Enterprise – Study Notes

1. What Is Enterprise?
Enterprise = an organisation/business run by one or more people who take the initiative, make decisions, and
accept calculated risks. It combines resources (land, labour, capital) with entrepreneurial effort to make
goods/services people want.
Two types:
Type Main aim
Business enterprise Make a profit that will be reinvested for growth or paid to owners/shareholders
Social enterprise Benefit society; any profit is just a means to sustain the mission, not the goal.

2. Enterprise Capability
An entrepreneur starts and runs a new business — self-driven, multiskilled, confident, and results-focused.
Core attributes of enterprise capability:
• Risk-taking — accepting a calculated risk (expected reward clearly outweighs the possible loss)
• Decision-making — using resources wisely; every decision carries an opportunity cost
• Innovation — creating something new, or presenting an existing product/service differently
• Positive attitude — drives entrepreneurs to face and overcome setbacks

Stakeholders
A stakeholder = any person/group/organisation with an interest in the business.
Internal: employees, owners/shareholders External: customers, government, local community, suppliers, lenders,
competition
Stakeholder Why they matter
Employees Do the work; need fair pay, security, good conditions
Owners/shareholders Want growth & profit to justify investment
Customers Generate revenue — need quality at a fair price
Government Collects tax; enforces laws; interested in jobs created
Local community Affected by traffic/pollution; can benefit from jobs/infrastructure
Suppliers Provide raw materials/products; must be paid on time
Lenders Provide finance; need to be repaid reliably
Competitors Same market — influence pricing/marketing decisions
Tip: an entrepreneur should weigh the interests of all stakeholders when deciding.

3. The Enterprise Process (6 stages)

• Identify the problem, need, or want — brainstorm, research the market, assess risk
• Explore creative solutions — generate & evaluate ideas (mind maps are useful)
• Action planning — set budget, break goals into tasks, allocate roles by strength, set timescales/milestones
• Implement the plan — carry it out efficiently, safely, and stay flexible when things change
• Monitor progress — track against objectives; adjust for deviations
• Evaluate successes & failures — review outcomes, extract lessons for next time

4. Types of Business Organisation

Structure Owned by Liability Key +/-
Sole trader 1 person (unincorporated) Unlimited + cheap/simple to start, keep all profit, full control
— risky if it fails, hard to raise finance
Partnership 2–20 "partners" Unlimited + shared work/decisions, quick to set up — one
 Structure Owned by Liability Key +/-
(unincorporated) partner's decision binds all, disputes possible
Private limited Shares held by Limited + easier to raise finance, survives owner leaving —
company friends/family costly/complex to set up, must publish accounts
(incorporated)
Public limited Shares sold to the public Limited Same as above, but original owners risk losing
company (incorporated) control as shares are sold publicly
Co-operative People who use its Usually + democratic, shared interest reduces conflict, tax
services or work there limited relief — can't raise money via shares, must publish
(consumer/producer/worke accounts
r co-op)
Franchise Franchisee buys rights to N/A + lower risk (known brand), franchisor
franchisor's brand support/advertising — license fee/revenue share,
less control
Social enterprise / Varies N/A Mission-driven; charities rely on donations &
not-for-profit / fundraising for short-term relief, not-for-profits
charity generate their own income

5. Skills of Enterprising People

Built from knowledge (facts/theory learned) + skills (ability to do something, innate or learned).
The enterprise skills set (12 skills): creativity, leadership, influencing skills, team work, delegation, problem-
solving, time management, self-confidence, resourcefulness, innovation, taking initiative, taking calculated risks,
perseverance, taking responsibility.
A skills audit helps a person:
• identify strong skills and how to use them
• spot weaknesses/gaps and the risks they create
• plan how to improve or close those gaps

6. Enterprise Opportunities & Risk

Opportunities
An opportunity = a chance to do something; a reward = what's gained from taking it. Opportunities can come
from:
• changing customer needs/wants (income, taste, population shifts)
• new technology (creating or ending demand for a product)
• competitors' failures or access issues
• government policy changes (grants, subsidies, tax, law)

Risk
Risk = the chance of gaining or losing from an action taken. Risk-taking is essential to enterprise — failure is
normal and a source of learning.
Categories of risk: financial, economic, health & safety/environmental, human resource, production.

Risk management — 5 steps

• Identify the risk — using PEST and/or SWOT analysis
• Analyse implications — likelihood? Consequences (positive or negative)?
• Decide if it's worth taking — compare potential reward vs. potential loss
• Plan to manage it — remember MATE:
• Mitigate — reduce the risk by changing your approach
• Accept — budget/prepare for it if nothing can be done
• Transfer — pass responsibility to someone else
 • Eliminate — remove the hazard entirely (but you lose the opportunity too)
• Monitor and review — risks change over time; reassess regularly
Ways to reduce risk generally: thorough research (market research, cash-flow forecasts), getting advice, careful
planning (business/action plan), spreading risk across products/markets (diversification).

Attitudes to risk
Type Behaviour
Risk-averse Avoids risk wherever possible
Risk-keen Willing to accept a level of risk
Risk-reducer Tries to limit likelihood/impact rather than avoid or embrace it

PEST vs SWOT (tools for Step 1)

• PEST = external factors affecting the whole market (no control): Political, Economic, Social,
Technological
• SWOT = internal + external factors for a specific idea/project:
1. Strengths & Weaknesses = internal, controllable
2. Opportunities & Threats = external, uncontrollable
3. The same factor can be a strength or weakness depending on context (e.g., new technology can cut
demand for an old product but create demand for a new one)

7. Legal Obligations
Governments regulate business to protect stakeholders from exploitation, covering:
• Employment — contracts, minimum wage, anti-discrimination
• Production — health & safety standards
• Marketing/selling — rules against misleading promotion, faulty/dangerous goods
• Finance — rules ensuring correct documentation and protecting stakeholder interests

8. Ethical Considerations
Ethics = the moral values/principles guiding behaviour — going beyond what's legally required.
Ethics can conflict with profit — e.g. paying a living wage, avoiding child labour, using Fair Trade goods, or
donating profits all raise costs.
Advantages of being ethical Disadvantages of being ethical
Better reputation/brand image Harder to source ethical materials
Attracts & retains good employees Higher raw-material costs → higher prices
Suppliers may offer better terms
Easier to get support from lenders
Can be a unique selling point (USP) for marketing

9. Market Research
Market research = collecting, collating, and analysing data about customers, competitors, or the market to support
decision-making.
Purpose: understand customer needs, understand competitors, reduce risk of launching/selling products, plan
marketing, choose between options, evaluate success.

Primary (field) research — new/original data

Method Note
Surveys/questionnaires Cheap, large sample, but poorly worded questions bias results
Interviews Detailed answers, higher response rate, but time-consuming, small sample
Consumer panels/focus groups Very detailed, but small sample, expensive, groupthink risk
 Method Note
Observation Cheap, shows real behaviour, but can't explain why
Test marketing Real customer reaction, but costly, slow, and tips off competitors

Secondary (desk) research — existing data

Examples: own sales records, newspapers/internet, trade journals, government statistics, market research
reports/agencies.
• Cheaper & faster than primary research, but may be out of date, irrelevant, or incomplete for your specific
purpose.

Primary vs Secondary — summary

Primary Secondary
Pro Up-to-date, exclusive to you, targeted questions Cheap/free, quick, may reveal extra useful info
Con Expensive, slow to collect May be irrelevant, outdated, incomplete

Presenting data
Format Best for Limitation
Table Precise figures, lots of data Hard to spot trends quickly
Bar chart Quick visual comparison Only works well for simple, single-
variable data
Pie chart Showing proportions of a whole Shows % not actual totals
Line graph Trends/relationships over time —
Pictogram Strong visual impact Hard to show exact values

Quick-Reference: Key Terms

• Enterprise process – the ordered stages of planning/running an enterprise
• Unincorporated / Incorporated business – no separate legal identity (unlimited liability) vs. separate
legal entity (limited liability)
• Reward / Opportunity / Risk – gain from effort / chance to act / chance of gain or loss
• PEST – Political, Economic, Social, Technological (external only)
• SWOT – Strengths, Weaknesses (internal) / Opportunities, Threats (external)
• MATE – Mitigate, Accept, Transfer, Eliminate (risk-response strategies)
• Primary research – original/new data; Secondary research – existing data
• Ethics – moral principles beyond legal requirements