1.1 ENTERPRISE

• Enterprise


  The purpose of business activity
• Factors of production needed for business activity


  • Land
  • Labour
  • Capital
  • Enterprise
• Adding value


  The difference between the cost of purchasing raw materials and the price the finished goods are sold for
• Economic activity


  Tries to provide for as many of our wants as possible, but we are still left wanting more
• Opportunity cost


  The best alternative that we forgo, or give up, when we make a choice or a decision
• Dynamic business environment


  • Keeps on changing due to factors like change in government policies, change in taste and choice of the consumer, change in technology
• Reasons why businesses succeed or fail


  • Good imagination that attract people (Innovation) or value added goods
  • Tight financial control
  • Highly committed and motivated employees & directors
  • An efficient production system
  • Lack of market research
  • Lack of working capital
  • Lack of management skill
  • Lack creativity
  • Bad location
  • Legal changes
  • Technology changes
  • Too many competitors
  • Poor services
  • Low quality product
  • Lack of record keeping
• Local businesses


  Operate in a small part of the country, objectives do not include expansion and do not attempt to obtain customers across the whole country
• National businesses


  Have branches or operations across most of the country, objectives do not include establishing operations in other countries
• International/Multinational businesses


  Operate in more than just one country
• Entrepreneur


  Someone who takes the financial risk of starting and managing a new venture
• Intrapreneur


  A business employee who takes direct responsibility for turning an idea into a profitable new product or business venture
• Qualities an entrepreneur is likely to need for success

  • Innovation (creative)
  • Commitment and self-motivation
  • Multi-skilled
  • Leadership skills
  • Self-confidence and an ability to "bounce back"
  • Risk taking
• Entrepreneur


  Takes the risk, rewards go to the entrepreneur
• Intrapreneur


  Risks taken by the business, rewards go to the business
• Major challenges faced by entrepreneurs


  • Lack of a business opportunity
  • Obtaining sufficient (financing)
  • Cost of good locations
  • Competition
  • Lack of a customer base
• Role of business enterprise in the development of a business and a country


  • Employment creation
  • Economic growth
  • Business survival and growth
  • Innovation and technology change
  • Export
  • Personal development
  • Increased social cohesion
• Business plan


  A written document that describes a business, its objectives, its strategies, the market it is in and its financial forecasts
• Key elements of a business plan


  • Executive summary
  • Description of the business opportunity
  • Marketing and sales strategy
  • Management team and personnel
  • Operations
  • Financial forecasts
• factors that affect business in dynamic business environment

  • political & legal issues - gov’ implement new laws and business needs to follow the rules
  • economic issues - economic change and will influence the income of consumer thus demand will change too
  • social issues - increase in a size of a population that affect demand and the type of product people buy
  • technology issues - changes in technology and the speed of internet which will make it easier to find supplier