Topic 1.1 Enterprise and entrepreneurship Flashcards
dynamic market
one that is constantly changing
Why new business ideas come about?
-changes in technology
-changes in what consumers want
-products and services becoming obsolete
-new and original ideas
-adapting existing products, services and ideas
E-commerce
-E-commerce is any business transaction that takes place using the internet.
-E-commerce has allowed businesses to sell to different countries and customers on a much wider scale.
Obsolete
Product or service which is no longer needed
Planned obsolescence
Many products are designed to only last a short time,and consumers are encouraged to buy newer and improved versions of these products.
Changing technology
As new technology develops, new business opportunities arise. New technology can often improve products and services, and make them more desirable in a number of ways.New technology can:
-Make products and services faster, cheaper, easier to use
-Make products smaller(more compact)
-Make products safer
Changing consumer needs
Society is constantly changing. These changes lead to consumers spending their money in different ways. New business opportunities can arise because of new consumer wants and needs caused by:
* changes in fashions
* changes in the economy
* changes in national demographics
* changes in lifestyle, such as the way consumers spend their leisure time
* changes in technology.
demographics
-different characteristics that make up a population or a business’ customer base
-age, gender,ethnicity and income levels
-used to help business decide on the target market for a product or service they want to offer
-demographic changes can impact upon consumer wants (aging population)
Social media
-Social media platforms have allowed businesses and customers to interact in more ways, allowing businesses to create more personal relationships with their customers.
-Social media offers a simple, cheap and effective way of creating
brand awareness. For example, clothes retailers can obtain feedback on the latest fashions or provide exclusive
promotions
-Businesses can also pay other businesses, celebrities or influencers to promote their brand or product by sharing photos of themselves wearing or using a product or service. This is often cheaper than traditional advertising and allows businesses to reach their target market more easily.
-widely used by businesses to attract new and retain existing customers
m-commerce
-any business transaction that takes place through a mobile device such as a mobile phone or tablet
-businesses try to increase the use by developing their own apps
-now also being used in regular shops, where payment can be made via a smartphone
Working out risk
Every successful entrepreneur should be willing to take a risk.Risk is worked out by considering the probability of a negative outcome occurring and the impact of the negative outcome.
Risks
Business failure - through poor cash flow, fall in sales revenue or the action
of competitors
Financial loss-an owner may lose the capital they invest in the business if it fails.This could include their personal belongings if the business has unlimited liability
Lack of security - not working for someone else means no guaranteed income, sick pay or holidays
Rewards
Business success - personal
satisfaction, excellent products/services, growth, and awards and recognition
Profit - where revenue exceeds costs over a period of time
Independence - many business owners will value the freedom of working for themselves over working for someone else
How can risk be reduced?
- Carry out detailed market research
-Produce a business plan
-Ensure that the business is competitive
-Raise sufficient start-up finance
What makes some businesses riskier than others?
-Seasonal demand, such as for ice cream.
-A small market.
-A highly competitive market with lots of competitors.
-An owner who knows little about the product or market.
Main reasons start-ups fail?
-Insufficient customer demand
-Good idea, poor execution
-External shocks e.g inflation
Goods
Tangible items that can be used and stored
Services
Intangible actions that cannot be stored
What is added value?
The difference between the selling price and the cost price of a good or service
Ways a business can add value
A business can add value to its products by lowering variable costs or adding something that will make customers willing to pay a higher price:
- More convenience-Saving customers time by making a product easier to use will result in customers being willing to pay more
- USP-A unique selling point is something that makes a good or service stand out from the competition and makes it more attractive to customers
- Better design-The features that a product has or the way that it is presented can add value
- Improved quality-Customers are usually prepared to pay more for higher-quality products
- Branding-Brand awareness can encourage customers to pay more for a product if they trust the brand name that produces it
6.Greater speed of service
What are the benefits of having a USP?
Gives the business a competitive advantage and adds value to a product
What are 3 key enterprise skills?
- Risk taking
- Showing initiative
- Willingness to undertake a new venture
4.organises resources
5.makes business decisions
What is an entrepreneur?
Someone who creates a business, taking on financial risks with the aim of making profit from the business
Approximately what percentage businesses fail within the first four years of trading?
40%
How do entrepreneurs create new products?
Through invention and innovation
How do entrepreneurs benefit the economy?
- Create products and services to meet people’s needs
- Create jobs
- Generate economic activity through consumer spending
- Pay tax to the government
- Export goods abroad
Mix and Match
Most products combine a range of features to add value and improve competitiveness.The most successful products are the ones that are able to keep cots down as they add new features of benefits.
What is the purpose of all products and services?
To meet the needs of customers, often in order to make a profit
What is a consumer?
The person who uses the goods or services
What is a customer?
A person or organisation that buys the product or service
What is production?
Using raw materials, labour and machinery to make products
What is a supplier?
A business that sells products/services to another business
What is a business or enterprise?
A person or organisation with the purpose of producing goods/services to meet the needs of customers
Why will there always be risks involved with setting up a business?
There are many unknown factors that affect long-term business success
Invention
Creating something that did not exist before
What is the role of business enterprise and the purpose of business activity:
-to produce goods or services
-to meet customer needs
-to add value: convenience, branding, quality, design, unique selling points.
The role of entrepreneurship
To produce goods or provide services, businesses need to organise resources and make decisions about how much
risk they are willing to take. An
entrepreneur will do this by making decisions about what to produce or provide using the resources available to them. Those resources will include land, labour and capital
For example, an entrepreneur who has identified a need for a new gym will require:
Land - Naturally occurring resources, such as land and water. A gym will need land for a physical building.
Labour - Human effort, skills and knowledge. A gym will need staff who can offer advice on health and fitness.
Capital - Equipment and money used to provide goods and services. A gym will need fitness equipment and money to pay staff.
Enterprise - The willingness to take risks, make decisions and organise resources. All of these will be needed to open the gym.
Ways businesses can use the law to protect its business
-Register ownership of an invention and be given a patent.stopes rivals from copying ideas
-Register a trademark to make their company distinctive
-Sue for damages of others copy
Invention
Invention means creating something that did not previously exist
Innovation
nnovation is the successful
commercialisation of an invention, or the
adaptation of a product over time to improve its features. It involves changing existing processes or creating new, more effective processes, products and ideas. For businesses, this could mean implementing new ideas, creating new products, or improving existing products or services. Innovation can increase the likelihood of a business succeeding.Seen as less risky
