Chapter 1 – Enterprise
Learning Outcomes
Understand what business activity involves
Analyse the meaning and importance of creating value
Understand the problem of choice
Identify the role of the entrepreneur and recognise the key characteristics of successful
entrepreneurs
Assess the importance of enterprise and entrepreneurs to a country’s economy
Understand the meaning of social enterprise and the difference between this and other
businesses
Introduction
Business activity does not take place in isolation from what is going on around it
The success of a business activity is greatly impacted by the structure and health of the
economy
Purpose of business activity
Businesses uses resources to meet the need of customers by providing product (goods &
services)
Business activity involves creating and adding value to resources (i.e. raw material & semi-
finished goods)
o making them more desirable to and thus value by the final purchaser (customers)
Business activity uses the scarce resources (limited resources) of our planet to produce
goods and services…
o allow us all to enjoy a such higher standard of living than would be possible if we
remained entirely self sufficient
So, what do businesses do?
o Businesses identify needs (consumers / other firms)
o Purchase resources (factors of production)
, o Produce goods & services – satisfy needs
o Market profit (make profit)
What do businesses need to produce goods and services?
Factors of production - Resources needed by business to produce goods or services
o Land
General term – not only land itself but all of the renewable and non-
renewable resources of nature i.e. coal, crude oil, timber
o Labour
Manual & skilled labour make up the workforce of the business
o Capital
Not just the finance needed at to set up a business & pay for its continuing
operation
Also all of the man-made resources used in production i.e. capital goods –
computers, machines, factories, offices & vehicles
o Enterprise
The driving force – provided by risk-taking individuals, combine other factors
of production into a unit capable of producing goods and services
Provides a managing, decision-making and coordinating role
The concept of creating or adding value (added value)
Business aim to create value- selling goods and services for a higher price than the cost of
bought in materials
A business adds value to the raw materials it uses to produce the goods and services it sells
If a customer is prepared to pay a price that is much greater than the cost of materials used
in making or providing a good / service…
Added value = selling price – cost
Value created profit
o Business can create value to its product to increase profit
Learning Outcomes
Understand what business activity involves
Analyse the meaning and importance of creating value
Understand the problem of choice
Identify the role of the entrepreneur and recognise the key characteristics of successful
entrepreneurs
Assess the importance of enterprise and entrepreneurs to a country’s economy
Understand the meaning of social enterprise and the difference between this and other
businesses
Introduction
Business activity does not take place in isolation from what is going on around it
The success of a business activity is greatly impacted by the structure and health of the
economy
Purpose of business activity
Businesses uses resources to meet the need of customers by providing product (goods &
services)
Business activity involves creating and adding value to resources (i.e. raw material & semi-
finished goods)
o making them more desirable to and thus value by the final purchaser (customers)
Business activity uses the scarce resources (limited resources) of our planet to produce
goods and services…
o allow us all to enjoy a such higher standard of living than would be possible if we
remained entirely self sufficient
So, what do businesses do?
o Businesses identify needs (consumers / other firms)
o Purchase resources (factors of production)
, o Produce goods & services – satisfy needs
o Market profit (make profit)
What do businesses need to produce goods and services?
Factors of production - Resources needed by business to produce goods or services
o Land
General term – not only land itself but all of the renewable and non-
renewable resources of nature i.e. coal, crude oil, timber
o Labour
Manual & skilled labour make up the workforce of the business
o Capital
Not just the finance needed at to set up a business & pay for its continuing
operation
Also all of the man-made resources used in production i.e. capital goods –
computers, machines, factories, offices & vehicles
o Enterprise
The driving force – provided by risk-taking individuals, combine other factors
of production into a unit capable of producing goods and services
Provides a managing, decision-making and coordinating role
The concept of creating or adding value (added value)
Business aim to create value- selling goods and services for a higher price than the cost of
bought in materials
A business adds value to the raw materials it uses to produce the goods and services it sells
If a customer is prepared to pay a price that is much greater than the cost of materials used
in making or providing a good / service…
Added value = selling price – cost
Value created profit
o Business can create value to its product to increase profit
