Business

• Enterprise is entrepreneurial activity
• An entrepreneur is someone who creates a business, taking on financial risks with the aim of making profit from the business
• A consumer is someone who uses products and services
• A customer is someone who buys products and service
• Obsolete: out of date / no longer used
• Need: a product or service which people need to make life comfortable
• Want: what people choose to spend their weekly money on once the weekly bills have been paid
• Goods: products that may be fresh, or manufactured. They are tangible
• A service provides useful ways to help people live their lives
• A venture capital is the risk capital provided by an investor willing to take a risk in return for a share in any later profits
• A demand is the number of units a customer wants - and can afford - to buy
• A competitive advantage is a feature of a business that helps it to succeed against its rivals
• New Business Ideas come about because of

  • changes in technology
  • changes in what consumers want
  • products and services becoming obsolete
  • change in trends
  • high demand for a product
• Risks of being an entrepreneur include:

  • Difficulty building a customer base
  • Running out of money
  • Unable to create customer loyalty
  • Coping with competition
  • Coping with a high sales volume
• Financial Reward: the money that an entrepreneur or investor makes when a business succeeds
• Independance: the need by many business owners to make their own decisions and be their own boss
• Intuition: knowing something instinctively
• Lack of financial security: uncertainty for the business owner about day-to-day family income and assets
• Risk: the possibility than an enterprise will have lower than anticipated profits or may experience a loss
• Start-up: a new business
• Adding Value: the difference between the selling price and the cost price of a product
• Business decisions: choices that have to be made, usually within a short time period
• Human resources: employees
• Market Share: the proportion of sales in the market that are taken up by one business
• USP (Unique Selling Point): a feature that makes a product stand out from its competitors
• The role of business enterprise and the purpose of business activity is to:

  • produce goods and services
  • to meet customer needs
  • to add value
• % profit = profit / investment * 100
• The 5 different ways of adding value are:

  • branding
  • quality
  • convenience
  • design
  • USP (unique selling point)
• Branding - logo
• USP - what makes a product stand out from its competitors
• Convenience - how you could make it easy for customers to buy your products
• Added price = price - costs of production
• Profit = total revenue - total costs
• The factors of production include;

  • land
  • capital
  • labour
  • entrepreneurs
• Choice: making life easier for customers
• Convenience - making life easier for your customers
• Indentifying customers - why customers do what they do
• Understanding customers includes their age, gender, income, where they live and what they want
• Market Research is the process of gathering, processing and interpreting information about consumers' behavior
• Gap in the market: an area in the market where few / no existing brands exist so there could be a business opportunity to meet a customer need