Studied by 4 people
Three purposes of business enterprise and entrepreneurship
Spotting an opportunity
Spotting a gap in the market
Improving a product or service already provided
Producing a product or service at a cheaper price
Developing an idea
Designing a product or service
Planning production
Satisfying customer needs
Producing the product or service
Marketing the product or service
Define entrepreneur
a person who takes the risk of starting and running a business enterprise
Characteristics of an entrepreneur
creativity
risk-taking
confidence
determination
Risks and rewards of entrepreneurship
Risks | Rewards | |
|---|---|---|
Financial | If the business does not succeed, there is a risk of losing savings and paying off debts | The potential to make a lot of money |
Non-financial | Health- strain of running a business can cause mental and physical illness | Independence Self-satisfaction Making a difference |
What are the steps involved in developing a business idea?
Idea:
Identifying what the business will produce and sell, and what resources it will need
Identifying the aims and objectives and how these will be met
The people:
Identifying who will be involved
Identifying the Human Resources requirements the business will need to operate, including the number of people and the skills and experience they should have
Market research:
Identify the market the business will target
Identifying marketing activities-price, product, place, promotion-to make the business successful
Identifying the marketing resources needed
Finance:
Identifying how much finance is needed and for what
Identifying how the money will be raised
A good business plan is necessary to present to investors if a business hopes to obtain external finance
Competitors:
Identify competitiors
Identify how the product or service will be different to those competitors
What does a business plan do?
Identify the market
Identify the resources
Identify the finance needed to start or grow a business
Achieve business aims and objectives
What is a partnership?
A business owned by between 2-20 people
What is a sole trader?
A business owned by one person
What is a deed of partnership?
A document stating who owns the partnership, how much money each partner has invested and their role in the business
What is a private limited company (Ltd)?
Usually a smaller business, it can sell shares to invited people only
What is a public limited company(plc)?
It sells shares on the stock market, to anyone who wants to buy shares
What is limited liability?
The owner of a business can only lose the money they invested in it if the business fails
What is limited liability?
The owner is responsible for paying all the debts of the business
Business objectives
Survival
profit
growth
providing a service
What is an external stakeholder?
The local community, suppliers, customers and government
What are internal stakeholders?
The business owners and people who work in the business
What is a stakeholder?
Groups or individuals who have an interest in a business
Types of organic growth
Increasing output
Gaining new customers
Developing new products
Increasing market share
What is organic growth?
Concerned with the internal growth of a business
Types of external growth
Horizontal growth
Backward vertical growth
Diversification
Forward vertical growth
What is backward vertical takeover?
When a business mergers with or takes over a business that supplies it with goods or services
What is diversification?
When a business mergers with or takes over another company with no connection in a different industry
What is external growth?
The growth of a business with mergers or takeovers
Forward vertical growth?
When a business mergers with or takes over a business it supplies goods or services to
What is horizontal growth?
A merger or takeover where two businesses are involved in the same industry or operations
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