Competitive Advantage
What is the purpose of a vision statement?
Establish the reason for the business - communicate the long-term aspirations and goals of a company, providing a clear direction and inspiration to employees and stakeholders
What is a financial risk?
The possibility of loss or reduced profit due to uncertainty / financial decisions.
What are financial rewards
The monetary incentives provided to employees or stakeholders for achieving specific goals or performance targets.
It is also the possibility of earning a profit from good financial decision making.
What is entrepreneurship?
The process of identifying, creating, and pursuing opportunities to create value through innovative ideas and business ventures.
What does the S stand for?
Strengths
What type of business structure is owned and operated by one person?
Sole Trader
Identify and explain two types of financial risks a business may face.
Market risk - rapidly changing market / Credit risk - not being paid back debt / Liquidity risk - can't convert assets to cash quickly enough / Operational risk - inadequate internal processes
Name and describe two types of financial rewards that motivate employees.
Bonuses - one-time payments based on performance.
Salary increases - permanent raises based on merit or tenure.
Shares/stock options - ownership in part of the company.
Name and describe two characteristics of entrepreneurs
Resilience (ability to overcome challenges and setbacks); Creativity (ability to generate solutions to problems); Risk-taking (willingness to take calculated risks); Passion (strong dedication to their ventures); adaptability (ability to adjust to changing circumstances).
What does the W stand for?
Weaknesses
Name one strategy that can help a business succeed?
High-quality products (reliable, safe, easy to use, durable); Customer service; Delivery; Premium features (high-end or luxury).
Cost leadership, differentiation, focus/niche marketing, innovation
How can a business mitigate financial risks?
Through diversification of investments; insurance; adequate internal processes and checks.
How can businesses use financial rewards to encourage innovation?
By providing bonuses or profit-sharing tied to successful implementation of innovative ideas.
What is the difference between a start-up and a small business?
Start-ups are typically newly established businesses that have high growth potential and innovative business models.
Small businesses are often established enterprises with a focus on stability and serving local markets.
What does the O stand for
Opportunities
Give an example of a niche market?
- Halal; Gluten Free; Organic & Sustainable good products; luxury pet accessories; adventure tourism experiences; personalised skincare formulations; specific weight loss diets, such as keto or intermittent fasting (general weight loss is not a niche market as this in itself is a sizeable market for the general population).
Give an example of a financial risk associated with international trade
Currency exchange rate risk, where fluctuations in exchange rates can affect the probability of exports or imports.
What is profit sharing?
It is sharing a portion of the companies profits among employees, fostering a sense of ownership and alignment of interests between the employees and the employers.
Give an example of a successful entrepreneur and describe their success.
Elon Must - co-founder of PayPal, Tesla, and SpaceX.
Oprah - media mogul who built multimedia empire, TV networks, magazines, and film production.
Mark Zuckerberg - co-founder and CEO of facebook
Sara Blakely - founder of spanx (shapewear)
Jeff Bezos - founder and former CEO of amazon.
What does the T stand for?
Threats
How can a company effectively leverage dynamic capabilities to sustain its competitive advantage in a rapidly changing market environment?
By continuously adapting and innovating its resources and processes to capitalise on emerging opportunities and response to competitive threats.
What is the impact of financial risks on a company's profitability and sustainability
Financial risks can lead to reduced profits, bankruptcy, or even business failure if not managed properly
People are motivated by money. Financial rewards are crucial for attracting talent, motivating high performance, and reducing employee turnover in competitive industries.
How does entrepreneurship drive economic growth and innovation?
Entrepreneurship stimulates job creation, fosters competition, and drives technological advancement, leading to overall economic development and prosperity.
What does SWOT stand for?
Strengths, Weaknesses, Opportunities and Threats.