UNIT 1

BUSINESS AND ITS ENVIRONMENT

CHAPTER 1 ENTERPRISE

Business activity- it is the process of combining the factors of production to produce goods
and services and satisfy the needs and wants of customers.

Factors of production- resources needed to be able to operate and produce goods and services
CELL- capital, enterprise, land, labour.

Added value- the difference between the selling price and cost of bought-in materials

Opportunity cost- the next best alternative forgone- gov. hospital/school

Dynamic business environment- constantly changing

 New competitors
 Legal changes- safety regulations/limits
 Economic changes- consumers have less money to spend
 Technological changes- products are outdated

Business success
 Good understanding of customer needs- sales targets achieved
 Efficient management of operations- keeps costs under control
 Flexible decision-making to adapt to new situations
 Appropriate and sufficient sources of finance- prevents cash shortages and allows for
expansion.

Business failure
 Poor record keeping- not possible to remember everything, helps keep track
 Lack of cash- working capital needed for day-to-day transactions
 Poor management skills- may not have skills like leadership, decision making, cash
handling, cash management, planning, coordinating, communicating, marketing.
Promotion, selling

Role of entrepreneurs
 Have ideas for new businesses
 Create business plan
 Invest savings
 Accept responsibility of business
 Accept possible risks of failure

Intrapreneur-

Qualities of successful entrepreneurs and intrapreneurs

 Innovation
 Commitment and self-motivation
 Multi skilled
 Leadership skills
 Self-confidence and ability to bounce back
 Risk taking