Topic 1: enterprise Flashcards
Business Enterprise definition (1,2)
(1) Any organization that uses resources to meet the needs of customers by providing a product or service that they demand
(2) Usually have profit as their primary motive
Factors of Production Definition (1,2)
(1) these resources are required to carry out business activity as collectively known as the factors of production
(2) they include Land, Labour Capital and Enterprise
there are factors, and they spell out LLCE.
The factors and descriptions of Production
- Land
* Represents all the natural recources
* renewable and non renewable, which are consumed by the business activity
* seas, mines, etc - Labor
* manual and skilled people
* they make up the workforce of a business
* carpenters, doctors, engineers - Capital
* refers to not only the finances needed to set up and pay operations
* but also all the man made resources used in production
* capital goods which are physical goods used to aid in production of other goods and services
* machines, commercial vehicles - Enterprise
* a ´driving force´provided by risk taking indidivuals
* those combine the FOPs into a unit capable of producing goods and services
* providing managing, decision making and coordinating rules
4. they basically keep everything together, like glue
Added value Definition (1,2) and Formula
(1) the difference between selling price of a finished good
(2) and cost of bought materials
added value = selling price - Cost of bought material
Added Value is the extra money a company makes by improving a product or service beyond its original cost.
Ways to improve added value (4)
(1) providing better customer service,
(2) advertising,
(3) attractive displays
(4) buying cheaper raw material etc.
Oppertunity costs Definition (1) and examples (3)
(1) Opportunity costs is defined as the next best alternative forgone.
- consumer
* a girl can have either a new laptop or phone, she choses phone; oppertunity cost is laptop - business
* business have 1 million, they decide they spend it on market research rather than investing in company vehicles; opp cost is vehicles - government
* build better hospitals for healthcare or schools; what they left behind is opp cost
Internal (3) and external (3) reasons of why businesses fail
Internal:
1. Lack of cash
2. Poor management
3. Lack of record keeping
External:
1. Political and Economical Changes
2. Technology
3. Competition
explain the reasons of why businesses fail (6)
Internal:
1. lack of cash
* This is the capital needed for day-to-day running of the business
* used to by inventories, pay off creditors and allows the business to give credit to its customers.
* cant pay? too bad shut down
- poor management
* you dont know what youre doing, an entrepreneur might be skilled in one feild and lack in other,
* choose appropriate people
3.Lack of record keeping
* the business will collapse if youre unorganised,
* when fail to maintain accurate business dates,
* can lead to legal issues, financial issues
External:
1. Political and economical changes
* laws changing, a ban on gasoline will affect your gasoline or gasoline car sales
2.Technology
* rapid changes makes it difficult to constatly update technology
* leads to failure to adapt
3.Competition
* price wars
* results in reduced profitability because ur product is dirt cheap
* cant survive, no revenue
(this is extremely informal writing pls just remember dont copy)
the 4 types of** ‘scale of businesses’** and what they are
- local
* in a small ,well-defined parts of a country.
* often do not aim to expand so
* do not make attempts to attract customers across the whole country.
* example: ur local pan shop - National
* branches or operations across a country.
* no attempt to establish operations in other countries or to sell internationally.
* example: ur local pan shop but u see the exact ones in a few more cities - International
* sell products in more than one country
* This may be done by using foreign agents or online selling.
* example: you go on vacay and spot your local pan shop??? - Multinational
* operations in more than one country.
* This means they have anestablished base for either producing or selling products outside their own domestic economy.
* ur local pan shop is now elon musk
Entrepreneur (2) and Intrapreneur (2) definitions
Entrepreneur
* An entrepreneur is an individual who organizes the factors of production,
* has the new idea for the business, invested capital to assumes the risk with usually the aim of generating profit.
Intrapreneur
* A business employee who takes direct responsibility for turning idea into a profitable new product of business venture.
* They develop an innovative product within an existing business where the risk and reward remain with the business.
basicalllllyyyyy:
Entrepreneur: Starts their own business from scratch and takes on all the risks and rewards of running it.
Intrapreneur: Works within a company to develop new ideas or projects, acting like a mini-entrepreneur but without the personal risk.
Difference: Entrepreneurs start and own their businesses, while intrapreneurs create new things within a company.
What issues do entrepreneurs face (4)
(1) Lack of business opportunity
(2) lack of finance
(3) Poor location
(4) High competition when they start.
Qualities of an entrepreneur (5)
- innovation
* Must be able to carve a new niche in the market,
* attract customers in innovative ways and present their business as being different from others in the same market.
* requires original ideas and an ability to do things differently. - multiskilled
* make the product (or provide the service), promote it, sell it and keep accounts.
* These different business tasks require a person who has many different qualities
* which includes technical,
people skills and money handling. - self confident
* Many start-ups fail, yet this would not discourage a true entrepreneur
* believe in themselves and their business idea
* ability to bounce back from any setbacks. - risk taking
* must be willing to take calculated risks in order to see results.
* Often the risk is by investing their own savings in the new business. - leadership
* know how to guide and motivate workers
* so they willingly work, much more efficient
basically be delusional, rich, and smart i guess
Benefits of Intrapreneur in a business
(1) Creativity and Innovation to the business –
* new products and methods of selling help to increase business sales.
(2) New ways of doing business –
* new business processes help to improve efficiency.
(3) Retain good employees –
* helps to keep talented workers and maintain a competitive edge.
Advantages of business / entrepreneur to a country
- Creates employment
* Businesses employ people which reduces the unemployment in the country.
* helps to increase the level of income and raise the standard of living - Economic Growth
* Businesses tend to add to the economic output to the country. Due to this the GDP of the country can increase and it can improve the standard of living. - Innovation
* New businesses come up with innovative ideas that adds to dynamism of an economy.
* Examples include Uber and Airbnb - Increase in exports
* Increase in exports earns country more revenue
* and provide better international competitiveness for the country. - Tax Generation
* Businesses generate taxes and variety of goods for individuals.
* The taxes can be used by the government to provide public goods.
baaaassssicccaallllyyyyy:Creates Jobs
Businesses hire people, reducing unemployment and raising income and living standards.
Boosts Economy
Businesses increase the country’s economic output, helping to raise the GDP and improve living standards.
Drives Innovation
New businesses bring fresh ideas, making the economy more dynamic (e.g., Uber, Airbnb).
Expands Exports
More exports bring in money and improve the country’s global market position.
Generates Taxes
Businesses pay taxes and offer goods, which helps the government fund public services.
Business plan definition
(1) A written document that describes a business, its objectives, its strategies, the market it is in and its financial forecasts.
(2) It includes executive summary, marketing and sales strategy, management team, operations and finance.
Advantages and disadvantages of a business plan (3,3)
Advantages
(1) It helps to gain investors as it allows the investors to see financial details which helps them to invest in the company.
(2) It shows strengths and weaknesses of a business which allows the managers to plan for strengths and remove weaknesses.
(3) It gives owners and managers clear plan of action which leads to guide their actions in the future which helps to improve the chances of success.
disadvantages
(1) Since it is based on forecasts and predictions, which might be wrong which can lead to incorrect decisions being made.
(2) The plan requires market research which is expensive and until the plan is not fully up to date the investors might reject it.
(3) It can lead to entrepreneurs becoming inflexible because new opportunities might be rejected if not in the plan reduce the potential for future growth.
simplified:
advantages
Attracts Investors: Shows financial details that help investors decide to invest.
Identifies Strengths and Weaknesses: Helps managers build on strengths and fix weaknesses.
Provides a Clear Plan: Guides future actions and increases chances of success.
Disadvantages
Forecasts Can Be Wrong: Predictions might lead to poor decisions.
Expensive Market Research: Updating the plan can be costly and might deter investors.
Can Limit Flexibility: Sticking too closely to the plan might mean missing new opportunities.
The economic sectors and what they are
- Primary
* includes the extractive industries that acquire raw material from naturally available resources,
* example: agriculture, mining etc. that can be used and processed by other firms. - Secondary
* It comprises of the manufacturing industries that convert raw material into semi-finished or finished goods.
* Example: Textile industry. - Tertiary
* This represents all kinds of services related to consumers and businesses.
* Example: Banking - Quaternary
* Businesses that provide information services
* example: web design and management consulting, research lab.
Primary Sector: A farm grows and harvests apples.
Secondary Sector: A factory processes the apples into juice.
Tertiary Sector: A store sells the apple juice to customers.
Quaternary Sector: A research team develops new juice flavors and improves production techniques.
Private sector definition (2)
(1) This sector includes privately owned businesses with the main motive of profits.
(2) This only exists in free-market economy.
A free market economy is one where prices and production are set by supply and demand, with minimal government interference. Businesses and consumers make their own choices, and competition drives innovation and efficiency.
Public Sector definition (3)
(1) This sector includes businesses owned, funded and controlled by the government.
(2) It operates for the welfare of the community and pursues profits as only a secondary motive.
(2) They are responsible to provided essential facilities like health care and utilities to the masses and it will do so even it does not prove to be profitable.
(3) This only exists in planned economy.
A planned economy is one where the government controls prices, production, and resource allocation. It makes most economic decisions and plans for the entire economy.
Public sector advantages and disadvantages
Advantages
(1) They have a social objective rather than profit maximization which benefits the society.
(2) Since government finances them from taxes even loss-making services can be sustained.
Disadvantages
(1) Can become inefficient because of a profit motive and overreliance of government support through subsidies.
(2) Government may interfere in business decision making for political popularity like reduce prices to attract votes.
Advantages
Helps Society: Focuses on social benefits, not just making money.
Sustained Funding: Government funding can keep services going even if they lose money.
Disadvantages
Can Be Inefficient: Less focus on profit can lead to poor performance.
Political Interference: Government might make decisions to gain votes rather than for business success.
