Enterprise Flashcards
Define enterprise
The formation of a new business or
development of a new good or service to be introduced to the market.
Define SME
small to medium sized enterprises with fewer than 250 employees
Explain the difference between a need and a want
People have a limited number of needs that must be satisfied if they are to survive. Like food and water.
Wants are unlimited, people constantly aim for a better quality of life. Like holidays.
Explain how satisfying needs and wants can give opportunities to entrepreneurs
Needs and wants are not fixed. They can change quickly as fashions and lifestyles change, and also over the longer term as incomes increase and population changes. This means that markets are always changing. The business world does not stay still – new opportunities are constantly arising. An entrepreneur with an idea, commitment, funds and a little luck can succeed even in the most competitive of markets.
Define an entrepreneur
An entrepreneur starts a business based on an innovative idea, taking on the risks but in hope of making a reward (profit)
Give characteristics of entrepreneurs
• being a risk taker – they risk capital
• product knowledge
• be hard working
• be passionate/determined/ambitious and have perseverance – new businesses have low success rates
• taking the initiative and being proactive – adapting to change if required
• having creativity and innovation – being able to come up with concepts and ideas
•being an effective organiser – organises labour, raw materials, etc.
Why do people start their own business ?
- to gain a profit
- to turn a passion/dream into a business
- to use redundancy money and provide
themselves with employment / provide a source of income - freedom to be their own boss.
- for ethical or social reasons
Define the primary sector of industry
it produces raw materials like iron ore and oil, that makes petrol, as well as producing final products like fish and oranges.
Define secondary sector of industry
It consists of manufacturing and construction industries that make, build and assemble products.
Define the tertiary sector of industry
services give value to people but are not physical goods. Services are sometimes classified as direct services like the police and commercial services
like financial services
Explain the primary sectors importance to the UK economy
In some rural areas the primary sector is crucial to the local economy. We also still get a great deal of food from the UK agricultural industry, even though
numbers employed are very small.
Explain the secondary sectors importance to the UK economy
• Many entrepreneurs believe that that manufacturing in the secondary sector creates wealth when compared to the service sector. However, the secondary sector in the UK and the manufacturing
sector in particular have rapidly declined partly due to competition from cheap foreign imports from developing countries. They can’t compete with low labour costs in China and India.
• The key issue for the secondary sector is that of ensuring they can turn raw materials, or semi- finished components, into something that consumers will pay for. The problem is about maintaining competitiveness by adopting suitable strategies and investing in high tech industry (computers, telecommunications, aerospace) where there is a significant emphasis on research and development.
• Within the secondary sector, there needs to be a greater emphasis on hi-tech manufacturing industries
and the UK needs to build on its success in this area so that it can manufacture goods for export and
earns money for the UK in the future. This is important in helping UK’s balance of payments.
Explain the tertiary sectors importance to the UK economy
• The tertiary sector has grown considerably over the past twenty years and it can be argued that the
tertiary sector is the most important even if the banking crisis and the recession have shown that an
over dependence on financial services has not generated as much wealth for the UK as was supposed
• In terms of employment, the tertiary sector is by far the most important in the UK employing approximately 80% of those who are in employment. The secondary sector accounts for 18%, with 2% in the primary sector. A similar picture emerges if we look at the contribution each sector makes to the
value of our output (GDP)
Importance of entrepreneurs to the success of the economy
• Entrepreneurs tend to be single-minded, prepared to work hard, passionate/determined/ambitious, have ability to organise production, are prepared to take risks and are innovative – possible use of examples of entrepreneurs to illustrate points.
• Many entrepreneurs are innovators. They bring new ideas to the market and drive the development of new technologies.
• Entrepreneurs are important because they are innovative, they can provide better ways of doing things and can also lead to new business, thus increasing profit for businesses and their stakeholders.
• Entrepreneurs have the vision and the
willingness to take risks which drive businessforward.
• Entrepreneurs help the economy by creating new jobs.
• Help to boost the economy by providing new products.
• Without entrepreneurs, our economy would not benefit from the boost they give from added business and ideas and wealth creation.
• Increasing exports – helps balance of
payments.
• Government benefiting from taxation that is generated from the revenues of the business
Explain SMEs positive impacts on the economy
•SMEs create jobs - businesses require a number of employees to help run and operate the business. These people pay tax and spend income on other products and services which goes into the economy;
• Critical to the UK economy as they make up 67% of the UK private sector jobs and contribute 50% of GDP;
• SMEs create demand for products which in turn creates more jobs and other businesses;
• SMEs buy products and services from other businesses in order to produce finished goods thus helping to generate wealth in the economy both local and national;
• SMEs pay tax to the government - theses businesses are required to pay business and corporation tax. This goes to the government to pay for things such as hospitals, police and schools;
• SMEs introduce new technology and innovation to the market - they come up with new technologies, create new products and provide new services for people in the UK and abroad;
• SMEs stimulate the economy by instilling confidence in people - having a healthy economy makes people more confident to invest;
• SMEs help to create competition which is good for the consumer and growth.
Explain negative impacts of SMEs on the economy
•SMEs are small scale and more likely to fail in times of recession and hardship; Many SMEs fail! Larger businesses are able to survive during harder economic times;
• Smaller budgets - do not have funds to compete with larger organisations to put into R&D, advanced technology, marketing and promotions which may affect the SMEs ability to offer high quality solutions to customers;
• Less recognition and harder to compete with well-established larger businesses;
• Harder to raise finance compared to larger organisations who can sell shares. Banks are more likely to lend money to larger more established businesses.
• Larger businesses can take advantage of economies of scale and better compete on price.
