1.1 Enterprise

Question 1

Why is adding value important?

Answer 1

• Charging a higher price
• Creating a point of difference from the competition
• Protecting from competitors trying to steal customers by charging lower prices
• Focusing a business more closely on its target market segment

Question 2

List some intangible values that a business can add?

Answer 2

• Building a brand – a reputation for quality, value etc that customers are prepared to pay for.
• Delivering excellent service – high quality, attentive personal service can make the difference between achieving a high price or a medium one
• Product features and benefits - Eg upgraded phone with new features -> charge at higher price
• Offering convenience – customers will often pay a little more for a product that they can have straightaway, or which saves them time.

Question 3

Define adding value

Answer 3

difference in the production process between the cost of raw materials and the price the finished goods are sold for – a key business objective – the degree of value added to inputs.

Question 4

Social enterprise

Answer 4

A business with mainly social objectives that reinvests most of its profits into benefiting society rather than maximizing returns to owners

Question 5

Opportunity cost

Answer 5

The benefits of the next best alternative that must be forgone in order to undertake an activity

Question 6

How can enterprise improve a country’s economy

Answer 6

• Employment creation: (both skilled, unskilled) -> Unemployment rate falls.
• Economic growth: Increase in output if goods or services -> Increase GDP and eventually increase tax revenue -> Increase living standards of denizens in the country
–> Help economy grow eg When an industry declines, another thriving industry will balance out
• Innovation and techno change
• Exports: increase value of nation’s exports and improve its international competitive
• Personal development: Achievement -> Self-actualization -> followers -> community -> boost econ further
• Increased social cohesion: Jobs and career opportunities, entrepreneurship can help achieve social cohesion

Question 7

Triple bottom line

Answer 7

Economic: Make profit –> Reinvest –> Provide some returns to owners
Social: Provide jobs often for disadvantage people
Environmental: Protect the environment, sustainable business

Question 8

Feature social enterprise

Answer 8

• Compete w/ other businesses in the same market or industry
• Don’t rely on donations
• Owners can keep some profits
• Ethical business -> spend surplus to benefit society bc they have social aims
• Directly produce goods or services

Question 9

Factors of production

Answer 9

Land: site for buildings, raw materials
Labour: skilled, unskilled
Capital: Finance to set up, continue operations, man-made resources in production (capital goods) : computers, machines, factories, offices, vehicles
Enterprise: Risk-taking individuals, combine the other factors of production into a unit capable of producing goods and services.

Question 10

Entrepreneur

Answer 10

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

Question 11

Successful entrepreneurs

Answer 11

• Innovation: original ideas and an ability to do things differently
• Commitment and self-motivation: work hard, keen ambition to succeed, energy and focus
• Multi-skilled: technical, accounting, communicating
• Leadership skills: Encourage people in the business
• Self-confidence and ability to bounce back
• Risk taking

Question 12

Problems by faced by entrepreneurs

Answer 12

1, Sourcing finance 
2, Identify successful business opportunities 
3, Determining a location 
4, Competition 
5, Building a customer base

Question 13

Businesses fail??

Answer 13

1, Lack of record keeping
2, Lack of working capital
3, Poor management skills
4, Changes in the business environment (new competitors, legal changes, economic changes such as econ crisis, technological change)

Question 14

Consumer goods

Answer 14

The physical and tangible goods sold to the general public - including durable consumer goods. cars and washing machines, and non-durable consumer goods , like food and drinks

Question 15

Consumer services

Answer 15

The non-tangible products sold to the general public : insurance services, train journeys, hotel accomodation

Question 16

Capital goods

Answer 16

The physical goods used by industry to aid in the production of other goods and services

Question 17

Social enterprise’s things in common with other businesses

Answer 17

– It is a business that seeks to make a surplus/profit
– It is concerned with being efficient and effective.
– It will likely face competition from other businesses in the same market or industry.
– It uses business principles and processes to achieve its objectives.
– It will have concerns for its workforce
– It will aim to deliver quality goods and services.
– It is of course committed to social/environmental responsibility as can be other
businesses.