Chapter 1- Enterprise and business functions

Question 1

What are the definitions of Enterprise?

Answer 1

• another term for ‘a business’
• the actions of a risk taker who starts up his/ her own business.

Question 2

What’s the difference between a self-employed person and a entrepreneur?

Answer 2

• An Entrepreneur is a risk-taker who sets up a business
• A self-employed person would have had a job working for someone else and may have got made redundant and couldn’t find another job so they set up their own business. They may not like risk-taking.

Question 3

Characteristics of a self-employed person?

Answer 3

• Hard-working
• Competent
• Reliable
• Diligent

Question 4

Characteristics of an Entrepreneur?

Answer 4

• Creativity and imagination: Necessary with coming up with ideas and solutions to problems.
• Ability to work under pressure: Early years of a business is difficult.
• Self-belief and confidence
• Persistance and ‘drive’
• Energy and enthusiasm
• Leadership skills- essential to achieve a committed, productive workforce .
• Ability to be comfortable with risk

Question 5

What are the benefits of successful entrepreneurs to the business’s stakeholders?

Answer 5

• more people are likely to be employed
• Employees will have more secure jobs
• Chance of better pay and conditions
• Suppliers will receive larger and more regular orders
• Successful business may start to export goods to other countries so help improve the UK’s trade balance
• Government will receive more tax revenue from sources such as income tax, Corporation tax, VAT, if business’s are thriving.

Question 6

Definition of Factors of Production?

Answer 6

The inputs that are used in the production of goods or services.

Question 7

What are the stages of Factors of production?

Answer 7

• Land
• Labour
• Capital
• Enterprise

Question 8

Land

Answer 8

This is natural resources. e.g. fields, what lies below them, what can be grown on them.

Question 9

Labour

Answer 9

This is all the human resources available (except the entrepreneur).

Question 10

Capital

Answer 10

This refers to buildings, machinery and tools.

Question 11

Enterprise

Answer 11

The entrepreneur who organises the other 3 factors.

Question 12

What will happen if there is a shortage in one of the factors of production?

Answer 12

Price will rise which is a cost to the business and may reduce profit margins.

Question 13

How might the firm react to a rise in factor costs?

Answer 13

• Raising prices but depends on how many competitors there are and the firms brand loyalty.
• Lower some other costs but may impose worse terms and conditions on it’s supplier
• Cut back on non-essential areas of expenditure.

Question 14

Adding value definition?

Answer 14

It means that a business can sell the product at a price that is higher than the cost of producing it.

Question 15

What is a constraint?

Answer 15

It’s a restraining factor on a business and limits how a business operates.

Question 16

Examples of constraints on a business?

Answer 16

• Environment
• Legislation
• Economy
• Competition

Question 17

What are the functions within a business?

Answer 17

– Accounting and finance
- Operations Management and production
-Marketing and support services
- Human resource management

Question 18

Accounting and Finance function:

Answer 18

• Monitors and controls the business’s financial resources
• Resposibility for ensuring costs are ket under control nd that there are sufficient funds available for the day-day running costs of the business.

Question 19

Operations management and production function:

Answer 19

• Designing and controlling the process of production to make it as efficient as possible
• Maintenance of capital equipment, stock control.

Question 20

Marketing and support services function:

Answer 20

• Role of marketing to ascertain needs of consumers by conducting market research and the attempt to satisfy the consumers in order to make a profit.

Question 21

Human resource management function:

Answer 21

• Responsible for the well-being of employees.
• e.g. including recruitment and training

Question 22

Benefits of adding value?

Answer 22

• Charging a higher price which creates a point of difference to competition.

Question 23

Methods of adding value?

Answer 23

• Delivery (high quality) to achieve a higher price
• Offering convenience so customers pay a little more.