Topic 1.1 Enterprise and entrepreneurship Flashcards
(40 cards)
dynamic market
one that is constantly changing
Why new business ideas come about?
-changes in technology
-changes in what consumers want
-products and services becoming obsolete
-new and original ideas
-adapting existing products, services and ideas
E-commerce
-E-commerce is any business transaction that takes place using the internet.
-E-commerce has allowed businesses to sell to different countries and customers on a much wider scale.
Obsolete
Product or service which is no longer needed
Planned obsolescence
Many products are designed to only last a short time,and consumers are encouraged to buy newer and improved versions of these products.
Changing technology
As new technology develops, new business opportunities arise. New technology can often improve products and services, and make them more desirable in a number of ways.New technology can:
-Make products and services faster, cheaper, easier to use
-Make products smaller(more compact)
-Make products safer
Changing consumer needs
Society is constantly changing. These changes lead to consumers spending their money in different ways. New business opportunities can arise because of new consumer wants and needs caused by:
* changes in fashions
* changes in the economy
* changes in national demographics
* changes in lifestyle, such as the way consumers spend their leisure time
* changes in technology.
demographics
-different characteristics that make up a population or a business’ customer base
-age, gender,ethnicity and income levels
-used to help business decide on the target market for a product or service they want to offer
-demographic changes can impact upon consumer wants (aging population)
Social media
-Social media platforms have allowed businesses and customers to interact in more ways, allowing businesses to create more personal relationships with their customers.
-Social media offers a simple, cheap and effective way of creating
brand awareness. For example, clothes retailers can obtain feedback on the latest fashions or provide exclusive
promotions
-Businesses can also pay other businesses, celebrities or influencers to promote their brand or product by sharing photos of themselves wearing or using a product or service. This is often cheaper than traditional advertising and allows businesses to reach their target market more easily.
-widely used by businesses to attract new and retain existing customers
m-commerce
-any business transaction that takes place through a mobile device such as a mobile phone or tablet
-businesses try to increase the use by developing their own apps
-now also being used in regular shops, where payment can be made via a smartphone
Working out risk
Every successful entrepreneur should be willing to take a risk.Risk is worked out by considering the probability of a negative outcome occurring and the impact of the negative outcome.
Risks
Business failure - through poor cash flow, fall in sales revenue or the action
of competitors
Financial loss-an owner may lose the capital they invest in the business if it fails.This could include their personal belongings if the business has unlimited liability
Lack of security - not working for someone else means no guaranteed income, sick pay or holidays
Rewards
Business success - personal
satisfaction, excellent products/services, growth, and awards and recognition
Profit - where revenue exceeds costs over a period of time
Independence - many business owners will value the freedom of working for themselves over working for someone else
How can risk be reduced?
- Carry out detailed market research
-Produce a business plan
-Ensure that the business is competitive
-Raise sufficient start-up finance
What makes some businesses riskier than others?
-Seasonal demand, such as for ice cream.
-A small market.
-A highly competitive market with lots of competitors.
-An owner who knows little about the product or market.
Main reasons start-ups fail?
-Insufficient customer demand
-Good idea, poor execution
-External shocks e.g inflation
Goods
Tangible items that can be used and stored
Services
Intangible actions that cannot be stored
What is added value?
The difference between the selling price and the cost price of a good or service
Ways a business can add value
A business can add value to its products by lowering variable costs or adding something that will make customers willing to pay a higher price:
- More convenience-Saving customers time by making a product easier to use will result in customers being willing to pay more
- USP-A unique selling point is something that makes a good or service stand out from the competition and makes it more attractive to customers
- Better design-The features that a product has or the way that it is presented can add value
- Improved quality-Customers are usually prepared to pay more for higher-quality products
- Branding-Brand awareness can encourage customers to pay more for a product if they trust the brand name that produces it
6.Greater speed of service
What are the benefits of having a USP?
Gives the business a competitive advantage and adds value to a product
What are 3 key enterprise skills?
- Risk taking
- Showing initiative
- Willingness to undertake a new venture
4.organises resources
5.makes business decisions
What is an entrepreneur?
Someone who creates a business, taking on financial risks with the aim of making profit from the business
Approximately what percentage businesses fail within the first four years of trading?
40%
