TOPIC 1 Enterprise

TOPIC 1 : ENTEPRISE
Topic objectives
1. Understand what business activity involves
2. Recognize that making choices as a result of economic
problem always results in opportunity cost
3. Analyze the meaning and importance of creating value
4. Recognize the key characteristics of successful
entrepreneurs
5. Assess the importance of enterprise and entrepreneurs to a
country’s economy
6. Understand the meaning of social enterprise and describe
the difference between it and other businesses.
Introduction starter pack
Read the passage ‘ Dulip start his Business’ page 3 and
discuss the questions.
1.Why do you think Dulip decided to own and run his own
business rather than work for another firm?
2.Why was it important to Dulip that he should do so much

planning before starting his business?
3.Do you think Dulip will make a successful entrepreneur?
4. Are new businesses such as Dulip’s good for a country’s
economy?
THE PURPOSE OF BUSINESS ACTIVITY:

What is a business?
1|Page
Business activity uses the scarce resources of our planet to
produce goods and services that allow us to all enjoy a very much
higher standard of living than it would be possible if we
remained entirely self-sufficient.
Name the resources used by business
What do a business do?

Businesses identify the needs of consumers or other firms. They
then purchase resources (factors of production) in order to
produce goods and services that satisfy these needs, at a profit.
Key terms to learn:
Consumer goods
Consumer services
Factors of production
These are the resources needed by the business to produce
goods and services.
They include
Land
Labour
Capital
Enterprise
THE CONCEPT OF ADDING VALUE

Discuss and look up the meaning of value addition
What is added value?
2|Page
Note: without creating value a business will not be able to
survive as other costs have to be paid, usually, a profit must be
made to justify staying in operation
Key terms
Capital goods
Creating value
Examples of value addition

1.Jewellers – well-designed shop-window display, attractive shop
fittings, well-dressed and knowledgeable shop assistants and
beautiful boxes of ered to customers to put new jewellery in.
These features might allow an increase in jewellery prices above
the additional costs involved.
2 Sweet manufacturer – extensive advertising of the brand of
sweets to create an easily recognised name and brand identity,
attractive packaging, selling through established confectionery
shops and not ‘cheap’ vending machines. Higher prices as a
result of successful branding should create added value
Pupil’s task 1.1
Explain how the following businesses could create added value to
the goods they buy in:
a hotel [3]
b car dealer [3]
c clothing manufacturer [3]
d fast-food restaurant. [3]
3|Page
Economic activity and the problem of choice
Economic problem: this arises when their exists unlimited wants
but limited resources to produce the goods and services to
satisfy those wants
Scarcity
Choice
Opportunity cost
ROLE OF ENTREPRENEUR
Who is an entrepreneur?
Characteristics of successful entrepreneurs
Innovation:
Commitment and self-motivation:
Multi-skilled
4|Page
Leadership
Self-confidence and ability to ‘bounce back
Risk taking: entrepreneurs must be willing to take risks in
order to see results.
Where do business ideas come from;

Hobbies
Previous employment
Franchising
Small budget market research
Challenges faced by entrepreneurs

1. Identifying successful business opportunities
2. Sourcing capital (finance)
3. Determining a location
4. Competition
5. Building customer base
Task: Summarise above points (page 7-8)
Why do new businesses fail?
1. Lack of record keeping
Occurs due lack of cash flow data, assets, liabilities, profit and
loss records
2. Lack of working capital
Working capital is the cash or liquidity needed to finance the
daily operations of a business
3. Poor management skills
5|Page
They arise from poor leadership skills, cash handling and cash management skills , planning and
coordinating skills, decision-making skills, communication skills, marketing, promotion and selling
skills
4. Changes in the business environment

Occurs when a business sets up a new branch like MNC setting
up in Kenya.
Think about MNC that have failed in Kenya
Common types of entrepreneurial business
1 Primary sector
2. Secondary sector
3. Tertiary sector
Impact of enterprise on a country’s economy

1. Employment creation
2. Economic growth
3. Firm’s survival and growth
4. Innovation and technological change
5. Exports
6. Personal development
7. Increased social cohesion
Task: summarise above points (page 10-11)
6|Page
Social enterprise
Definition: a business with mainly social objectives that
reinvests most of its profits into benefiting society rather than
maximising returns to owners.
In other words, a social enterprise is a proper business that
makes its money in socially responsible ways and uses most of
any surplus made in benefiting the society.
Features of social enterprises include;
 They directly produce goods and services
 They have social aims and use ethical ways of achieving them
 They need to make a surplus or profit to survive as they
cannot rely on donations such as charities do
Objectives of social enterprises
Economic
Social
Environmental
Revision questions
Page 13-14
7|Page

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TOPIC 1 : ENTEPRISE

2.Why was it important to Dulip that he should do so much

THE PURPOSE OF BUSINESS ACTIVITY:

What do a business do?

THE CONCEPT OF ADDING VALUE

Examples of value addition

Where do business ideas come from;

Challenges faced by entrepreneurs

4. Changes in the business environment

Impact of enterprise on a country’s economy

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