GCSE Edexcel Pearson business summary

1.1 Enterprise and Entrepreneurship
Enterprise
Business enterprise is having the new idea for the business. All business activity have a purpose;
 Provide people with a good or a service
o Good = physical item that you can keep e.g. pair of shoes
o Service = a non-physical thing the customer pays for e.g. haircut
 Meet customer needs
o Providing the good or service the customer wants to buy
 Add value to the product
o Finding ways to improve the product so customers are more willing to
pay more for it. Ways to add value;
 Convince
 USP
 Quality
 Brand image



Business ideas
How do business ideas come about?
 Changes in technology
 Customer wants/ needs - a gap in the market
 New use for old product
 A product becomes obsolete (no longer used) because its outdated so they have to
come up with new ideas

Business ideas will either be completely original or an adaption for an existing product or idea but
they have come up with a better, more relevant idea for the customers at the time

Entrepreneurship
A entrepreneur is someone who takes on the risks of enterprise activity, they take the idea and turn
it into a business.

Roles of an entrepreneur;
 Organise resources - good organisation skills to keep on top of day to day tasks and
plan ahead for the future
 Takes risks - there are lots of unknowns when running a business and they have to be
prepared for this. They can write a business plan to see if it will work out. They must
take calculated risk
 Make business decisions - lots of decisions need to be made when running a business
e.g. the business aims, structure, employees and how to grow etc…

Risks and rewards of running a business;
Risks Rewards
 Money is  Seeing the
needed to business idea
start a become a
business success

, and if they  Lots of profit
make a meaning the
financial entrepreneur
loss they gets more
won't be money and it
able to could give
pay back them a better
the quality of life
money  Entrepreneur
borrowed might get
 If the self-
business satisfaction/
fails it will independence
be a they wanted
waste of
time and
effort
 If the
business
fails it
might lead
to a bad
reputation



1.2 Spotting a business opportunity
Markets
A market can be…
1. A place where goods are traded between customers and suppliers
2. Trade in a particular type of product
3. The potential customers for a product

Competitors are the different business that sell the same products in the same market

Understanding markets
Its key a business understands the market they are in an how well they are performing in it. They
might want to know…
 Market size - the number of individuals within market which are the potential buys or
sellers of products. It can also mean the total value of products in the market
 Market share - proportion of total sales the business makes within the market
 Businesses carry out market research in order to find out about the market and their
place in it

Competition
Customer needs
 Price - customers will often want to pay less for a given product. If they firm lowered
their prices they are likely to receive more customers but they might not make any
more profit

,  Customer service - offering better customer service will attract more customers and
will be willing to pay more. Bad customer service may lead to a bad reputation
 Quality - better quality means the customer will be more satisfied. This could mean it's
more costly for the business
 Product range - larger range makes the business more attractive to more customers
 Location - customers are more likely to buy from the business if it sells in a convenient
place

It's important to identify and understand customers because…
 Generating sales
 Business survival


Market research
Purpose of market research:
 Identify gaps in the market - helps the business develop a new way to meet customer
needs before competitors do
 Identify and understand customer needs - allows them to see their needs and how to
satisfy them. By understanding customer needs, businesses will be able to make better
products to suit the needs so they can make more sales therefore ensuring the
business survives
 Reduce risk - helps to make informed decisions by identifying things the customer
wants instead of selling random things at too high price or wrong location which could
cause them so make a financial loss
 Inform business decisions - provides useful information to help the business decide on
things such as; what to sell and where to sell and promote them etc

Types of market research
Primary research
This is doing the research on your own and involves getting information from customers or potential
customers e.g. questionnaires, surveys and focus groups
Advantages of primary research Disadvantages of primary research
 You can make it not bias - you're in  More expensive
control  Time consuming
 Keep results to yourself  Resources required
 You can get answer to deep
qualitative data (why/ how)

Secondary research
Secondary research is relying on other people's data e.g. market research reports, government
reports, newspapers and on the internet
Advantages of secondary research Disadvantages of secondary research
 Cheaper than  Not always relevant to your
primary needs
 Easily found  Not specific to you product
 Instantly available  Often out of date
 Can be biased


Quantitative data
Any information collected in numerical values