Topic 1.1

• Why new businesses come about

  • Changes in technology
  • Changes in consumer wants over time
  • Products and services becoming obsolete
• Changes in technology

  1. Businesses must adapt to be successful

  2. New products must be up-to-date

  3. Ignoring changes leads to business failure
• Changes in consumer wants

  1. Businesses adapt products or set up new enterprises

  2. To capitalise on changes and be successful
• Products and services becoming obsolete

  1. Consumers no longer want the product/service

  2. Technology or convenience elsewhere makes it obsolete

  3. Businesses must adapt to succeed
• Entrepreneur

  An individual who takes on the risk of starting and running a business
• How new business ideas come about

  1. Entrepreneurs spot gaps in the market

  2. Develop a good/service to fill that gap

  3. Gain a competitive advantage
• Entrepreneur

  Can develop original, unique ideas due to being innovative
• Pursuing, researching and developing a business

  Time consuming and expensive
• Successful business

  Competitive advantage will be gained
• Accepting existing products, services or ideas


  Making improvements and adapting them to the modern world
• Accepting existing products, services or ideascan be...

  A cheap and quick process, less risk involved, can keep sales and consumer interest high
• Risk and reward

  Setting up a new business can be very risky, this can be reduced by planning, using reasonable market research and monitoring costs so better rewards are gained instead
• Types of risks faced when setting up a new business

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

  The business no longer trades or exists, time, money and effort will be wasted, can impact personal relationships
• Financial loss

  The entrepreneur is liable for the debts of the business if it fails, may have to sell personal possessions to pay for the debt
• Lack of security

  The feeling of security can be lost when starting a business as the predicted sales/costs can vary, the entrepreneur may have concerns over this and may not reach the standard of living desired
• Impacts of reward on the business

  • Business success shown through sales, standard of living and survival of the 1st year, personal objectives may have also been met
  • Independence - the entrepreneur is in full control and makes all decisions, this independence may make them feel satisfied
  • Profitability - the amount of money a business makes from selling its products is called revenue, profit will be made if the revenue is higher than the cost of running the business
• Enterprise

  Can mean business or describe the actions of a business
• Entrepreneur

  Someone who takes the risk of setting up, investing in and running a business
• Purpose of a business

  • To provide services and goods
  • Services are non-physical and intangible
  • Goods are physical and tangible
  • Business must offer in-demand goods and services to be successful
• Customer needs

  • Businesses should identify customer needs and aim to meet them better than rivals in order to be successful
  • Customer wants and needs differ, so the business must adapt to those new changes
• Adding value

  • To make a profit, the business will have to sell products at a higher price than the cost of making the product (added value)
  • The value of a product can be increased
• Ways to add value

  • Convenience: Making a product that can save time and make lives easier
  • Branding: A unique design that can create an image of a business, a strong brand image can help differentiate the business from rivals
  • Quality: Meeting the customers' expectations, the more the product meets the expectations the more value will be added and higher price will be charged
  • Design: How easy the product is to use and its physical appearance
  • Unique selling point: An additional feature that will help to differentiate the product from rivals and give the business a competitive advantage
• Role of Entrepreneurship

  • Entrepreneurs should be innovative, determined and organised in order to be successful
  • Organise resources to ensure they have the right amount of resources to produce goods/services including recruiting, choosing a suitable premises, buying and renting equipment to operate successfully
  • Make business decisions based on information and a financial plan
  • Take risks and choose good decisions even if they are risky, as some risks can be resolved and lead to reward