1.1 Enterprise & Entrepreneurship Flashcards
All 28 cards in this deck
Give the three main reasons why new business ideas come about.
Changes in technology, changes in what consumers want, and products or services becoming obsolete.
Give one way a change in technology can create a new business idea.
e.g. faster mobile internet
It allows new products or ways of selling, e.g. faster mobile internet allows a business to sell through an app.
Give one way a change in what consumers want can create a new business idea.
e.g. more people choosing plant-based diets
Businesses start up to meet the new demand, e.g. a café selling only vegan food.
What does it mean if a product or service has become obsolete?
It is out of date and no longer wanted or used, usually because something better has replaced it.
What is the difference between an original business idea and an adapted one?
An original idea is completely new to the market; an adapted idea changes or improves a product, service or idea that already exists.
True or false? A new business idea must be completely original to succeed.
False. Most new businesses adapt an existing product, service or idea rather than inventing something new.
True or false? When a product becomes obsolete it creates an opportunity for new businesses.
True. The gap left in the market can be filled by a newer product, e.g. streaming services replacing DVD rental.
Give the three risks of starting a business named in the specification.
Business failure, financial loss and lack of security.
Give the three rewards of enterprise named in the specification.
Business success, profit and independence.
What is meant by 'lack of security' as a risk of starting a business?
The entrepreneur has no guaranteed regular income or job security, unlike an employee.
What is meant by 'independence' as a reward of enterprise?
Being your own boss and making your own business decisions.
What is meant by business failure?
The business stops trading because it cannot sell enough or cover its costs.
What is the general relationship between risk and reward in business?
The greater the risk taken, the greater the possible reward — but also the greater the possible loss.
True or false? An entrepreneur who invests their own money in a start-up risks financial loss.
True. Money spent on equipment or stock can be lost if the business does not make enough sales.
What is meant by added value?
The difference between the price the customer pays and the cost of the bought-in inputs.
Name the five ways of adding value listed in the specification.
Convenience, branding, quality, design and unique selling points.
How does convenience add value?
e.g. a shop that opens 24 hours
It saves the customer time or effort, so they will pay more, e.g. paying extra to buy milk late at night.
How does branding add value?
A recognisable, trusted brand lets the business charge a higher price than an unbranded rival.
How does quality add value?
Better materials or workmanship mean customers are willing to pay a higher price.
How does design add value?
Attractive or better-functioning design makes the product stand out, so customers pay more for it.
What is a unique selling point (USP)?
A feature that makes a product or service different from those of competitors.
Give one benefit to a small business of adding value.
It can charge a higher price, increasing profit margin and helping it stand out from competitors.
What are the steps to work out the value added to a product?
e.g. a sandwich shop buys ingredients for £1 and sells the sandwich for £3
- Find the selling price: £3
- Find the cost of the bought-in inputs: £1
- Subtract: £3 − £1 = £2 added value
Give the three roles of an entrepreneur.
Organising resources, making business decisions and taking risks.
What is meant by an entrepreneur 'organising resources'?
Bringing together money, people, equipment and materials so the business can produce its goods or services.
True or false? An employee who simply carries out the tasks their manager sets is acting entrepreneurially.
False. An entrepreneur makes the business decisions and takes the risks themselves.
What are the three purposes of business activity given in the specification?
To produce goods or provide services; to meet customer needs; to add value.
True or false? Only businesses that make physical products are carrying out business activity.
False. Business activity is producing goods or providing services, e.g. a hairdresser.