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Chapter 1- Enterprise

Definitions

  • Entrepreneur= The processs by which new businesses are formed and new products and services are created and brought to the market. Enterprises are usually led by an entrepreneur. 
  • Entrepreneur= Individuals who have an idea that they develop by setting up a new business and encouraging them to grow. They take the risk and subsequent profits that come with success or the losses that come with failure. 
  • Enterprise Skills= Skills that allow an individual or organisation to respond effectively to changing market situations, including problem-solving skills, thinking and acting innovatively and creatively, and understanding the importance of risk and uncertainty.

Opportunity Costs- Next best alternative forgone when a choice is made. By spending money and time on one business venture an entrepreneur may lose out because they don't have the time and money to carry out another. This is why some of the Dragon's on BBC's Dragon's Den are so careful  about which businesses they choose to become involved in.

Entrepreneurs and Enterprise

How does the government support enterprise and entrepreneurs?

  • Access to advice and information to help them get started e.g. By the government's business link agencies across the UK. 
  • Funding and grants may be available. 
  • Protection of new ideas by allowing patents to be registered. 

Why do governments encourage entrepreneurs?

  • Source of income for the government.
  • Provide jobs- less pressure on government system and reduced unemployment. 
  • Improve trade relations- more exports. 

Entrepreneurial Characteristics

  • Determination and Persistence 
  • Passion 
  • The ability to spot and take advantage of opportunities 
  • Relevant skills and expertise
  •  Vision, creativity and innovation
  • Motivation to succeed and not be daunted by failure. 
  • Willingness to take risks- possibly the most important quality of an entrepreneur.

The importance of risk and rewards such as profit

  • In the UK, people tend to be risk averse with over one third of those surveyed in the Global Entrepreneurship Monitor in 2006, saying they are afraid of failure. 
  • As the majority of new businesses fail, such fears are well placed. Failure occurs for a number of reasons: 
  • Lack of Finance
  • Poor Infrastructure 
  • Skill Shortages 
  • Complexity of regulations or red tape
  • However, the ability to evaluate the risks and uncertainty that are an integral part of almost all business decisions is an important element of successful entrepreneurship. 
  • The fact files in this demonstrate that most entrepreneurs are happy to take risks if their potential rewards are great enough. Of course this depends on them doing their research to ensure that all reasonable steps are taken to minimise the probability of failure. The outcome of successful risk-taking will be a profitable venture.

Structure of Industry in the UK 

  • The tertiary sector is the largest sector in terms of contribution to GDP and employment in the UK. As economies develop, the secondary sector tends to grow faster than the primary sector and in well-developed economies such as the UK, the tertiary sector tends to grow faster than the secondary sector. 
  • In general, as people become more affluent, they want more manufactured products

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