The Role of Business Enterprise Flashcards
All 18 cards in this deck
What are the three purposes of business activity?
To produce goods or services, to meet customer needs, and to add value.
What is a good?
A tangible item that can be touched, used, stored and owned.
e.g. cars, televisions.What is a service?
An intangible action that cannot be stored and gives customers access for a period of time.
e.g. a fitness class, a train journey, accountancy.True or false? Hairdressing is an example of a good.
False. Hairdressing is a service, because it is intangible and cannot be stored.
What is added value?
The difference between the selling price of a product and the cost of the inputs used to make it.
Name the five ways a business can add value.
Convenience, branding, quality, design and unique selling points.
How does improving quality add value?
Customers are willing to pay a premium price, creating a bigger difference between the price and the cost of raw materials.
How does a unique selling point (USP) add value?
It differentiates the product from rivals, so customers pay extra because they feel it is better than the competition.
How does convenience add value?
Locating in a convenient place or making the product easy to buy means customers will pay more for it.
How does branding add value?
A well-known, trusted brand makes the product more appealing, so customers will pay a higher price for it.
How does design add value?
Attractive or better-functioning design makes the product more appealing, so customers will pay a higher price.
What are the three roles of an entrepreneur?
Organising resources, making business decisions and taking risks.
True or false? Being a sole trader is a role of an entrepreneur.
False. It is a type of business ownership; the roles are organising resources, making decisions and taking risks.
What is the difference between a customer and a consumer?
A customer buys the product; a consumer is the person who uses it. They may be different people.
Give the two ways a business can increase the value it adds to a product.
Reduce the cost of its inputs, such as raw materials, or make the product worth a higher price to customers, e.g. through branding, quality, design, convenience or a USP.
Why is adding value important to a business?
The value added on each sale helps cover fixed costs, so the more value added, the sooner the business makes a profit and the better its chances of surviving and growing.
What is a unique selling point (USP)?
A feature or benefit that makes a product or service different from those of its competitors, giving customers a reason to buy it.
What is an entrepreneur?
A person who starts and runs their own business, taking risks in the hope of making a profit.