1.1 Enterprise
- Syllabus
- 9609–2026–2027
- Topic
- 1.1
- Level
- AS
Learning objectives
1.1.1Business activity• The nature of business activity- the purpose of business activity- the factors of production needed for business activity: land, labour, capital and enterprise- the concept of adding value- the nature of economic activity, the problem of choice and opportunity cost- the dynamic business environment- why businesses succeed or fail- differences between local, national, international and multinational businesses1.1.2Entrepreneurs and intrapreneurs• The role of entrepreneurs and intrapreneurs- the qualities entrepreneurs and intrapreneurs need for success- the role of entrepreneurship in creating and starting up a business- the role of intrapreneurship in the ongoing success of a business- barriers to entrepreneurship- business risk and uncertainty- the role of business enterprise in the development of a country1.1.3Business plans• Business plans- the meaning and purpose of business plans- the key elements of business plans- the benefits and limitations of business plans
Business activity transforms scarce inputs into customer value
Business activity organises resources to produce goods or services that satisfy customer needs/wants. Private businesses often seek profit and survival/growth, but objectives can also include service, social or environmental outcomes.
| Factor of production | Business meaning/example |
|---|---|
| Land | Natural resources and sites: farmland, minerals, water, premises |
| Labour | Human effort, skills, experience and time |
| Capital | Man-made productive assets such as machinery, tools, buildings and vehicles; not simply cash |
| Enterprise | Opportunity spotting, innovation, coordination and risk-bearing that combines the other factors |
Added\ value = selling\ price - cost\ of\ bought-in\ inputs
Design, quality, branding, convenience, service, processing or delivery can persuade customers to pay more. Added value is not profit: wages, rent, utilities, marketing, depreciation and other operating costs still have to be paid.
Resources are scarce relative to wants, so every allocation creates choice. Opportunity cost is the benefit of the next-best alternative forgone: if finance buys machinery rather than promotion, identify the lost promotion benefit, not merely the money spent.
| Change | Possible chain of business impact |
|---|---|
| Consumer/social trend | Demand changes → product/marketing adaptation → revenue, cost and profit effects |
| Technology/AI | New process/channel → investment/training and productivity → competitiveness |
| Economy/policy/law | Spending power, interest, tax or compliance changes → cost/demand/finance effects |
| Competitor/supply/environment | Price, quality, disruption or sustainability pressure → inventory/location/strategy response |
| Internal leadership/restructure | Objectives, culture or capacity changes → decisions and performance |
Success or failure depends on demand and differentiation, cash/working-capital control, capable leadership, operations, marketing, finance, flexibility and external conditions. A viable product can still fail through cash shortage; a changing market can reward an agile response.
| Scope | Distinction |
|---|---|
| Local | Mainly one town/area |
| National | Operates/targets customers within one country |
| International | Trades across borders, e.g. exports, but may produce in one country |
| Multinational | Owns/controls capital or productive operations in more than one country; exporting alone is insufficient |
Entrepreneurs start ventures; intrapreneurs renew existing businesses
| Entrepreneur | Intrapreneur | |
|---|---|---|
| Position | Creates/owns a new venture and combines factors | Employee acting entrepreneurially inside an existing organisation |
| Main role | Spots opportunity, builds model, obtains resources, starts and leads | Generates/champions ideas, solves problems, develops products/processes and challenges routines |
| Resources/reward | Uses own/raised resources; receives ownership reward | Uses employer brand, finance, people and systems; may receive salary/recognition/reward |
| Risk | Bears financial/ownership risk and uncertainty | Project may fail, but formal financial risk is mainly borne by employer |
| Quality | Why it can matter |
|---|---|
| Creativity/innovation | Finds a gap or better solution and differentiates |
| Calculated risk-taking/decision making | Commits resources despite uncertain demand, after weighing evidence |
| Resilience/determination/self-motivation | Sustains effort and adapts after setbacks |
| Communication/leadership/networking | Wins customers, finance, staff and internal sponsors |
| Business/market knowledge and organisation | Coordinates finance, marketing, operations and people |
| Adaptability/problem solving | Responds to dynamic technology, fashion, competition and constraints |
| Start-up barrier | Consequence/possible response |
|---|---|
| Finance/working capital and no track record | Smaller capacity/marketing; plan, savings, microfinance or crowdfunding may help |
| Opportunity/market knowledge/customer base | Weak demand/positioning; research, niche and personal service can differentiate |
| Established competition | Loyal customers, scale and promotion disadvantage |
| Skills, advice, network and fear of failure | Decision/implementation limits; mentoring/team can fill gaps |
| Location, regulation and production/supply costs | Raise entry cost, delay launch or constrain capacity |
Risk has outcomes whose likelihood may be estimated; uncertainty involves outcomes/probabilities that cannot be known reliably. Successful enterprise uses evidence and experimentation to manage exposure—it does not mean taking the greatest possible risk.
Enterprise can create jobs and skills → household income/spending → business revenue and multiplier effects; introduce innovation/competition → productivity and choice; use idle resources and develop suppliers; raise exports/foreign exchange and tax revenue → public services/infrastructure. Effects depend on survival, scale, local linkages, externalities and distribution.
No single quality guarantees success. Judge which quality is most important in context, against finance, demand, competition, operations and management. Intrapreneurship also needs senior support, time, authority, culture and funding to convert ideas into ongoing performance.
A business plan makes objectives, evidence and assumptions testable
A business plan is a formal written document setting out a business opportunity, objectives and the strategies/resources/forecasts for achieving them over a stated period. It is both a communication document and a working decision/monitoring tool.
| Element | Questions/evidence |
|---|---|
| Executive summary/opportunity/objectives | What problem, offer and measurable direction? |
| Market and sales/marketing | Target customers, size/trends, research, competitors, price, promotion and forecast sales |
| Operations | Location, capacity, process, suppliers, technology, quality and timing |
| People/management | Ownership, skills, roles, staffing and organisation |
| Finance | Start-up/funding needs, revenue/cost/profit forecasts, cash flow, break-even and assumptions |
| Risks/contingencies/timeline | Internal/external threats, milestones, responses and review dates |
| Benefit | Analysis chain |
|---|---|
| Obtain finance/investment | Evidence and repayment/return forecasts → greater lender/investor confidence |
| Test feasibility/anticipate problems | Research and linked forecasts expose demand, capacity or cash gaps before commitment → lower avoidable failure risk |
| Coordinate and motivate | Shared objectives/actions/resources → aligned departments/employees and clearer priorities |
| Monitor/control | Compare actual with planned sales, cost, cash and milestones → identify variance and corrective action |
| Limitation | Consequence |
|---|---|
| Forecasts depend on research, experience and assumptions | Bias/optimism/no trading data can create cash shortfalls or poor decisions |
| Dynamic internal/external change | Plan becomes outdated unless reviewed and updated |
| Time, skill and consultancy cost | Opportunity cost; scarce start-up resources leave other work undone |
| Over-reliance/inflexibility/false certainty | New opportunities or threats may be ignored; innovation and speed fall |
| Disclosure/complexity and weak execution | Confidential strategy may leak; a credible document still fails without implementation |
A plan does not guarantee funding or success. Its usefulness depends on reliable evidence, realistic linked forecasts, author skill, stakeholder use, regular updates and flexible execution. Revision after new evidence strengthens planning; blindly defending old targets weakens it.