Please enable JavaScript.
Coggle requires JavaScript to display documents.
1 Investigating Small Business - Coggle Diagram
1 Investigating Small Business
1.1 Enterprise and Entrepreneurship
1.1.1 The Dynamic Nature of business
Why do new business ideas come about?
Changes in technology
Create new opportunities for innovation
E.G. The emergence of smartphones and social media created new advertising opportunities
Changes in customer demand
Consumers demand changes over time
Lead to business changing their product to match demand
E.G. Growing demand for plant-based food products leads to new companies emerging
Business ideas becoming obsolete
Products and services can become outdated to to tech or consumer changes
Creates new business opportunities
E.G. The decline of physical media such as CD to be replaced by streaming companies like Netflix
How do new business ideas come about
Adapting existing ideas
Takes existing ideas and makes it better/more suitable
E.G. The rideshare app Uber which adapted the concept of taxi services in a more convenient format
Creating original ideas
Unique concepts that not based on existing products
Nutrigene offers personalised vitamin supplements bases on individual DNA
1.1.2 Risk and reward
The impact of risk and reward on business activity
The risks of business activity
Business failure - Happens when business cannot gain enough revenue to sustain its operations and assets - Leads to job losses, bankruptcy and financial troubles for owners and investors
Financial loss - Can be because of poor financial management, economic downturns or unexpected events such as a natural hazard - Results in reduced profit and competitiveness
Lack of security - Can be because of data security or physical security - A breach can result in reputational damage, legal liability and loss of customer trust
The reward of business activity
Business Success - This is the ultimate reward that business owners want - Happens whenever a business exceeds its objectives such as generating revenue or achieving profitability
Profit - Profit is a measure of success of a business - Profits enables for the business to reinvest growths opportunities/ pay dividends to shareholders and provide financial stability
Independence - Crucial to the success of the business - Allows the business to make their own decisions which out being subjects to demands of external figures such as investors
1.1.3 The Role of Business Enterprise
Broad Definition - Produce goods or services that meet customer needs while adding value
What businesses do?
Produce goods or services
These goods/services satisfy a demand
A good is a physical product like a bike or a T-Shirt
A service in a non physical product like hairdressing or city tours
Meet customer needs
The ultimate goal is to create products that meet the needs and preference of customers
Businesses can build customer loyalty which increases band awareness and generate revenue
Add value
Value added can differentiate products from competitors, this creates a unique selling point which increases customer satisfaction
E.G. A product is easier to use, is of higher quality or has better design
Methods of adding value to a business
Convenience - More convenient option
Branding - Create a unique identity that distinguishes it from competitors and increases customer loyalty, trust and recognition
Quality - Customers are willing to pay more for products/services that are of a higher quality
Design - Adds value by enhancing the aesthetics and functionality of a product/service, can also improve user experience and increase the value
Unique Selling Point - Identify a unique and compelling benefit that can attract new customers and increase sales
The role of entrepreneurship
The organise resources which helps start and operate the business
Make business decisions that determine the businesses success or failure
They take risks which can help grow the business