Defenitions
Opportunity cost
The next best alternative forgone or given up when making a choice
Define Multinational Businesses
A business organisation that has its headquarters in one country, but with operating branches, factories and assembly plants in other countries.
How do businesses allow for economic growth?
1. employment
2. GDP
3. Growth in business
4. exports
Why banks are interested in business plans
Intrapreneur
List out the Factors Of Production with an example for each
Land
Labour
Capital
Enterprise
Qualities of successful entrepreneurs and intrapreneurs
Innovation
Commitment and Self-motivation
Multi-skilled
Leadership skills
Self confidence and ability to bounce back
risk taking
Limitation Of Business Plans
Gives a fake sense of certainity
inflexible owners
Branding
the process of differentiating a product by developing a symbol, name, image or trademark for it.
Describe the different types of goods
(capital/consumer(durable and nondurable)
Capital goods are the physical goods used by industry to aid in the production of other goods and services, such as machines and commercial vehicles.
Consumer goods are the physical and tangible goods sold to consumers- these include durable consumer goods and non-durable consumer goods.
Differentiate Entrepreneurs and Intrapreneurs
Entrepreneur: starts the business; takes the risk; is the one being rewarded
Intrapreneur: developing an innovative product or project within the existing business; risk taken by the business; rewards to the business.
List the elements of a business plan
1. executive summary
2. description of the business opportunity
3. marketing and sales strategy
4. management team and personnel
5. operations
6. financial forecasts
Added Value
The difference between the cost of purchasing bought-in inputs (materials) and the selling price of the finished goods.
What is meant by a dynamic business environment and what are the possible changes that might occur in the business environment?
Dynamic Business Environment: The business environment or market is constantly changing
Potential Changes:
1. new competitors enter the market
2. legal changes (government laws)
3. economic changes (economic growth; recession)
4. Technological changes (advances in machinery;)
What are some barriers to entrepreneurship?
1. Lack of business opportunity
2. obtaining sufficient capital (finance)
3. cost of good locations
4. competition
5. lack of a customer base
Benefits of business plans
- brings everyone together towards a common goal
- forces the owner to think through strengths and weaknesses seriously
- gives owners a clear plan of action to guide their decisions
Business Plan
a written document that describes a business, its strategies, the market it is in and its financial forecasts.
Reasons for business failure and success?
Succeed
1. understanding of customer needs
2. efficient management of operations
3. flexible decision making to adapt to new situations
4. sources of finance
Why fail?
1. Poor record keeping
2. Poor management skills
3. Lack of cash
Differentiate business risk and uncertainty
Business risk is the chances of failure and can be reduced through planning. However, business uncertainty cannot be foreseen, measured or calculated and therefore cannot necessarily be reduced.