Enterprise And Entrepreneurship Flashcards
New business ideas
New business ideas often come about due to changes in technology, changes in consumer demand, and the obsolescence of products and services.
New business ideas emerge as entrepreneurs recognise opportunities created by changes in the market.
Successful businesses can identify these opportunities and develop innovative solutions that meet the changing needs of customers.
How new business ideas come about
New business ideas can come about through original ideas or by adapting existing products, services, or ideas.
The key to business success is identifying a need or opportunity in the market and developing an innovative solution that meets the needs of customers in a unique and valuable way.
Original ideas
Original ideas are new and unique concepts that are not based on existing products/services, or ideas.
They often arise when entrepreneurs identify a gap in the market or a new need that has not yet been met.
Original ideas can be based on a new technology, a new market, or a unique perspective on an existing problem.
Adapted ideas
Adapting existing products, services, or ideas involves taking an existing concept and making it better or more suitable for a different market or customer base.
This approach often involves identifying a problem with an existing product or service and developing a solution that addresses the problem.
Why new businesses ideas come about
Changes in technology - Advances in technology can create new opportunities for businesses to develop innovative products and services.
Changes in customer wants - Consumer demand often changes over time, creating opportunities for businesses to develop new products and services that meet these changing needs.
Obsolete products or services - Products and services can become outdated due to changes in technology or changes in consumer demand.
This can create opportunities for businesses to develop new products and services that meet the needs of consumers in new and innovative ways.
Risks of business activity
Business failure - Business failure affects businesses of all sizes and is a risk to both new and established businesses.
It occurs when a business is unable to meet its financial obligations or when it cannot generate enough revenue to sustain its operations.
The impact of business failure can be devastating, resulting in job losses, bankruptcy, and financial ruin for the owners and investors.
Financial loss - This occurs due to factors such as poor financial management, economic downturns, or unexpected events such as natural disasters.
The impact of financial loss can be severe, resulting in reduced profitability, reduced competitiveness, and reduced ability to invest in growth.
Lack of security - This is a risk that businesses face in terms of data security, intellectual property theft, or physical security.
A security breach can result in reputational damage, legal liability, and the loss of customer trust.
Rewards of business activity
Business success - This is the ultimate reward that business owners strive for.
It occurs when a business meets or exceeds its objectives, such as generating revenue, achieving profitability, or expanding its operations.
Profit - Profit is a measure of the success of a business.
Profit enables businesses to reinvest in growth opportunities, pay dividends to shareholders, and provide financial stability to the business.
Independence - Independence allows businesses to make their own decisions rather than being subject to the demands of external stakeholders such as investors or creditors.
Purpose of business activity
The purpose of business activity is to take inputs, add value to them, and create products which meet customer needs.
Goods and services
The primary purpose of business activity is to produce goods or services that satisfy a need or demand in the market.
Goods are tangible items
Services are non tangible products.
Meeting customer needs
The ultimate goal is to create products that meet the needs and preferences of customers and provide value to them.
By meeting customer needs, businesses can build customer loyalty, increase brand awareness, and generate revenue.
The 4 customer needs are price, quality, choice and convenience.
Added value
The purpose of business activity is to add value to products or services.
Adding value is the difference between the price that is charged to the customer and the cost of inputs required to create the product or service
Value-added features can differentiate products from competitors, create a unique selling point, and increase customer satisfaction.
Methods of adding value
Convenience - Products which offer a more convenient option to the customer can sell for a higher price.
Branding - Creating a unique identity that distinguishes from its competitors increases customers loyalty, trust and recognition which translates into higher sales and profitability.
Quality - Customers are willing to pay premium prices for products or services that are high quality because they offer greater value and satisfaction.
Design - Design adds value by enhancing the aesthetics and functionality of a product or service. It can also improve the user experience and increase the perceived value.
USP - By identifying a unique and compelling benefit or advantage, companies can attract new customers, increase sales and profitably, and build a loyal customer base.
Role of entrepreneurship
An entrepreneur is a person who is willing and able to create a new business idea or invention and takes risks in pursuing success.
Successful entrepreneurs can identify and pursue opportunities, create value for customers and build thriving businesses.
Entrepreneurs display three main characteristics - organising resources, making business decisions and take risks.
Qualities of an entrepreneur
Organising resources - An entrepreneur must be able to gather and coordinate the resources necessary to start and operate a business.
Decision making - Entrepreneurs must be able to make decisions that will determine the success or failure of their business.
Making the wrong decisions can lead to wasted resources, lost opportunities, and ultimately business failure.
Risk taking - Entrepreneurship involves taking risks - financial, personal, or professional.
These risks can pay off with great rewards, but they can also lead to failure and financial loss
