Topic 1.1 Enterprise and entrepreneurship

What does “the dynamic nature of business” mean?

Business is constantly changing due to new ideas, technology, consumer needs, and competition.

What is an original business idea?

An original business idea is a new product or service that hasn’t been sold before. It helps a business stand out and attract customers.
Example: A café selling edible cookie dough.

What is a competitive advantage?

A competitive advantage is something that makes a business better than its rivals, such as lower price, better quality, or a unique feature.
Example: A smartphone with the longest battery life compared to competitors.

Explain what is meant by ‘adapting existing products’ and what are the benefits?

Adapting existing products means changing or improving a product that already exists.

Example: Sequels and remakes of movies.

Benefits: Less research and development is needed, the product already has an established audience, and there is a higher chance of profit because customers are familiar with the brand or story, (80% of new products fail).

Why do new business ideas come about? (3 reasons)

• Changes in technology-Smartphones led to new apps, delivery services, and mobile banking.

• Changes in what consumers want- Consumers wanting eco-friendly products → businesses offering reusable bottles.

• Products/services becoming obsolete-
  DVDs became obsolete due to online streaming.

  
  

What does it mean when a product or service becomes obsolete?

When a product or service becomes obsolete, it is no longer wanted or needed by customers.

What can businesses do to ensure that changing customer tastes do not make all their good/services obsolete?

Businesses can stop selling obsolete products, adapt existing products, carry out market research, and innovate to meet customer needs.

What is the difference between cost and revenue?

Cost is the money a business spends to make or sell products, including fixed and variable costs. Revenue is the money a business earns from selling its products or services.

What are the 2 main impacts of changes in technology?

• creates opportunities for new things

• increase likelihood products become obsolete

Explain what is meant by business failure? 

Business failure happens when there is not enough demand for a product, so revenue is too low to cover costs. This can lead to debts and the business may have to close, causing owners to lose money and employees to lose jobs.

How many businesses fail within their five years of trading?

50% of UK’s startups

What advantages are there of having a job instead of starting a business? 

• financial security

• steady income/salary 

• guaranteed pension 

What are the 3 main types of businesses in the UK and express these in million:

• Sole traders: 3.3 million

• Limited companies: 1.6 million

• Partnerships: 0.45 million

What are the 3 risks of owning a business?

• Financial risk – losing your own money or investment if the business fails.

• Business failure – the business may close due to low sales, high costs, or strong competition.

• Lack of security – giving up a regular wage and benefits, meaning income is uncertain.

What are the 3 rewards of owning a business?

• Business success – achieving goals, growing the business, and gaining market recognition.

• Profit – earning financial gain after covering costs.

• Independence – being your own boss and making your own decisions.

What is the difference between a good and a service?

A good is a tangible product that you can see, touch, and store, such as a chocolate bar. A service is intangible and cannot be physically touched; it is an action or activity provided for someone, such as a taxi ride.

What percentage of the UK consists of services?

79.6% 

Explain the difference between customer needs and customer wants?

• customer needs- the products and services customers need to make life comfortable( electricity)

• customer wants- what customers choose to spend money on after weekly bills are paid ( luxury items)

How might the number of businesses/ competition providing a good/service impact the price and quality?

More competition usually lowers prices and improves quality to attract customers.

In order to make sure customers get the products/ services they want, what 3 things may businesses do?

• Hire staff based on attitude and personality – to provide better customer service.

• Invest in research and development (R&D) – to improve products and meet customer needs.

• Start a business based on what founders love – so the business is motivated to offer high-quality products/services.

Explain what is meant by value added and why is it important( in terms of meeting costs)?

• Value added is the extra worth a business gives to a product or service. It is the difference between the selling price and the cost of inputs, creates the possibility of profit.

• It is important because it increases the selling price above costs, helping the business cover expenses, make profit, and stay financially sustainable.

Identify and explain the 5 methods of adding value?

• Convenience – making products easier to buy or use, e.g., online shopping or delivery.

• Branding – creating a recognisable and trusted brand to attract loyal customers.

• Quality – improving the product or service so it stands out from competitors.

• Design – making products attractive, functional, or unique.

• Unique Selling Point (USP) – offering something different that competitors do not.

Explain why some business ideas have a large market, but are not worthwhile to pursue? 

Even with many customers, if the business cannot add enough value to cover costs and make profit, the idea is not financially viable.

What are business decisions?

choices that have to be made, usually within a short time period. 

What are resources?

things or people( human resources)  that can be used to help build and run the business

Explain what is meant by somebody who is a risk taker?

A risk taker is a decision maker who acts when there are unknown factors or a high chance of failure.

Explain the main purpose of business activity and enterprise?

to produce goods and servicers which meet customer needs

Why do most businesses seek to meet customer needs? 

They are incentivised by profit, therefore is they can meet customer needs, then businesses are likely to generate more revenue and therefore more profit

What must decisions made by the entrepreneur ensure?

Decisions must ensure that production costs are less than revenue to avoid business failure.

What are the 3 main roles of an entrepreneur?

• Takes risks – invests time, money, and resources into a business, knowing there is a chance of failure. This includes drawing the right conclusions from market research or experiences to reduce risk.

• Makes business decisions – plans and controls the business, deciding on strategy, pricing, and production. This involves showing leadership and guiding the business towards its goals.

• Organises resources – manages people, money, and equipment effectively to run the business efficiently and meet customer needs.

Outline 6 requirements for a business producing a good?

• Design packaging, brand name, and logos – to attract customers.

• Select the product range – wide enough to appeal but manageable.

• Persuade shops to stock products – get retailers to sell your product.

• Ensure accurate, on-time deliveries – meet customer expectations.

• Run advertising and promotions – boost sales and retailer confidence.

• Manage invoicing – ensure customers pay the correct amount on time.

What are the advantages and disadvantages of turning your hobby into a business?

Advantages:

• You are motivated and enjoy the work.

• You have knowledge and skills in the area.

• Lower start-up costs if you already have equipment or materials.

Disadvantages:

• You may lack business skills like marketing or finance.

• There may be high risk of failure if demand is low.

• Turning a hobby into work can make it less enjoyable.

What are the 7 main causes of start up failure?

1. Starting for the wrong reason – lacking passion, only motivated by money or free time.

2. Poor management – weak handling of resources, security, or fraud.

3. Insufficient capital – not enough money to cover start-up and running costs.

4. Poor location – especially for service businesses, failing to be near customers.

5. Lack of planning – not enough research, thought, or preparation.

6. Overexpansion – growing too quickly and mismanaging resources.

7. No or poor-quality website – limits customer access, communication, and professionalism.