Scholars Den

A tradition of excellence
AS BUSINESS STUDIES
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Chapter: 1

Enterprise

Definition:
Consumer: A person who purchases goods and services for personal use.
Consumer Goods: Consumer goods are physical and tangible goods bought for
consumption.

Consumer Service: Consumer service is an intangible product sold to consumers that

are not intended for resale.

Factors of Production: The resources needed by business to produce goods or services.

Capital Goods: Capital goods are physical assets a company uses to produce goods and
services for consumers. Capital goods include fixed assets, such as buildings, machinery,
equipment, vehicles, and tools.

Enterprise: An enterprise is an activity or a project that produces services or products.

There are two types of enterprise. Business enterprises are run to make a profit. Social
enterprises provide services to individuals and groups in the community

Adding value*: Increasing the difference between the cost of bought in materials and the
selling price of the finished goods.

Added Value*: The difference between the cost of bought in materials and the selling price of
the finished goods
Opportunity Cost*: Opportunity costs represent the potential benefits that an
individual, investor, or business misses out on when choosing one alternative over another

Multinational Business: that has business offices and operations in two or more
countries in the world

Business plan*: a business document that defines in detail a company's objectives and
how it plans to achieve its goals.

Intrapreneur*: a manager within a company who promotes innovative product development

and marketing.
Entrepreneur: a person who sets up a business or businesses, taking on financial risks in
the hope of profit.

How a business can increase added value:

Companies can increase added value in two ways. Firstly, they can create incentives for customers to be
willing to pay higher prices. Secondly, they can lower the production or purchasing cost

How does a business succeed :

# Good understanding of customers need

# Efficient management of operation

# Being flexible to new situation while decision making

# sufficient sources of finance

# Knowing How to Attract Funding

#By building strong business relationships

Why does a business fail

# Financial Hurdles lack of cash)

#Inadequate and poor Management skills

#Ineffective Business Planning

# Marketing Mishaps

# Unsuccessful marketing initiative

# poor record keeping

Qualities of successful entrepreneurs and intrapreneurs:

Innovation, commitment and self- motivation, multi- skilled, leadership skills, self -confidence and
having ability to bounce back, Risk taking, realistic vision, optimistic, responsible etc

Barriers for entrepreneur and intrapreneur:

Lack of business opportunities , insufficient capital, cost of good location, competition, lack of a
customer base.

Role of an entrepreneur in a country’s economic development :

1. Raising the Standard of Living

2. Creation of New Jobs

3. Helps to Eliminate Poverty in Local Areas

4. Provides Economic Independence

5. Increases Per Capita Income (PCI) and Gross National Product (GNP)

6. Increasing national reserve by exports

7. Increased social cohesion (Social cohesion involves building shared values and communities of
interpretation, reducing disparities in wealth and income, and generally enabling people to have a sense
that they are engaged in a common enterprise, facing shared challenges, and that they are members of
the same community.)

Differences between Entrepreneur and Intrapreneur :

1.An entrepreneur is defined as a person who establishes a new business with an innovative idea or
concept. An employee of the organisation who is authorised to undertake innovations in product,
service, process, system, etc. is known as Intrapreneur.

2.An entrepreneur is intuitive in nature, whereas an intrapreneur is restorative in nature.

3.An entrepreneur uses his own resources, i.e. man, machine, money, etc. while in the case of an
intrapreneur the resources are readily available, as they are provided to him by the company.

4.An entrepreneur raises capital himself. Conversely, an intrapreneur does not need to raise funds
himself; rather it is provided by the company.

5.An entrepreneur works in a newly established company. On the other hand, an intrapreneur is a part
of an existing organisation.

6.An entrepreneur is his own boss, so he is independent to take decisions. As opposed to intrapreneur,
who works for the organisation, he cannot take independent decisions.

7. entrepreneur is capable of bearing risks and uncertainties of the business. Unlike intrapreneur, in
which the company bears all the risks.
8.The entrepreneur works hard to enter the market successfully and create a place subsequently. In
contrast to Intrapreneur, who works for organization-wide change to bring innovation, creativity and
productivity.

Elements of a business plan:

1. Executive summary

The executive summary is the first and one of the most critical parts of a business plan. This summary
provides an overview of the business plan as a whole and highlights what the business plan will cover.
Executive summary includes organization's mission statement and the products and services it plans to
offer or currently offer. It may also want to include why the entrepreneur is starting the company if the
business plan is for a new organization.

2. Business description

The next part of a business plan is the business description. This component provides a comprehensive
description of the business and its goals, products, services and target customer base. Include details
regarding the industry the company plans to serve along with any trends and major competitors within
the industry. Add the team's experience in the industry and what distinguishes the company from the
competition in the business description.

3. Market analysis and strategy: showing why a customer will buy the product and how the business will
reach and sell to them. Factors to cover in this section are:

# The geographic locations of target markets.

# The primary pain points experienced by company's target customers

The goal of this section is to clearly define the target audience.

4)Marketing and sales plan: This part of the business plan covers the specifics of how a entrepreneur
plans to sell his products and services. This section includes:

#anticipated marketing and promotion strategy plans

#Pricing plans

# Strategies for making sales.

#Organization's unique selling proposal

5) Operations: This part of a business plan describes how the entrepreneurs plan to operate their
company. It also Includes information regarding how and where their company plans to operate, such as
shipping logistics or patents for intellectual property. The operating plan also details operations related
to personnel, like how many employees the business hope to hire in various department.
The advantages of a business plan:

# It helps to forecast future steps

# It is required to apply for Business loans

# It helps to identify future cash flow issues

# It helps to allocate resources

# It can help to secure staff management

The disadvantages of a business plan:

# It may not be accurate

# It can make you become tunnel-visioned (illusion of being correct and unwillingness to be adaptive).

# It can waste precious time and money.

How aims and objectives of a business change in a dynamic business environment:

Businesses that operate in dynamic business environment must be prepared to change their business
aims and objectives regularly. A dynamic environment is a business environment that is rapidly
changing. In a dynamic market, businesses have to adapt quickly to changes and develop new ideas,
products and services to keep up with technology and new trends. Changes to aims and objectives in
these markets could be caused by either internal or external factors.

Internal factors include:

#sudden change in demand

#faster or slower growth

#a change in business direction

#achieving objectives early or being far behind expected

External factors include:

#increase in consumer incomes

#a change in the competitive environment

#new taxes or legislation

#increased pressure on social issues such as sustainability