1.1

• New business ideas


  Often come about due to changes in technology, changes in consumer demand, and the obsolescence of products and services
• New business ideas emerge


  As entrepreneurs recognise opportunities created by changes in the market
• Successful businesses


  Can identify opportunities and develop innovative solutions that meet the changing needs of customers
• Changes in technology


  • Advances in technology can create new opportunities for businesses to develop innovative products and services
  • E.g. The emergence of smartphones and social media platforms created new opportunities for businesses to reach customers through mobile apps and digital marketing
• Changes in consumer demand


  • Consumer demand often changes over time, creating opportunities for businesses to develop new products and services that meet these changing needs
  • E.g. The growing demand for plant-based food products has led to the emergence of new businesses in the food industry
• Products and services becoming obsolete


  • Products and services can become outdated due to changes in technology or changes in consumer demand
  • This can create opportunities for businesses to develop new products and services that meet the needs of consumers in new and innovative ways
  • E.g. The decline of physical media like CDs and DVDs created opportunities for businesses to develop digital streaming services like Netflix and Spotify
• New business ideas


  Can come about through original ideas or by adapting existing products, services, or ideas
• The key to business success

  Is identifying a need or opportunity in the market and developing an innovative solution that meets the needs of customers in a unique and valuable way
• Original ideas


  • Are new and unique concepts that are not based on existing products/services, or ideas
  • They often arise when entrepreneurs identify a gap in the market or a new need that has not yet been met
  • Original ideas can be based on a new technology, a new market, or a unique perspective on an existing problem
  • E.g. The business Nutrigene offered a subscription service for personalised vitamin supplements based on an individual's DNA, which was an original idea that was not based on an existing product or service
• Adapting existing products, services, or ideas


  • Involves taking an existing concept and making it better or more suitable for a different market or customer base
  • This approach often involves identifying a problem with an existing product or service and developing a solution that addresses the problem
  • E.g. The ride-sharing app Uber adapted the existing concept of taxi services by offering a more convenient, efficient, and cost-effective solution that was accessible through a mobile app
• The impact of risk and reward on business activity


  • Is significant
  • They are two sides of the same coin in business
  • Businesses must manage the risks associated with failure, financial loss, and lack of security while striving to achieve the rewards of success, profit, and independence
• Risks of Business Activity

  • Business failure
  • Financial loss
  • Lack of security
• Business failure


  • Affects businesses of all sizes and is a risk to both new and established businesses
  • It occurs when a business is unable to meet its financial obligations or when it cannot generate enough revenue to sustain its operations
  • The impact of business failure can be devastating, resulting in job losses, bankruptcy, and financial ruin for the owners and investors
• Financial loss


  • Occurs due to factors such as poor financial management, economic downturns, or unexpected events such as natural disasters
  • The impact of financial loss can be severe, resulting in reduced profitability, reduced competitiveness, and reduced ability to invest in growth
• Lack of security


  • Is a risk that businesses face in terms of data security, intellectual property theft, or physical security
  • A security breach can result in reputational damage, legal liability, and the loss of customer trust
• Rewards of Business Activity


  • Business success
  • Profit
  • Independence
• Business success


  • Is the ultimate reward that business owners strive for
  • It occurs when a business meets or exceeds its objectives, such as generating revenue, achieving profitability, or expanding its operations
• Profit


  • Is a measure of the success of a business
  • Profit enables businesses to reinvest in growth opportunities, pay dividends to shareholders, and provide financial stability to the business
• Independence


  • Is a crucial reward for the success of a business
  • It allows businesses to make their own decisions rather than being subject to the demands of external stakeholders such as investors or creditors
• The purpose of business activity

  Is to take inputs, add value to them, and create products which meet customer needs
• To produce goods or services

  • Goods are physical products, such as bicycles and T-shirts
  • Services are non-physical items such as hairdressing, tourism and manicures
• Meeting customer needs


  • Is the ultimate goal of business activity
  • By meeting customer needs, businesses can build customer loyalty, increase brand awareness, and generate revenue
• To add value


  • Is the third purpose of business activity
  • Value-added features can differentiate products from competitors, create a unique selling point, and increase customer satisfaction
• Methods of Adding Value to Products/Services

  • Branding
  • Convenience
  • Quality
  • Unique Selling Points (USPs)
  • Design
• Branding


  • Apple has built a brand that many customers believe is superior to other brands
  • They have achieved this through the use of quality materials, innovative design and good marketing
  • This branding allows the firm to charge a higher price for its products thus increasing the added value
• Convenience


  • Persil initially provided a bottle of dishwashing liquid for dishwashing machine use
  • This resulted in spillage as customers added the liquid to their machines, so Persil then created tablets
  • The tablets offered a much more convenient option and Persil was able to charge a higher selling price for them
• Quality


  • Jo Malone perfume products are well known for their beautiful packaging which creates an exciting opening experience for the customer
  • This allows the firm to charge a higher price for its products thus increasing the added value
• Unique Selling Points (USPs)

  • MoonPig birthday cards can be completely customised (size, colour, design etc.) and the level of customisation has helped them to gain a competitive advantage
  • This customisation allows the firm to charge a higher price for its cards thus increasing the added value
• Design


  • Samsung Galaxy Watch 5 has robust health tracking tools built into it, along with an amazing screen, which has helped it to gain a competitive advantage
  • These features allow the firm to charge a higher price for its products thus increasing the added value
• Businesses may use several methods of adding value. It's important to understand that adding value adds raises costs, but it is worth it if the increase in selling price outweighs the costs associated with the method e.g. if improving the packaging costs £1 per unit and the firm is able to raise its selling price by £1,40 per unit, then the firm can improve its profitability by changing the packaging.
• Entrepreneur


  • Is a person who is willing and able to create a new business idea or invention and takes risks in pursuing success
  • Successful entrepreneurs can identify and pursue opportunities, create value for customers and build thriving businesses
• Characteristics of Entrepreneurs


  • They organise resources
  • They make business decisions
  • They take risks
• Organising resources


  • An entrepreneur must be able to gather and coordinate the resources necessary to start and operate a business
  • E.g. When Michael Dell started his computer company from his garage, he had to organise resources such as space, computers, software tools, and employees, and manage the finances
• Making business decisions

  • Entrepreneurs must be able to make decisions that will determine the success or failure of their business
  • E.g. A restaurant owner may need to decide what type of food to serve, where to locate the restaurant, and what prices to charge. These decisions require a combination of market research, creativity, and business skill
  • Making the wrong decisions can lead to wasted resources, lost opportunities, and ultimately business failure
• Taking risks


  • Entrepreneurship involves taking risks - financial, personal, or professional
  • E.g. An entrepreneur may invest their life savings into a new venture or quit a secure job to start their own business
  • They may also take risks by introducing new products or entering new markets
  • These risks can pay off with great rewards, but they can also lead to failure and financial loss
• As a business grows


  • An entrepreneur may make the decision to employ staff to help with its day to day operations
  • The entrepreneur may take on the role of mentor, supporting new staff members to carry out their tasks in a particular way