1.1 Enterprise and entrepreneurship .
1.1.1 The dynamic nature of business .
Why new business ideas come about:
- changes in technology
- E-commerce
- E-commerce is any business transaction that takes place using the internet
- businesses selling to consumers
- businesses selling to other businesses
- consumers selling to other consumers directly (eg auction sites)
- allowed businesses to sell to different countries and customers on a much wider scale
- M-commerce
- Any business transaction that takes place through a mobile device.
- Businesses try to increase popularity by developing their own mobile apps
- Includes transactions via websites
- used in regular shops where payment can be made via a smartphone.
- Social media
- Businesses and customers can interact
- Able to create more personal relationships with customers
- Simple, cheap and effective
- Creates brand awareness
- can also pay businesses, celebrities or influencers to promote their brand or product by
sharing photos of themselves wearing or using a product or service
- cheaper than traditional advertising
- Allows business to reach target market
- used to attract new and retain existing customers.
- changes in what consumers want
- Demographics Changes
- Demographics are the different characteristics that make up a population, or a
business’ customer base.
- age
- gender
- disability
- nationality
- religion
- ethnicity
- income levels
- Help them decide on the target market
- Changes demographic can impact upon consumer wants
, - Consumer wants changing over time
- Changes in lifestyles and technology change what consumers want
- Entrepreneurs respond and provide for this through their products and services
- customers’ tastes regularly change, as do trends in society
- This requires new products or adaptation
- Businesses have to constantly monitor the market, technology and their
competitors to ensure they are keeping up with constantly changing consumer
demands.
- products and services becoming obsolete.
- Obsolete means ‘out of date’
- As products become obsolete, new products replace them.
- Most products have a limited lifespan and, at some point, will no longer be available to buy.
- This lifespan is known as the product life cycle.
- Introduction
- Growth
- Maturity
- Decline
- One of the main reasons why products become outdated is technological advancement
How new business ideas come about:
- original ideas
- adapting existing products/services/ideas.
1.1.2 Risk and reward .
The impact of risk and reward on business activity:
- Risk:
- business failure
- lack of cash flow.
- don’t have enough money coming in to cover costs
- poor revenue caused by:
- a lack of market research to find out what customers want
- running out of raw materials
- poor management, with not enough thought given to the consequences of
decisions on how to manage the business
- financial loss
- personal money or money borrowed from a bank or an investor
- If the business is not profitable then the entrepreneur, and any lenders, risk losing the
money
- lack of security
- Often have to give up existing jobs in order to run business
- Can’t depend on regular income
, - Reward:
- Business success
- Can mean different things:
- a growing business
- a positive reputation
- winning business awards
- becoming a well-known business person
- Ideas becoming popular
- Profit
- profits can be put back into the business
- help it survive and grow
- incentive for an entrepreneur to start a business,
- they can earn more money than they would if they worked for someone else
- Independence
- make their own decisions
- control their own working hours
1.1.3 The role of business enterprise .
The role of business enterprise and the purpose of business activity:
- to produce goods or services
- meets the needs of its customers
- Goods
- Goods are tangible items that can be used and stored
- Services
- Services are intangible actions that cannot be stored
- Decisions made to reduce risk:
- Land
- Naturally occurring resources (eg. land/water)
- Labour
- Human effort, skills or knowledge
- Capital
- Equipment and money
- Enterprise
- Willingness to take risks
- to meet customer needs/ wants
- Needs are required for survival:
- Clothing
- Water
- Food
- Shelter
- Warmth
- Wants: desired but can live without
- to add value: convenience, branding, quality, design
- Difference between production price and selling price
The role of entrepreneurship:
- organises resources
- makes business decisions
- takes risks
, 1.2 Spotting a business opportunity .
1.2.1 Customer needs .
Identifying and understanding customer needs:
- Customer needs:
- Price
- Important for price to match quality
- Quality
- The standard of what is being offered
- Choice
- Range to suit different customers
- Convenience
- Easier, quicker and less hassle for customers
- ie. online ordering
- the importance of identifying and understanding customers:
- generating sales
- Generating sales is easier when a business knows customers wants
- Enables business to provide a product/service that directly meets customers’
requirements.
- business survival
- Main aim of new, small business
- Usually relates to the business continuing to operate for at least 12 months
- Generating sales (through understanding customers) = business has greater chance of
survival
- Important to keep up with the changing requirements of customers
- Businesses must adapt their products and services to suit changing
requirements
1.1.1 The dynamic nature of business .
Why new business ideas come about:
- changes in technology
- E-commerce
- E-commerce is any business transaction that takes place using the internet
- businesses selling to consumers
- businesses selling to other businesses
- consumers selling to other consumers directly (eg auction sites)
- allowed businesses to sell to different countries and customers on a much wider scale
- M-commerce
- Any business transaction that takes place through a mobile device.
- Businesses try to increase popularity by developing their own mobile apps
- Includes transactions via websites
- used in regular shops where payment can be made via a smartphone.
- Social media
- Businesses and customers can interact
- Able to create more personal relationships with customers
- Simple, cheap and effective
- Creates brand awareness
- can also pay businesses, celebrities or influencers to promote their brand or product by
sharing photos of themselves wearing or using a product or service
- cheaper than traditional advertising
- Allows business to reach target market
- used to attract new and retain existing customers.
- changes in what consumers want
- Demographics Changes
- Demographics are the different characteristics that make up a population, or a
business’ customer base.
- age
- gender
- disability
- nationality
- religion
- ethnicity
- income levels
- Help them decide on the target market
- Changes demographic can impact upon consumer wants
, - Consumer wants changing over time
- Changes in lifestyles and technology change what consumers want
- Entrepreneurs respond and provide for this through their products and services
- customers’ tastes regularly change, as do trends in society
- This requires new products or adaptation
- Businesses have to constantly monitor the market, technology and their
competitors to ensure they are keeping up with constantly changing consumer
demands.
- products and services becoming obsolete.
- Obsolete means ‘out of date’
- As products become obsolete, new products replace them.
- Most products have a limited lifespan and, at some point, will no longer be available to buy.
- This lifespan is known as the product life cycle.
- Introduction
- Growth
- Maturity
- Decline
- One of the main reasons why products become outdated is technological advancement
How new business ideas come about:
- original ideas
- adapting existing products/services/ideas.
1.1.2 Risk and reward .
The impact of risk and reward on business activity:
- Risk:
- business failure
- lack of cash flow.
- don’t have enough money coming in to cover costs
- poor revenue caused by:
- a lack of market research to find out what customers want
- running out of raw materials
- poor management, with not enough thought given to the consequences of
decisions on how to manage the business
- financial loss
- personal money or money borrowed from a bank or an investor
- If the business is not profitable then the entrepreneur, and any lenders, risk losing the
money
- lack of security
- Often have to give up existing jobs in order to run business
- Can’t depend on regular income
, - Reward:
- Business success
- Can mean different things:
- a growing business
- a positive reputation
- winning business awards
- becoming a well-known business person
- Ideas becoming popular
- Profit
- profits can be put back into the business
- help it survive and grow
- incentive for an entrepreneur to start a business,
- they can earn more money than they would if they worked for someone else
- Independence
- make their own decisions
- control their own working hours
1.1.3 The role of business enterprise .
The role of business enterprise and the purpose of business activity:
- to produce goods or services
- meets the needs of its customers
- Goods
- Goods are tangible items that can be used and stored
- Services
- Services are intangible actions that cannot be stored
- Decisions made to reduce risk:
- Land
- Naturally occurring resources (eg. land/water)
- Labour
- Human effort, skills or knowledge
- Capital
- Equipment and money
- Enterprise
- Willingness to take risks
- to meet customer needs/ wants
- Needs are required for survival:
- Clothing
- Water
- Food
- Shelter
- Warmth
- Wants: desired but can live without
- to add value: convenience, branding, quality, design
- Difference between production price and selling price
The role of entrepreneurship:
- organises resources
- makes business decisions
- takes risks
, 1.2 Spotting a business opportunity .
1.2.1 Customer needs .
Identifying and understanding customer needs:
- Customer needs:
- Price
- Important for price to match quality
- Quality
- The standard of what is being offered
- Choice
- Range to suit different customers
- Convenience
- Easier, quicker and less hassle for customers
- ie. online ordering
- the importance of identifying and understanding customers:
- generating sales
- Generating sales is easier when a business knows customers wants
- Enables business to provide a product/service that directly meets customers’
requirements.
- business survival
- Main aim of new, small business
- Usually relates to the business continuing to operate for at least 12 months
- Generating sales (through understanding customers) = business has greater chance of
survival
- Important to keep up with the changing requirements of customers
- Businesses must adapt their products and services to suit changing
requirements
