Unit 1 AOS 1 Flashcards
What is entrepreneurship?
the process whereby a person creates and operates a new business, usually in response to opportunities, while taking on the risk of the venture in the hope of making a profit ( may involve taking risks such as investing time, money and skills)
3 significant ideas related to entrepreneurship are?
- pursuing business opportunities
- innovation
- seeking growth
what is a Business opportunity?
a set of circumstances that presents itself as an avenue to success
examples of business opportunities?
- gaps in the market that no-one else has tapped into
- changes in customer needs
- technological developments
- changes in global markets
how does the pursuit of opportunities help with a business?
An entrepreneur converts these opportunities into manageable business ideas and makes the idea a reality.
what is innovation?
either creating a new good, service or process, or significantly improving an existing one
what does innovation involve?
change, improvement and/or transformation
what do entrepreneurs use for innovation?
flair, imagination and creativity to develop new ways or products
when seeking growth what will an entrepreneur do?
seek new trends, explore new products and new approaches so that the business increases in size
why is growth is necessary for the survival of a new business?
Becoming bigger would be expected to lead to increasing sales and market share, and greater profit.
what will an entrepreneur have when seeking growth?
An entrepreneur will have a vision of what the business will be like in the future. Setting clear goals, will give the business direction towards this vision.
what are the personal motivations for starting a business?
- Desire for financial and personal independence
- To make a profit
- To fulfil a market need
- To fulfil a social need
what is Financial independence?
refers to when someone can support a lifestyle using the business earnings without having to be employed or be dependent on others
what is Personal independence?
refers to when someone has control of everyday life decisions and activities including working hours, conditions, roles and tasks
what is a profit?
Profit is the money left once the expenses have been deducted from the revenue
when does profit come?
it may not come immediately especially in the start up phase, but the goal is to earn more in the long run
who keeps the profit?
- In a sole trader business all profits are kept by the owner.
- In a partnership business, profits are divided between the owners.
- In a social enterprise at least 50% of the profits must be donated to the social cause. The rest is often donated or used by the owners to further the social aims of the enterprise
ways to increase profit?
Increasing revenue or Minimizing expenses
what is fulfilling a market need?
- Recognising that there is demand for a product that is not currently available at all, or in this country
- A gap in the market
- The invention of a new product or the innovation of an existing one
what is fulfilling a social need?
The motivation to establish a business to making the world (or the community) a better place.
what are examples of social needs?
- opportunities for local unemployed people
- developing skills, providing vocational training or lifelong learning opportunities for disadvantaged people in the community
- access to a better quality of life for disadvantaged members of the community
- focusing on some sort of environmental need
benefits of owning a business?
- Being your own boss — independence
- Possibility of making a profit
- Challenging, rewarding and satisfying
- Increasing personal wealth
- Contributing positively to society
- Developing own creative ideas
- Overcoming unemployment
- Achieving a better lifestyle
- Employing family members
- Possible tax advantages
limitations of owning a business?
-Hard work and long hours
-Meeting the demands of customers, suppliers and financiers
-Fluctuating or uncertain income
-Risk of failure
-Stress and worry
-High levels of responsibility
-Constantly solving problems
-Difficulty selling the business
what is an entrepreneur?
An entrepreneur refers to a person willing to establish a business whilst taking risks and seizing opportunities in the hope of making profit.
what is a manager?
A manager is the owner (or employee) who runs the business or aspects of the business operations day-to-day. A business manager may manage and direct staffing, marketing and operations (producing the goods and services sold).
what are Characteristics of Entrepreneurs?
- shared vision
- initiative
- innovation
what is a shared vision?
An ability to build understanding/hope of what what the business will be like in the future which provides clear direction. Everyone in the business will then work to achieve this.
what is initiative?
Willingness to take the first step without being prompted & make decisions independently but might seek advice before doing so
what is innovation?
Creative ideas and drive to add a new product to an existing product line or significantly improving an existing product or process. Finding new ways of doing things.
what are Characteristics of Managers?
-Self motivation and discipline to follow through on long-term projects
-Leadership qualities and interpersonal skills to manage staff, customers and suppliers
-Ability to calculate and minimise risk as well as financial planning skills
-Flexibility and adaptability (willingness to modify plans and learn new skills in response to new information)
-Logical thinking which allows the manager to develop short and long term plans
what is a business opportunity?
A business opportunity is a set of circumstances that can allow a business to succeed, grow or improve.
what are the key sources of business opportunities?
-innovation
-recognising and taking advantage of market -opportunities
-changing customer needs
-research and development
-technological development
-global markets
what is innovation?
either creating a new good, service or process, or significantly improving an existing one
why is innovation a source of business opportunity?
Customers can be attracted to your business by unique or innovative new products, services, marketing or selling points. Innovation involves change, improvement and/or transformation. Innovating provides an opportunity to attract new customers and expand the business
what is a market (industry)?
A market refers to the businesses and customers that trade and purchase particular products.
examples of markets?
-Cosmetics
-Gyms/personal training
-Electronics (e.g. Samsung, Apple, Sony)
-Entertainment Streaming (e.g. Netflix, Foxtel, Prime, Stan)
what is a market opportunity?
A market opportunity is when there is a customer demand for a good or service that competitors do not provide.
This is sometimes referred to as ‘gap in the market’.
what is technological development?
Technological development is the use of scientific advances to meet industrial or commercial objectives.
examples of technological development?
-computer aided design (CAD)
-computer aided manufacturing (CAM)
-smart devices
-automated assembly lines
-mechanised processes
-robotics
-AI
how has social media helped as a technological development?
social media and the internet allows for businesses to reach a bigger market (globally)
what has technological development improved?
improved productivity and reduced production costs
what is research and development?
Research and development is investigating products and processes to develop new and better ways of doing things.
what is involved in research and development?
-product design
-product development product testing
-evaluation and identifying areas for improvement
-product refinement
how is research and development linked with innovation?
R&D links closely with innovation as it is the first stage in that process and has all the same benefits for business.
what are the changing customer needs specific?
Busy:
-wants convenience
-wants 24/7 trade
-wants supportive home services such as cooking, cleaning and childcare
Technological changes:
-has access to information
-compares competitors
-shops online
-is able to give reviews and use social media
Expectations:
-has high expectations of corporate social responsibility to people and the environment
-has high expectations of excellence in product quality
-is health and safety conscious
what are changing customer needs broad?
- changing incomes
- changing tastes and fashions.
- changing prices of complementary and substitute goods and services
- changing population
- changing expectations about the market, including future prices and incomes
- changes in the number of potential customers
what are changing customer needs important to a business?
products/businesses need to change according to customer needs resulting in greater sales and profit
what are global markets?
Global markets refer to the ability of markets or industry to sell their products worldwide
what do global markets allow access to?
-global customers
-overseas suppliers
-natural resources not in home country
-Access to overseas workers and labour laws (cheap labour)
-Access to overseas tax laws and government subsidies
-the opportunity to grow and further expand a business
-reduced dependence on local markets
-extended life cycle of new and existing products through the discovery of new markets to sell them in
-reduced effects of fluctuations in markets caused by changes in season or demand by moving into markets with different patterns
what is entrepreneurship?
Entrepreneurship is an opportunity to take advantage of other business opportunities (e.g. market opportunities, new technological developments and global markets) in the creation of a new business.
what do entrepreneurs do and what does this allow for?
Entrepreneurs take the risk to exploit these opportunities and by coming up with innovative ideas for a new business.
Entrepreneurship allows business to be owned by someone with:
- Innovative ideas
- Drive
- Vision for the future
what is a goal?
A goal describes what a business expects to achieve over a set period of time. Goals provide a business with a direction and help to measure results.
what are SMART goals?
SMART Goals should relate to a business VISION and MISSION statement.
what is a vision?
Where the business wants to be in the future
what is a mission?
Describes what the business does and how it will achieve its vision
what smart goal stand for?
S - specific (narrow down)
M - measurable (what evidence will prove)
A - attainable (reasonable in time frame)
R - relevant (align with values and long term objectives
T - time based (set a realistic end date)
what are the three types of goals?
Financial, social and perosnal
what are some financial goals?
-Making a profit
-Increase sales
-Increase market share
-Expand the business
-Maximising return on investment
what are some social goals?
-Community service
-Provision of employment
-Social justice
-Ecological sustainability
what are some personal goals?
-Prospective business owners normally have a number of personal goals
what does goal setting ensure you are doing?
- Planning - short and long term
- Guiding - staying on track
- Evaluating - refining with continuous improvements
what is decision making?
Decision-making involves identifying available options and then choosing one course of action from the alternatives.
why is effective decision making important?
Effective decision-making underlies every aspect of creating and developing a business idea, including identifying opportunities and business planning
what is the decision making process steps?
- Develop goals
- Outline the facts
- Identify alternative solution
- Analyse the alternative
- Choose one alternative and implement it
what is step 1 (develop goals)?
- state what desired or position is
- have some sort of measurable criteria
- keep goals in mind when making decisions
what is step 2 (outline the facts)?
- facts and information related to the situation needs to be outlined (including any circumstances that may cause problems)
- reassess goal to see if it was realistic
what is step 3 (identify alternative solutions)?
- generate alternative solutions that will possibly overcome any circumstances or obstacles
what is step 4 (analyse the alternates)?
- each alternate should be closely examined for the resources they would need and their personal consequences
- then they should be ranked in terms of their costs and benefits, strengths and weaknesses or advantages and disadvantages
what is step 5 (choose one alternative and implement it)?
- business owner needs to choose the best alternative according to the criteria and implement it
what is a business concept?
A business concept is an idea for a business venture including basic information such as the product, target market that also has a competitive advantage/edge (that is something competitors do not).
where is the source of business concepts?
The source of a business concept may come from a person’s own experiences, interests, abilities or imagination.
what are the business concept development steps?
- Business opportunity recognised
- Business concept development
- Conduct initial market research
- Conduct feasibility study
- Establish business values, goals, mission, vision and objectives
Why is it important to develop a business concept?
- The initial idea may have come from different sources, but market research needs to be undertaken to gain an understanding of the market.
- Following general research, the owner needs to look into specific research, to look at trends, competitors, supply and pricing which would allow them to differentiate themselves.
Relationship between business opportunities and business concept?
The development of the business concept is when the prospective business owner takes an idea that has arisen from an assessment of possible opportunities, and begins to turn it into an actual business.
They will need to protect their idea and determine how feasible it is.
Business concept development comprises of business opportunities, goals and motivations.
what is IP?
The potential business owner’s idea or concept is referred to as intellectual property (IP)
why is it important to protect a business idea?
a creation of the mind that can have a commercial value, so it’s important that competitors do not copy them. Almost every business will have some form of IP that needs to be protected.
what are methods of protecting a business idea?
- trademark (right granted over a deign aspect)
- patent (right granted for new, inventive and useful inventions)
- copyright (free and automatic protection for original works)
- design rights (rights to use, licence or sell a design)
- domain name (unique internet address for website)
what is market research?
Market research refers to an in depth investigation into consumer needs and problems associated with marketing goods and/or services
steps for market research?
- Identifying what information is needed to make a decision about the potential of the business. For example, someone wanting to set up a pet care business would want information about pet numbers and types in a particular area.
- Gathering the relevant information from appropriate sources. This could involve surveys or interviews, or examining government statistics. Market research businesses can be hired to carry out this research.
- Analysing and interpreting the relevant results to extract some clear information that will assist in decision-making. This analysis can give the potential business owner an idea of the market conditions that exist for the proposed good or service.
Market Research questions?
-Is the business concept entirely new or does it already exist?
-Who will buy the product?
-Why will they buy the product?
-What needs and wants have to be satisfied?
-How big is the market?
-Where is the market?
-Who are the competitors?
-What makes this product different from what already exists?
when is market research essential?
- Starting a new business
- Introducing a new product or service
- Writing a business plan
when is market research wise?
- Maintaining a current business
what is a feasibility study?
Feasibility studies are an assessment of whether a proposed business idea will be viable by looking at the current business environment, customer need, operational costs and possible value. The study results in a feasibility report.
what may a feasibility study include?
-An assessment of the market
-Consideration of operations
-Analysis on financial aspects of the business
-Appraisal of the owner’s management abilities
-Understanding of others who have tried this idea (what has failed and what worked)
-Legal feasibility
-Timeframe
why do a feasibility study?
- To work out if your business has a good chance of success
- To plan ways of minimising risk
when should you do a feasibility study?
- Before starting a business
- Launching a new product or service
What value do businesses bring to Australia’s economy (contributions to nations well being) ?
- employment
- economic growth
- international trade
- tax revenue
- infrastructure
- research and development
positive contributions businesses make to the nations wellbeing?
Social:
- employment income improves standard of living
- employs diverse labour force
- transferable work skills
- consumer choice an competition
- research and development
Economic:
- economic growth (GPD)
- pays tax
- builds infrastructure
- expands industrial base and competition
negative contributions businesses make to the nations wellbeing?
- natural resource depletion
- worker exploitation
- environmental pollution
- loss of worker craft skills language and diverse cultures
- lack of competition and undercutting suppliers
- downsizing causing major job loss
- political influence
what is the economy?
An economy is the system that distributes resources in society.
how do business contribute to the economy?
- Manufacturing goods for sale and performing services
- Selling products in return for money
- Employing individuals
- Buying from other businesses as their suppliers.
- Paying taxes to the government
businesses economic contribution though employment?
Businesses employ people, which provides individuals with income to purchase goods and services. People employed by businesses also produce or deliver goods and services for others.
Employment directly improve the living standards of employed people, but also it reduces the burden on the state to provide unemployment benefits, while boosting taxation revenue received by the government through payroll tax.
businesses economic contribution though taxation revenue?
Taxes provide the government with additional revenue which allows the government to provide goods and services that benefit the whole community, such as health, education, infrastructure and welfare.
what is economic growth?
Economic growth occurs when a nation increases the real value of goods and services over a period of time.
what is GPD?
GDP is the monetary value of all the finished goods and services produced in Australia over a specific period
businesses economic contribution though GPD?
Gross domestic product (GDP) is the main way that economic growth is measured in Australia (measures value). Economic growth is important for any nation as it provides the chance to ensure improved living standards.
Businesses also provide a range of goods and services, thereby allowing a higher standard of living and a wide selection of choice and availability.
why is international trade important?
International trade is important to a nation as it allows businesses and individuals to gain access to goods they may not otherwise be able to purchase. Businesses can also use imported parts and materials in the production of goods in Australia.
what do import and exports allow for?
Many businesses import and export goods and services, which allows people to access a greater variety of goods and allows businesses to earn revenue by selling products to other countries.
what are exports?
Exports refer to the sale of our goods and services in other countries. Exporting products overseas contributes to Australia’s balance of payments (BOP).
what is BOP?
The BOP is a record of trade and financial transactions between residents of Australia and residents of the rest of the world, over a given period. A favourable BOP exists when there are more payments coming in than going out.
businesses economic contribution though exports?
Exporting products creates jobs, boosts incomes and improves our living standards.
businesses economic contribution though research and development?
Inventions and improvements in areas such as science, technology and medicine benefit society and contribute to improved wellbeing.
Finding new ways to do things results in improved efficiency and increased productivity. Additionally, the development and improvement of new and existing products and business processes drives economic growth, improving our quality of life and standard of living.
who is involved in research and development?
Both governments and the private sector are involved in research and development in Australia.
why do businesses undertake research and development?
Businesses undertake research and development (R&D) in order to expand their knowledge of products and processes.
what is social wellbeing?
Social wellbeing refers to how well a nation’s people live. This may be affected by access to basic needs and services such as water, food, shelter and health, as well as education, relationships with others in society, community engagement and material possessions.
how can wellbeing be measured?
Wellbeing can be quantified using economic measures such as GDP, income, the level of employment, and consumption of goods and services. Wellbeing can also be determined through non-economic measures, including our level of personal happiness and self-fulfilment, crime and death rates, environment quality and political freedom. Many of these can be difficult to measure precisely.
Business social contribution to career and social wellbeing?
People who have jobs have the opportunity to build up their self-esteem by doing something that they consider to be worthwhile. Working for a business allows people to feel as though they belong within the business, as well as a sense of contributing to the needs of society. This can contribute to a person’s level of personal happiness and self-fulfilment. In addition, the social connections that people make at work may also affect their health, personal habits and general wellbeing.
Business social contribution to innovation?
The innovations of businesses large and small, and of individual entrepreneurs, have also helped to solve some of the world’s urgent problems, with new solutions including fair trade, mobile money transfer, restorative justice and carbon reduction.
what is corporate social responsibility?
Corporate social responsibility involves the managers or owners of a business taking steps beyond what is required by law to ensure that the broader social welfare of the community — including employees, customers, suppliers and the environment — is taken into consideration when conducting business dealings.
Business social contribution to corporate social responsibility?
Customers and workers are treated fairly and that the environment is not damaged. Employees will want to work for businesses that are socially responsible. Working for a socially responsible business allows people to contribute directly to community wellbeing. People want to be proud of the business they work for and this feeling may add to their level of personal happiness and self-fulfilment.
what are the methods for fostering innovation and entrepreneurship?
- Government investment in research and development
- Council grants for new businesses
- School-based educational programs in entrepreneurship
- Regional business start-up hubs
- Business mentorships
what is government investment in R&D?
Governments offer grants and investments for businesses to conduct R&D.
what are council grants for new businesses?
Local councils will provide business grants and funding programs.
The objective is to encourage the establishment, growth and retention of innovative, creative and sustainable businesses.
what are business mentorships?
Involves experienced business person assisting a new business by offering knowledge, wisdom and advice to inexperienced business managers and entrepreneurs. This helps them set goals, expand their network and develop other entrepreneurial skills.
what are school-based educational programs in entrepreneurship?
Awareness of entrepreneurship can be improved through education and information programs. Schools teach courses in economics and business, including VCE Business Management, so that students will gain some knowledge of entrepreneurship.
what are regional business start-up hubs?
Business hubs provide subsidised premises, advice, services and support to new and emerging businesses to assist them to become established and profitable.
example of regional business start-up hubs?
Example - INNOVIC (the Victorian Innovation Centre) is a not-for-profit organisation that assists innovators and entrepreneurs.The organisation helps to turn new ideas into viable products and create new businesses of the future. It offers a wide range of practical services, free seminars and innovation resources to help potential business owners with their business ideas, as well as innovation through all the stages of the business’s development.
example of school-based educational programs in entrepreneurship?
$20 boss and is organised by the Foundation Young Australia Bank. Participating students are given $20 each as a seed funding to create their own business.
example of government investment in R&D?
AusIndustry of a federal government agency that provides support and assistance into R&D. Programmes that AusIndustry offers includes: The Entrepreneurs Programme and the R&D Incentive.
examples of council grants for new businesses?
Start-up Grant up to $30,000 are available.
