Enterprise and Entrepreneurship

Theme 1: Topic 1.1 - Enterprise and Entrepreneurship

1. Definition of Business Enterprise

• Business enterprise is defined as the process of identifying new business opportunities and taking advantage of them. This may include:

  • Starting a new business.

  • Helping existing businesses expand by generating new ideas.

2. Purpose of Business Activity

• All business activities serve at least one specific purpose:

  1. Provide goods: A tangible item like a book.

  2. Provide services: Actions performed for others, such as hairdressing or plumbing.

  3. Meet customer needs: Providing goods and services that change according to customer demands.

  4. Add value to existing products: Making products more attractive to customers so they are willing to pay higher prices compared to competitors.

2.1 Ways to Add Value

• Several methods for a business to add value to its product include:

  • Convenience: Making a product easier for customers to obtain.

  • Brand image: Establishing a good brand that assures customers of trustworthiness and desirability.

  • Design and quality enhancement: Improving the physical attributes to make the product appealing.

  • Unique Selling Point (USP): Creating distinctive features that set the product apart from competitors.

3. Emergence of New Business Ideas

• New business ideas arise due to various reasons, which may include:

  1. Changes in technology: For instance, the introduction of tablets led to a proliferation of apps.

  2. Societal concerns: Increased environmental awareness has prompted businesses to offer eco-friendly products.

  3. Obsolescence: As older products or services fade away, businesses must innovate to remain relevant, exemplified by DVD rental companies transitioning to subscription streaming services.

  4. Original vs. Adapted Ideas: New business ideas can be original or improved adaptations of existing products.

  • Example: James Dyson's bagless vacuum cleaner.

Theme 1: Topic 1.2 - Spotting a Business Opportunity

1. Understanding Competition

• Competition among businesses is fierce, and rival businesses exert efforts to outperform one another.

• A market can be defined in three distinct ways:

  1. A physical location where goods are exchanged.

  2. A market can refer to a specific product trade (e.g., the oil market).

  3. The potential customer demographic for a product (e.g., customers ages 18-25).

• Competitors are defined as businesses that sell similar products and vie for the same customers.

2. Effects of Competition on Business Strategy

• Most businesses contend with competition and must make strategic decisions in key areas:

  1. Pricing: Competitive pricing can be crucial; if prices among competitors are similar, this may drive firms to reduce prices, potentially lowering profit margins.

  2. Customer Service: Enhanced customer service can draw customers, leading to a willingness to pay more.

  3. Quality: Offering superior product quality might not only attract customers but also justify higher prices.

  4. Product Range: A broad variety in product offerings can be advantageous; businesses may introduce a diverse selection to attract more customers.

  5. Location: Proximity to customers can increase sales; businesses often seek convenient locations or leverage online platforms to enhance accessibility.

3. Importance of Market Research

• Conducting market research is vital for businesses as it helps them identify customer wants, needs, and preferences.

  1. Market Size: The total number of potential buyers or sellers in a market is known as the market size.

  2. Market Share: This is the percentage of total sales in the market controlled by a particular business.

4. Targeting Customers Through Research

• Businesses need to understand their customer base to inform product offerings and adjust marketing strategies. Utilization of market segmentation is essential to achieve this.

5. Types of Market Research

• Primary Research involves collecting first-hand data by directly inquiries or observations, useful for gathering specific and contemporary information.

  • Advantages include real-time data relevant to business needs.

  • Disadvantages may include high costs and time consumption. Examples:

  • Surveys and questionnaires.

  • Observational studies.

• Secondary Research includes the use of existing data, usually cheaper and broader in scope but less specific.

  • Involves accessing reports, newspaper articles, and market analyses.

6. Categorization of Market Data

• Quantitative Data: Measurable data, such as sales figures; for example, "How many units of product X will you purchase weekly?".

• Qualitative Data: Descriptive data based on feelings or opinions; e.g., responses to "What do you think of product X?".

7. Market Segmentation and Mapping

• Market Segmentation divides potential customers into identifiable groups based on demographics, location, or lifestyle, helping define target markets.

• Market Mapping visually represents a market, illustrating various segments and highlighting competitors, gaps, and customer perceptions.

8. Connecting Market Research with Business Strategy

• Successful businesses use market research insights to tailor product offerings, enhancing their marketing strategies and increasing sales, thereby ensuring long-term business viability...c