1.1: enterprise and entrepreneurship

• what must a business do in order to survive?

  it must be dynamic and able to respond to changes in demand
• what can help identify a gap in the market?

  personal experiences and customer feedback
• gap in the market

  occurs when no business is currently serving the needs of customers for a particular product and can be used as an opportunity for a business to enter new markets
• how do new business ideas come about?

  - original ideas

  - adapting existing products/services/ideas
• why would a business adapt existing products?

  an existing product can be changed or altered to appeal to new/different customers, keep up with customer demands or fit seasonal changes
• why do new business ideas come about?

  - changes in technology

  - changes in what consumers want

  - products and services becoming obsolete
• how do changes in technology help new business ideas emerge?

  by opening up new markets and opportunities, allowing businesses to reach a global audience more easily
• business risk


  a situation involving exposure or danger that could potentially result in loss or failure
• calculated business risk


  where the chance of exposure to business loss is undertaken having carefully assessed the advantages and disadvantages of taking that risk
• business risks


  - business failure

  - financial loss

  - lack of security

  - harsh competition
• how can harsh competition affect a business?

  one business may try to force other businesses to close down by setting its prices extremely low or putting on offers that other businesses can't compete with
• how can a lack of security affect a business?

  it can increase the chances of theft and vandalism - this can delay business growth and without action, lead to an increase of incidents
• reasons for business failure

  - cash flow problems

  - poor market research

  - lack of finance

  - lack of competitive advantage

  - failure to adapt to changes in the market

  - insufficient customer demand

  - external reasons (e.g. economic, technological or climate changes)
• financial business rewards


  - profit

  - retirement benefits

  - stock options

  - entrepreneurial perks
• non-financial business rewards


  - independence

  - personal satisfaction

  - status

  - job security
• pros of having a job over starting a business

  - steady salary

  - higher financial security

  - guaranteed pension after retiring
• what is the role of a business?

  to produce and distribute goods or provide services to satisfy customers' wants and needs
• why do businesses exist?

  to make money and profit
• who are businesses formed by?

  entrepreneurs
• what are products?


  physical, tangible items (e.g. clothing)
• what are services?


  non-physical, intangible products (e.g. a haircut)
• who are customers?


  people who buy goods and services
• who are consumers?

  people who use goods and services
• what is a customer want?

  a luxury
• what is a customer need?

  an essential
• what are customer demands?

  the needs and expectations of customers for a product or service
• what does adding value mean?

  making a product or service more of value to a customer than it is in its raw form
• what does added value mean?

  the difference between the cost of the inputs involved with producing a

  reduction and the price it is sold for
• methods of adding value

  - branding

  - design

  - quality

  - convenience

  - USP
• how does branding add value?

  if a business is well known, people are more likely to pay more for their goods
• how does design add value?

  a well designed product, packaging or advertising tempts people to purchase
• how does quality add value?

  high quality suggest reliability and durability, allowing the business to charge more
• how does convenience add value?

  customers will often pay more for a product that they can have straightaway, or which saves them time
• how does a USP add value?

  strong USP clearly articulates a specific benefit,one that other competitors don't offer, that makes a business stand out
• what is an entrepreneur?

  a person who has a business ideas and develops it - they organise, manage, and takes on the risks of a business.
• roles of an entrepreneur

  - organises resources (factors of production)

  - enterprise (ideas, innovation and resilience)

  - capital (money and resources such as equipment)

  - labour (people/resources needed to run the business)

  - land (physical and extractable natural resources)