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Business and its Environment (Enterprise (Factors of production…
Business and its Environment
Enterprise
Business activity uses the scarce resources of our planet to produce goods and services to fulfil the wants and needs of customers
Creating value
Businesses selling a product for higher a price than the cost of producing the product.
Economic problem
An economy's finite resources are insufficient to satisfy all human wants and needs.
Opportunity cost
The benefit of the next most desired option which is given up and the loss of the next most desired option given up.
Factors of production
Entrepreneurs/Enterprise
Characteristics
: Innovation, commitment and self-motivation, multi-skilled, leadership skills, self-confidence, risk taker
Land
Site for buildings and raw materials
Labour
Workforce of the business
Capital
Finance needed to set up the business and grow, and capital goods
Why new businesses fail
Lack of record keeping, lack of cash and working capital, poor management skills, changes in business environment