Flashcards in 1.1 - Enterprise and entrepreneurship Deck (74):
Why do new business ideas come about?
New business ideas usually arise because of changes in society and consumer trends. These changes include:
Advances in technology
Changes in what consumers want
Products and services becoming obsolete
Changes in technology
What do they mean for businesses?
Technology is constantly developing and can have a huge impact on what consumers want and need
Technology means that businesses have to be flexible and must innovate in order to respond to continuous change
How can technology provide business opportunities?
Technology can provide business opportunities through:
Making expensive technology affordable
E-commerce and m-commerce
Making expensive technology affordable
How can they be used in a company's products and services?
Changes in technology can trigger new technologies to be made. In turn, previous technologies become cheaper to use and produce
As a result, they can be used more affordably in a company’s products and services
E.g. 3D printing
What are e-commerce, and what does it allow for businesses?
E-commerce means that a small business can operate with customers all across the world.
It allows businesses to create to take online payments without having to create their own payment platforms
It also means that entrepreneurs don’t have to rent physical premises before they can begin trading.
What is m-commerce, and what has it helped to do?
M-commerce means that people use mobile devices to buy and sell products
It has helped to develop and generate new business ideas
Social media and its impact on businesses
How can it promote businesses easily?
It has transformed relationships with businesses
It is a relatively inexpensive way to promote businesses and encourage customers to recommend their business to others
What are the ways in which products and services become obsolete? (2)
Technology is a way in which products can become obsolete. It means that older technologies are replaced, and this can create new business ideas
A product can also become obsolete due to changes in fashion and taste
How do new business ideas come about?
New business ideas may come about through
Adapting an existing product
Adapting existing products/services/ideas
What is the risk involved in this?
Adaptation is the process of modifying an existing product/service so it is suitable for different customers or markets
This can be less risky than launching a brand new product
How can a product be adapted? (4)
A product can be adapted through:
Modifying a product to different customers and cultures
Adapting the promotion strategy
Changing a product’s brand name
Responding to new fashions
How do businesses decide whether to adapt?
Businesses have to balance customer and market needs with the cost of development and the likely return they will get for investment in the adaptation process
Original ideas - problems for entrepreneurs
It can be very challenging for an entrepreneur to come up with a completely new business idea. They may be successful
Risks on business activity for an entrepreneur
Being an entrepreneur involves risks. When an entrepreneur launches a new business, they risk losing the money they have invested in the start-up of that business.
Rewards on business activity for a business
If a business succeeds, they will receive a financial reward for that risk
How can risks be minimised?
Risks can be minimised by being informed by plenty of evidence, such as market research and revenue forecasts
Business failure - What can happen if there are problems with cash flow?
Businesses can have a problem with its cash flow, which means a successful business can have serious financial problems if customers are slow in paying their bills
Business failure - What can happen in sales revenue?
This can happen if a business has failed to do something, such as running out of raw materials, or other reasons:
Behaviour of suppliers
Financial loss - what can happen to an entrepreneur?
An entrepreneur can lose the money they’ve invested in their start-up, but this may also damage their reputation and could have an impact on being able to raise finance for other start-ups
Financial loss - competitive risk
the risk that a business’s competitor might do better than the business
Financial loss - technical risk
The risk that a product or service might not work as intended
Financial loss - financial risk
The risk that a business doesn’t have the right amount of investment
Lack of security - what can it cause?
An entrepreneur doesn’t have the security of working for someone else when they launch a business
This can cause financial insecurity if the entrepreneur uses their own money to launch the business
Lack of security can also have an impact on the entrepreneurs health
Business success - what are entrepreneurs motivated by?
Many entrepreneurs are motivated by the satisfaction of building a business from nothing or thinking of something no-one has thought before
Some like giving people jobs, and others like giving customer satisfaction
Many entrepreneurs value receiving industry awards
Profit - is setting up a business the route to success?
Entrepreneurs set up a business with the intention of making a profit, but it is rarely a route to financial success
Many entrepreneurs have many set-backs, and have to work hard in order to succeed
Many entrepreneurs are motivated by having the opportunity of working for themselves rather than for someone else. They often like to make their own decisions and hence like this option.
What is business enterprise?
Business enterprise is the entrepreneurial activity undertaken by entrepreneurs and businesses, either by setting up or expanding a business
What are the opinions for the role of business enterprise?
Some people think the main aim of business is to make as much money as possible. Some people believe businesses should behave in certain ways towards their stakeholders, and every enterprise must be conducted ethically
What purposes do business activities have?
Business activities have 3 main purposes: to produce goods and services, to meet customer needs and to add value
Producing goods and services
Making goods and services that satisfy the customers' wants and needs. The profit made by these goods are reinvested by the business, which leads to further wealth.
Meeting customer needs
In order to meet customer needs, a business needs to develop a relationship with them. A positive relationship allows a business to learn from customers through feedback, and the business can use the feedback to improve products and services
How is added value useful for a business?
Adding value is the increase in a products value as a result of a business producing that product. e.g. the difference between the final price of a car and the cost to make it
A business that successfully adds value can operate profitably
How can value be added to a product? (4)
Branding, Convenience, Quality and design, USPs
Branding is the businesses way of presenting itself, including its logo, aims and values
What can branding create?
Branding can create a lot of customer loyalty, which is important to businesses as it allows them to gain more of the market share
Convenience includes excellent customer service, having products that are easy to pay for and products that are available
What does customer service do for a business?
Customer service that is good encourages customers to be brand loyal, rather than going to a competitor
What can easy to pay for items do for a business?
Items that are easy to pay for mean that customers will continue to stay with your business because it is simple to make purchases
What does being available mean for a business?
Being available can make people want to go to a particular shop because of the times they are open, and can attract the custom of people in the local area
A business needs to be able to demonstrate its quality of its products and services in order to show customers they can depend on its brand
This may be the design of the product, marketing or website. These designs can communicate the business's values and encourage customers to buy from that business
A USP is something that differentiates a product or service from its competitors.
What are potential USPs?
Being first to the market
What does an entrepreneur have to do?
An entrepreneur has to have an idea for a new business, but also organise resources, make business decisions and take risks
A key resource of a new business is finance. The entrepreneur has to raise enough money for the business in terms of all costs, as well as future costs. They also need to be able to lead and motivate people
Making business decisions
To make good business decisions, an entrepreneur has to focus on their long-term vision of the business, but each short-term stage of its growth as well.
Entrepreneurs will need to take financial risks, as well as key business decisions. However, an entrepreneur can minimise the risks by having a good knowledge of the market and market research
entrepreneurial activity (can also mean business or company)
someone who creates a business, taking on financial risks with the aim of making a profit for the business
someone who buys and uses goods and services
out of data or not used anymore
using the internet to carry out business transactions
using mobile technologies, such as smartphones and tablets, to carry out business transactions
websites that allow users to interact with other users, by sharing text-based messages, pictures or links to online content
enable businesses to take online payments from customers. They are usually free for the customer to use, but require a small amount of commission from the seller
the activities involved in buying and selling particular types of goods or services, in competition with other companies
information, particularly statistics that can be collected and analysed
relating to the population, such as average age, income, and so on
the possibility that an enterprise will have lower than anticipated costs or experience a loss
the money that an entrepreneur or investor receives when a business succeeds
the process of gathering information about the market and customers' needs and wants in order to help inform business decisions, including product design and marketing
a prediction of future revenue based on expected sales; this is either a judgement or based on previous sales patterns
the amount of money coming in and going out of the business and the timing if this movement
the amount of money that comes in from a business's sales
putting money into a business with the intention of making a profit
a new business, usually with a small number of employees
knowing something instinctively or understanding something easily without conscious thought
anyone who has an interest in the activities of a business, such as its workers, its suppliers, its directors, the local community and the government
moral principles or standards that guide the behaviour of a person or business
Unique Selling Point (USP)
something that makes a product stand out from its competitors
standards of behaviour or moral principles
wanting to always support something or someone
the proportion of sales in a market that are taken by one business