unit 1 - enterprise and entrepreneurship

Why do new ideas come about? 

• Make society better 

• Changes in what consumers want 

• Changes in technology 

• External factors 

• Products/services becoming obsolete 

• Gap in the market 

How do new ideas come about? 

• Original ideas 

• Adapting existing products and services 

Ways to Add Value: 

• Branding – celebrity endorsement, good reputation 

• USP – limited production, customisable 

• Quality 

• Good design 

• Convenience 

Added value – difference between the cost of the inputs involved in producing a product and the price it is sold for 

Obsolete -  

Risk – solution involving exposure to danger 

Calculated risk – change in exposure can lead to injury to competitors having carefully assessed the advantages and disadvantages of taking that risk 

Entrepreneur – organises resources, makes business decisions, takes risks 

Reward: 

• Profit 

• Business success 

• Independence  

Risk: 

• Business failure 

• Financial loss 

• Lack of security 

Asset – something you own  

Liability – something you owe, e.g., mortgage, taxes, bills, loan 

Meeting Customer Needs – satisfying/exceeding customer expectations to encourage a purchase over a competing business 

External Influences of a Business: 

• Inflation 

• Economy e.g., cost of living  

• Natural disasters 

• Rivals  

• Changes in society 

Why would a business fail? 

• External factors 

• Oversaturated market 

• Products becoming obsolete 

• Lack of innovation 

• Doesn't meet customer needs 

• Change in shopping habits 

• Lack of assets 

• Change in laws 

• Limited access to finance 

Entrepreneur – someone who has a business, develops it, makes decisions, organises resources, and takes risks 

Factors of production: 

• Land 

• Labour 

• Capital  

• Enterprise