economics case study

economics case study Innovation/what is needed for a successful innovation - correct answer- comes up with new ideas

• innovation needs to be seen as something that will enhance their lives
• innovation needs to attract a certain level of attention
• needs clever advertising
• consumers willing to buy innovation at right price
• can sometimes lead to benefits for society

social enterprise - correct answer- an enterprise started with the purpose of serving the community

• eg. may aim to generate profit to service the community or employ disadvantaged people
• example is The Big Issue

skills of enterprising people - correct answer- ability to create a new idea and work relentlessly to turn the idea into a successful business

• tend to be risk managers because they often risk their time, money and effort by exploring new ideas

and markets

• take calculated risks
• open to opportunities to determine if there is a market to sell their product

business planning - correct answer- strategic decisions to decide what the business will sell, how the goods/services will be produced, where the enterprise needs to be located.business networking - correct answer- effective tool for business

• enterprising people develop contacts and build markets by keeping in touch with their customer base.

-customer communication= spreading the word and relaying a message

• word of mouth networking tool is very effective

business structure- sole trader - correct answerbusiness is usually owned and operated by one person who is fully liable in law for all the debts of the business. Owner makes all business decisions and the 1 / 2

profits belong to the owner. If the business fails, the owner has to repay any debts personally out of his or her own money.

TYPE OF BUSINESS IS SIMPLE AND INEXPENSIVE TO ESTABLISH

Partnership - correct answer-owned by a group of people (usually between two to twenty people) -each partner is responsible in law for the debts according to their share in the business -partners share the decision-making, although some partners can often not be involved in the day to day running of the business.

• some partners can contribute capital or special expertise

-partners can offer a wide range of skills -can be disagreements in the business

• partners in some partnerships may not be liable for all the debts of the partnership

company - correct answer- an entity in its own right, owned by a group of people who combine their capital to form the company

• each member of group owns shares in the company according to the amount of money that person has

contributed

• management of the company is usually separate from owners of company
• once shares of company are paid for, owners have no further legal liability for the debts of the

company. (limited liability)

• owners cannot be asked to contribute anything towards the debts of the company if it fails. Can lose

amount paid for if company ceases to operate

• companies can be private or public
• private=usually owned by a limited number of people
• public= shares can be transferred on the stock exchange and any member of the public can buy shares

in the company.

• costs of running are higher than a sole proprietorship/partnership
• conversion from the above is usually considered for businesses with sales at $50,000 + per year

Franchise - correct answer- system of distribution of goods and services in which the franchisor (organisation owning the rights) grants the right to others to use its brand name and sell its goods or services.

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