The Role of Business Enterprise Flashcards
All 14 cards in this deck
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.