1
Q
What is an entrepreneur? [2]
A
- A person who spots an opportunity and shows initiative and a willingness to take risks in order to benefit from potential rewards
- Entrepreneurs make use of resources available to them to set up or develop a business
2
Q
Explain creative destruction [2]
A
- This refers to the way in which quality improving innovations lead to economic growth
- Customers switch to new products and old products become obsolete
3
Q
What is innovation?
A
Developing an idea that will generate new or improved products
4
Q
Explain structural changes [2]
A
- New businesses spring up to make and market the superior products, while the older businesses find their profits failing
- The process of some products declining in importance while others take their place is also called structural change
5
Q
What is the result of structural changes
A
- Some businesses are destroyed by the change , but new businesses that profit lead to economic growth
6
Q
What are the options for businesses threatened with destruction? [3]
A
- Fight back
- R&D
- Increase creativity
7
Q
What are disrupters? Give an example
A
- Businesses that initiate change across the market are known as disrupters
- For example, uber revolutionised the taxi industry with technological advancements
8
Q
Explain an entrepreneur’s ability to take risks [2]
A
- It helps them to create a dynamic market
- A contrast to this would be a family run organisation
9
Q
Explain the concept of adding value
A
Represents the difference between the cost of material inputs and the eventual value of the product in terms of price
10
Q
What is the formula for *added value**?
A
Sale price - cost of sales = added value
(This is the same as profit margin)
