1.2 -Enterprise, Business and the Economy

Question 1

define creative destruction

Answer 1

The constant innovation of a product or service which results in old versions being replaced

Question 2

who created creative destruction

Answer 2

Joseph Schumpeter

Question 3

what is the main incentive for entrepreneurs

Answer 3

taking risk in order to earn profit

Question 4

define innovation

Answer 4

developing an idea that will generate new or improved products or techniques

Question 5

define entrepreneur

Answer 5

someone who sets up a business, taking a financial risk

Question 6

What are the 4 factors of production ( CELL)

Answer 6

capital
enterprise
land
labour

Question 7

what steps are needed to create a business

Answer 7

generating the odea
asking if the idea can add value
conducting market research
drawing up a business plan
deciding n legal structure
raising finance

Question 8

when is a business plan used

Answer 8

Externally - Used by banks and investors to decide funding
Internal - entrepreneurs use it as a road map for the firm

Question 9

what may be included on a business plan

Answer 9

Financial forecast
marketing strategies
summary of plans
skills held by employers and entrepreneurs

Question 10

whta may a entrepreneur deal with when it comes to daily decisions

Answer 10

Managing inventories and finances
making marketing decisions ( price and promotion )
dealing with customers
maintaining financial records

Question 11

how may an entrepreneurs focus change as they grow

Answer 11

Employment of staff
use the services of an expert e.g accountant
delegate responsibility
move to larger premises
change supplier
expand product portfolio

Question 12

what is the added value model

Answer 12

inputs —- transformation process —- output

Question 13

define added value

Answer 13

creating something of a higher value than the cost of the raw materials