1.1 enterpreneurship and enterprise

• Ways a business could create a new product

  • Mix and match
  • New version of an old product
  • Cheaper version of an old product
• Social enterprise


  When an entrepreneur spots an opportunity to trade and make a difference to society with their product
• Ways entrepreneurs can come up with original ideas

  • Solve a problem
  • A gap in the market
  • Entrepreneur has a passion/interest
  • A business may have carried out some research into the wants and needs of shoppers and be creating products to meet those needs
• Some services are no longer required

  Because of changes in technology or new inventions
• A product could be made obsolete


  By replacing it with something better
• Obsolete


  A product is no longer used/out of date
• A business doesn't keep up with current trends


  Because consumer tastes change over time
• How businesses can use social media

  To find out what consumers want and need so that they can produce products and services to satisfy them
• One impact of new technology innovation is phones/gaming products on the market
• 1. commerce


  Buying and sell of/from online businesses
• Product


  Anything that is capable of satisfying customer needs
• Ways in which business ideas can be generated

  • Original ideas
  • Adapting existing products/services/ideas
• Why do new business ideas come about


  • Changes in consumer want
  • Changes in technology
  • Products and services becoming obsolete
• Planned obsolescence


  Products designed to last a short time and customers are encouraged to buy new and improved versions of these products
• A business fails to plan for the future


  It may risk losing out to competitors
• 20% of small businesses fail in their first year
• Risks of a business

  • Business failure
  • Financial loss
  • Lack of security
• How can risk be reduced

  • Carry out detailed market research
  • Produce a business plan
  • Ensure that the business plan is competitive
  • Raise sufficient start up finance
• Ways to compete


  • Wider product range
  • Higher quality
  • More convenient location
  • Lower pricing
  • Better design
• How does product differentiation help businesses

  • To position their products and target different market segments
  • Competitive advantage
• Product differentiation allows consumers to see clearly that their needs are being met more effectively by one product than by another
• Methods likely to differentiate a driving school from its rivals

  • Providing high-quality tuition
  • Providing a personalised service
• Competitive market


  A market where there are a large number of businesses relative to the number of potential consumers
• Competition is also high in markets where businesses sell very similar products and services that are difficult to differentiate
• Example of competition in a market where it is difficult to differentiate

  • Sugar is a highly competitive market
  • There is very little difference between one producer's sugar and another
• Drawbacks of highly competitive markets

  • Accepting lower profit margins
  • Lower prices in order to compete
  • Monitor competitors closely
  • Be careful about how and when it expands
• Decisions a business may have to make in a highly competitive market


  • Giving customers offers on special prices
  • Differentiating its products and services
  • Improving efficiency
• Consumers benefit from competition


  It encourages businesses to lower their prices and improve quality and customer service
• Reasons why a business might decide to lower the price of its products

  • In order to remain competitive against other businesses
  • If a business lowers its prices, it may seem more appealing to customers compared to other alternatives
  • As a result, customers may choose it over rivals and its sales revenue will increase
• Strengths of price as a competitive strategy

  • Competitors who offer lower prices than their rivals can gain a competitive advantage by attracting price-sensitive customers who are looking for the best deal
  • They can also gain economies of scale by producing and selling their products at a lower cost, which can lead to higher profits
• Weaknesses of price as a competitive strategy


  • Competitors who rely solely on lower prices may struggle to maintain their profitability if customers do not perceive the quality of their products to be adequate
  • They may also struggle to differentiate themselves from other low-priced competitors in the market
• Strengths of customer service as a competitive strategy

  • Competitors who provide excellent customer service can differentiate themselves from rivals and establish a loyal customer base
  • They can also generate positive word-of-mouth recommendations
• Weaknesses of customer service as a competitive strategy

  Competitors who rely solely on customer service may struggle to compete with lower-priced rivals if customers do not recognise the additional costs of offering good customer service
• How does competition impact business decision making

  • Pricing decisions
  • Product development decisions
  • Marketing decisions
  • Operational decisions
• Pricing decisions in a competitive market

  Businesses must consider their competitors' prices when setting their own prices, as they need to remain competitive while also ensuring they are profitable
• Product development decisions in a competitive market

  Competitors' products and services can influence a business's product development decisions. It may increase the speed of development of new features - or entirely new products
• Marketing decisions in a competitive market

  Businesses must develop effective marketing strategies that will differentiate them from their competitors. Making decisions about advertising, promotions, and other marketing activities has to include an analysis of their competitors actions
• Operational decisions in a competitive market


  Competitors can also impact a business's operational decisions e.g. deciding on the best method of production (job, batch or flow production)