Chapter 1- Enterprise

Enterprise
Unit 1
Business and its
Environment
Understan Understand what business activity involves.
d
Lesson Recognise that making choices as a result of the ‘economic
Objectives
Recognise problem’ always results in opportunity cost.
On Analyse Analyse the meaning and importance of creating value.
completion of Recognise the key characteristics of successful
this chapter,
Recognise entrepreneurs.
you will be Assess Assess the importance of enterprise and entrepreneurs to a

country’s economy.
able to The purpose of the business plan. What are the key
Explain elements involved in it?
The nature and
purpose of
business activity
• An organisation that uses resources
to meet the needs of the customer by
providing a product or services in
demand.
• There are several stages in the
production of finished goods
involving adding value to resources.
 Raw material
 Semi-finished goods
 Finished goods
• And making these goods more
desirable are the consumers.
What do businesses do?
+ Businesses identify the needs of customers.

+ They purchase necessary resources to allow
production to take place.
+ They produce goods and services which satisfy
customers’ needs, usually with the aim of making a
profit.
Consumer goods
and Consumer
Services
+ Consumer Goods -Physical
and tangible goods sold to
public it can be durable or
nondurable.
+ Consumer Services – These
are non-tangible product
sold to general public.
Example – Insurance
services, Internet services
etc..
What is capital goods?
Physical goods used by the
industry to aid in the production of
other goods and services.
Examples
• Machinery
• Commercial vehicles
Factors of production
Creating or Adding
value
Increasing the difference between the cost
of purchasing bought in material and the
price finished goods are sold for is called
creating value
Its also called as added value .

Opportunity cost
Opportunity cost
The benefit of the next most desired
option is given up.
Why do some businesses succeed?
+ good understanding of customer needs – leads to
sales targets being achieved
+ efficient management of operations – keeps costs
under control
+ flexible decision-making to adapt to new situations
– allows investment in new business opportunities
+ appropriate and sufficient sources of finance –
prevents cash shortages and allows for expansion.
Lack of record Lack of working
Why do keeping capital
business
often Fail
Poor Change in
management business
skills environment
Lack of record keeping
Lack of working capital
Poor management skills
Change in business environment
Role of an
Entrepreneur
• Entrepreneur is someone who

takes the financial risk of
starting and managing a new
venture.
• He has an idea for new
business.
• Accepts the responsibility of
managing the new business.
• Accepts the possible risks and
failures.
Major Barriers Faced by an
Entrepreneur
+ Lack of business opportunity
+ Sourcing capital
+ Cost of good location
+ Competition
+ Lack of customer base
Identifying successful business
opportunity
 original ideas for new business comes through
several sources.
+ Own skills and hobbies
+ Previous employment experience
+ Franchising Conferences and Exhibitions
+ Small budget market research
Sourcing Capital - Finance
Determining a Location
Competition
Building a customer base
Role of intrapreneurship
+ Intrapreneurship is a term given to people who have the same
qualities as entrepreneurs and are encouraged to demonstrate
the same skills as entrepreneurs within an existing business.
+ The present times are witnessing rapidly changing economic
activities. This requires the business to be innovative and
retain its best staff.
+ As such many successful businesses allow employees to take
a risk and show the same initiative as an entrepreneur even in
an established business.
+
Difference between Entrepreneur and
Intrapreneur
+
Entrepreneur Intrapreneur
Starting up a new business Developing an innovative product
or project within an existing
business
Risk is taken by the entrepreneur Risk is taken by the business
Rewards go to the entrepreneur Rewards go to the intrapreneur

Business Plans
+ Business Plan is a written document that describes a
business, its objectives, its strategies, the market it is in,
and its financial forecast.
+ It contains :
+ The executive summary
+ Description of the business opportunity
+ Marketing and sales strategy
+ Management team and personnel
+ Operations
+ financial forecast
Importance of business plans
+ The main purpose of the business plan for the new
enterprise is to obtain finance for the start-up.
+ Forces the owners to think seriously about the
proposal, its strength, and potential weakness.
+ Give owners a plan of action and guide them
during the initial period of setting up the business.
Limitations of business plans
+ A detailed business plan is not enough for the
success of the business as it is based on forecasts
and predictions.
+ The business plan must be detailed and supported
by market research.
+ The plan might lead entrepreneurs to be inflexible.
Thank you

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Enterprise

Lesson Recognise that making choices as a result of the ‘economic

On Analyse Analyse the meaning and importance of creating value.

completion of Recognise the key characteristics of successful

you will be Assess Assess the importance of enterprise and entrepreneurs to a

+ Businesses identify the needs of customers.

Its also called as added value .

• Entrepreneur is someone who

Risk is taken by the entrepreneur Risk is taken by the business

Rewards go to the entrepreneur Rewards go to the intrapreneur

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