal problems that can cause business failure?
- Weak business idea
- Lack of managerial skills
- Poor cash flow management
Other factors include insufficient finance and poor initial research.
What are external problems that can lead to business failure?
- Anticipated customers did not materialize
- Changes in business environment
- Unexpected competition
What is the difference between local, national, and multinational businesses?
- Local: Provides goods/services to local population
- National: Provides goods/services to domestic market
- Multinational: Provides goods/services to more than one country
What are characteristics of intrapreneurs?
- Passionate
- Resourceful
- Independent and proactive
Intrapreneurs often think like entrepreneurs and possess leadership skills.
What do entrepreneurs do?
Generate ideas for new businesses and take on financial risks
What challenges do entrepreneurs face in identifying successful business opportunities?
- Finding profitable markets
- Sourcing finance
- Determining a suitable location
- Building a customer base
What are the three types of entrepreneurial businesses?
- Primary sector: Extracting materials
- Secondary sector: Manufacturing
- Tertiary sector: Service
What impact does enterprise have on an economy?
- Employment creation
- Economic growth
- Innovation and technological change
- Increased social cohesion
What is the purpose of an entrepreneur?
Setting up and starting a new business
What is the potential risk for an entrepreneur?
Liability falls upon the entrepreneur
What is the potential reward for an entrepreneur?
Profit
What is the purpose of an intrapreneur?
Coming up with innovative ideas within an existing business
What is the potential risk for an intrapreneur?
Liability falls upon the business
What is the potential reward for an intrapreneur?
Profit, sales, or potential promotion
What is business risk?
Potential events that can affect a company’s profitability and are often measurable or predictable
What is business uncertainty?
Unpredictable events that can impact the business but are not measurable
What is a business plan?
A document outlining business objectives and how they will be achieved
What are advantages of a business plan?
- Allocates resources
- Future planning
- Attracts investors
What are disadvantages of a business plan?
- Can be inaccurate
- Can be time-consuming
- May become flawed due to changing business environment
