CIE IGCSE Business Studies: Enterprise, Business Growth, Size (1.3)
Summary
TLDRThis video by Mr. Eazy delves into the IGCC Business Studies specification point 1.3, exploring enterprise growth and size. It covers the definition of entrepreneurship, the characteristics of successful entrepreneurs, and the benefits and risks involved. The script also discusses the importance of a business plan for securing loans and planning for the future. It further explains government support for startups, methods for measuring business size, reasons businesses may grow or remain small, and common causes of business failure. Key terms are defined, providing a comprehensive understanding of the subject.
Takeaways
- π Entrepreneurs are individuals who take risks to organize and operate new business ventures, seeking independence, the opportunity to implement their ideas, and potentially high profits.
- π Successful entrepreneurs often possess characteristics such as hard work, risk-taking, creativity, optimism, self-confidence, innovation, independence, and effective communication skills.
- π A business plan is crucial for entrepreneurs, helping to secure loans or overdrafts from banks and forcing them to think ahead and plan for the initial years of their business.
- π‘ Business plans typically include sections on business description, products and services, market analysis, business location, organization structure, financial information, and marketing strategy.
- π Governments support business startups to reduce unemployment, increase competition, stimulate economic growth, and potentially foster the development of socially beneficial enterprises.
- π Measuring business size can be done through various methods, including the number of employees, value of output, and capital employed, each with its own limitations and considerations.
- π Businesses may grow for reasons such as increased profits, higher status, lower average costs due to economies of scale, and a larger market share, which can influence negotiations with suppliers and distributors.
- π There are two main ways businesses can grow: internally, by expanding existing operations, and externally, through mergers or takeovers, each with its own benefits and challenges.
- π‘ Business growth can sometimes lead to problems such as difficulty in control, poor communication, high costs, and integration issues, which need to be managed carefully.
- π Some businesses remain small due to factors like industry type, market size, and owner's objectives, with some owners preferring to maintain personal control and avoid the stress of managing a larger entity.
- β οΈ Business failures can occur due to various reasons, including poor management, changes in the business environment, liquidity problems, and overexpansion, with new businesses being particularly at risk due to lack of experience and resources.
Q & A
What is the main focus of the video script provided?
-The video script focuses on the specification point 1.3 of IGCC Business Studies, which discusses enterprise, business growth, and size, including characteristics of successful entrepreneurs, methods of measuring business size, reasons for business growth or stagnation, and factors contributing to business failure.
What are the benefits of being an entrepreneur according to the script?
-The benefits of being an entrepreneur include independence, the ability to use time and money as desired, implementing personal ideas, potential for fame and success, higher profitability, and the utilization of personal interests and skills.
What are some of the disadvantages of entrepreneurship mentioned in the script?
-Disadvantages of entrepreneurship include the high risk of business failure, the need to invest personal capital, the lack of knowledge and experience in starting and operating a business, and the opportunity cost of not being employed elsewhere.
What are the key characteristics of successful entrepreneurs as outlined in the script?
-Key characteristics of successful entrepreneurs include being hardworking, risk-takers, creative, optimistic, self-confident, innovative, independent, and effective communicators.
Why is a business plan important for entrepreneurs seeking loans from banks?
-A business plan is important because it forces the entrepreneur to think ahead and plan carefully about the initial years of the business. Banks require a business plan to assess the viability and future prospects of the business before agreeing to a loan or overdraft.
What are the common headings included in a business plan as per the script?
-Common headings in a business plan include a description of the business, products and services, market analysis, business location, organization structure and management, financial information, marketing strategy, and a summary demonstrating the business's potential for success.
Why do governments support business startups and what are some forms of support?
-Governments support business startups to reduce unemployment, increase competition, stimulate economic growth, and potentially create social enterprises. Forms of support include grants and training schemes.
What are the common methods to measure business size mentioned in the script?
-Common methods to measure business size include the number of people employed, the value of output or sales, and the value of capital employed.
What are the limitations of using the number of people employed as a measure of business size?
-The limitations include that capital-intensive firms with few employees can produce high output levels, making this measure potentially misleading for comparing business sizes.
What are the benefits of business expansion as discussed in the script?
-Benefits of business expansion include the potential for higher profits, increased status and privilege for owners and managers, lower average costs due to economies of scale, and a larger market share which can influence dealings with suppliers, distributors, and consumers.
What are some reasons why businesses might remain small as per the script?
-Reasons for businesses remaining small include the type of industry, where personal services or specialized products are offered; market size, where a small consumer base limits growth; and owner's objectives, where some prefer to maintain control and avoid the stress of managing a larger business.
What are the main reasons for business failures according to the script?
-Main reasons for business failures include lack of management skills and experience, changes in the business environment, liquidity problems or poor financial management, and over-expansion leading to difficulties in management and finance.
Why are new businesses at a greater risk of failing compared to established ones?
-New businesses are at a greater risk of failing due to lack of finance and resources, poor planning, inadequate research, and the owner's inexperience in decision-making skills compared to managers of larger businesses. Additionally, established businesses have a better understanding of the market and a stable revenue stream.
What key terms related to enterprise and business growth are defined in the script?
-Key terms defined in the script include entrepreneur, business plan, capital employed, internal growth, external growth, takeover, acquisition, merger, horizontal integration, vertical integration, forward integration, backward integration, conglomerate integration, and diversification.
Outlines
π Introduction to Enterprise Growth and Business Size
This paragraph introduces the video's focus on the IGCC Business Studies specification point 1.3, which covers enterprise growth, business size, and the various aspects related to these topics. It outlines the learning objectives, including understanding enterprise and entrepreneurship, methods and problems of measuring business size, reasons for business growth or stagnation, and factors contributing to business failure. The paragraph also mentions the importance of a business plan for entrepreneurs and how it can aid in securing loans and planning for the future.
π’ Characteristics of Entrepreneurs and Business Plan Essentials
The second paragraph delves into the definition of an entrepreneur, the benefits and risks associated with entrepreneurship, and the key characteristics of successful entrepreneurs such as hard work, creativity, and effective communication. It also discusses the importance of a business plan, its components, and how it helps in planning and securing financial support. The summary includes the various sections typically found in a business plan, emphasizing the need for a comprehensive strategy, market analysis, and financial projections.
π Government Support for Business Startups
This paragraph examines the role of government in supporting business startups, including the provision of grants and training schemes. It outlines the reasons behind such support, such as reducing unemployment, increasing competition, and boosting economic growth. The paragraph also touches on the concept of the multiplier effect, which describes the positive economic impact of new businesses on local economies, and the potential for new firms to grow into significant contributors to society.
π Measuring Business Size and its Challenges
The fourth paragraph discusses the methods and issues related to measuring business size, including the number of employees, value of output, and capital employed. It highlights the limitations of these methods, such as the potential for misleading comparisons due to differences in industry, production methods, and market positioning. The paragraph emphasizes the importance of understanding business size for various stakeholders, including investors, governments, competitors, and banks.
π Business Growth Strategies and Challenges
This paragraph explores the reasons and benefits of business growth, such as higher profits, increased market share, and economies of scale. It differentiates between internal growth, where a business expands its existing operations, and external growth, which involves mergers or takeovers. The paragraph also addresses the challenges associated with business expansion, including difficulties in control, communication, and financing, and suggests strategies for overcoming these issues.
ποΈ Reasons for Business Stagnation and Failure
The final paragraph examines why some businesses remain small or fail, citing factors such as industry type, market size, and owner objectives. It also identifies common causes of business failure, including poor management, changes in the business environment, liquidity problems, and overexpansion. The paragraph highlights the particular risks faced by new businesses due to factors like lack of experience and resources, and the challenges of entering an established market.
π Conclusion and Key Terms Summary
In the concluding paragraph, the video script wraps up the discussion on enterprise growth and business size, summarizing key points and terms. It invites viewers to engage with the content through likes, subscriptions, and comments, and offers additional resources through the provided Instagram link. The paragraph also encourages viewers to reach out with any questions or feedback, emphasizing the goal of facilitating learning and understanding of the topic.
Mindmap
Keywords
π‘Entrepreneur
π‘Business Plan
π‘Risk
π‘Innovation
π‘Economies of Scale
π‘Market Share
π‘Internal Growth
π‘External Growth
π‘Liquidity
π‘Business Failure
π‘Government Support
Highlights
Introduction to the lesson on enterprise business growth and size, covering key points such as enterprise and entrepreneurship, methods of measuring business size, reasons for business growth or stagnation, and the causes of business failure.
Definition of an entrepreneur and the benefits and disadvantages of entrepreneurship, including independence, risk-taking, and the potential for high income.
Characteristics of successful entrepreneurs, such as hard work, creativity, optimism, self-confidence, and effective communication.
Importance of a business plan for entrepreneurs, including its role in securing loans and guiding the initial years of a business.
Components of a business plan, detailing the description of the business, products and services, market analysis, and financial projections.
Government support for business startups through grants and training schemes, aimed at reducing unemployment and fostering economic growth.
Explanation of the multiplier effect and its role in attracting businesses to new locations, contributing to economic growth.
Methods and problems of measuring business size, including the number of employees, value of output, and capital employed.
Limitations of business size measurement methods, such as capital intensity and the potential for misleading output values.
Reasons why businesses grow, including benefits like higher profits, market share, and economies of scale.
Different ways businesses can grow, such as internal growth through expansion and external growth through mergers and acquisitions.
Problems linked to business growth and potential solutions, like decentralization and careful financial management.
Reasons why some businesses remain small, including industry type, market size, and the owner's personal objectives.
Causes of business failure, such as poor management, environmental changes, financial issues, and overexpansion.
The greater risk of failure for new businesses due to lack of resources, planning, and experience compared to established businesses.
Key terms related to enterprise and business growth and size, defining terms like entrepreneur, business plan, internal and external growth, and various types of integration.
Conclusion of the video with a summary of the lesson and an invitation for feedback, subscriptions, and further engagement.
Transcripts
hey friends my name is zee and you're
watching
you mr eazy and welcome to a new video
for igcc business studies and today
we have the specification point of 1.3
and which is enterprise
business growth and size and by the end
of the lesson you should be able to
describe 1.3.1
enterprise and entrepreneurship 1.3.2
the methods and problems of measuring
business size
1.3.3 why some businesses grow and
others remain small and 1.3.4 which is
why some
which is new or established businesses
fail
so check out the ping comment for all
the time stamps
and we move on now to 1.3.1 enterprise
and entrepreneurship
and will focus on the characteristics of
successful entrepreneurs
and for starters entrepreneur is a
person who organizes
operates and takes the risk for a new
business venture
and the benefits include independence
and they are able to choose how to use
time and money they are able to put
their own ideas into practice
and they may become famous and
successful if the business grows like
really big
and they may be profitable and income
might be higher
and they are able to make use of
personal interest and skills
but disadvantages could be there's a lot
of risk and many entrepreneurs
businesses fail
the capital entrepreneurs have to put
their own money into the business unless
they get a loan from the bank or other
investors
the lack of knowledge and experience in
starting and operating their business if
they are new to the industry
and opportunity cost which is the lost
income from not being an employee
of another business
then we have some characteristics which
includes hard working
and reasons why it is important because
long hours and
holidays are typical for many
entrepreneurs risk takers
like make decisions to produce goods and
services that people might buy
creative or creativity and the new
business needs
new ideas optimistic because they have
to be looking forward to be a better
future
to have a better future self-confident
to convince other people of your skills
and to convince banks
lenders and customers to convince your
service or goods and services or to take
alone
innovative and being able to put new
ideas into practice
independent and they have to work on
their own before they can afford to
employ other people
and an effective communicator by talking
clearly and confidently to banks
other lenders customers and government
agencies
then we have a content of business plan
and how business plans
assist entrepreneurs and a bank will
almost certainly ask an entrepreneur for
a business plan
before agreeing to a loan or overdraft
and by completing a business plan
the entrepreneur is forced to think
ahead and plan carefully about the first
few years
of their business and the entrepreneur
will have to consider the following
questions which includes
what products or services do i intend to
provide
and what will be my main cost and will
be will be enough products to solve to
pay
for them and where would the firm be
located
and what machinery and how many people
will be required for the business plan
and every business plan might be
different but generally business plans
contain the similar headings
which includes these right here
description of bit
of the business which provides a brief
history and summary of the business
the products and services like what is
intended to sell or deliver
and strategy for continuing on
developing products in the future
the market which is which describes the
market the business is targeting like
the user group the market
and there should also be a marketing
strategy and market research data should
be included
number four the business location and
how products will reach the customers
which you have to describe the physical
location if applicable
internet sales or mail order and also
describe how the firm delivers
products and services to the consumers
then we have organization structure and
management which describes the
organization structure
management and details of employees
required and it usually includes the
number of level of skills required for
the employees
any financial information which includes
projected future financial accounting
statements
for several years into the future the
sources of capital which includes the
owner's capital
or the revenue of the bank loans the
predicted cost
the fixed cost and the variable cost the
forecaster
cash flow and working capital and the
projection of
profitability and liquidity ratios
and number seven uh the missing strategy
which includes how to explain
or explain how the business intends to
satisfy customers needs
and gain brand loyalty a summary should
be included to bring together all the
points from above that should be
demonstrated
that all that should demonstrate that
the business will be successful
then we have the contents of a business
plan more about the business plan
without a detailed business plan the map
will be reluctant to lend money to the
business
this is because like the owners of the
new business cannot show that they have
the
thought of seriously about the future of
seriously plan
about the future and plan for the
challenges they will meet
so here's just an example of a business
plan
then we have why and how governments
support business startups like grants or
training schemes
and while government supports business
startups most government offers offer
support to entrepreneurs by encouraging
them to set up business
and reasons why the support is driven is
because to reduce unemployment
new businesses will often create jobs to
help reduce unemployment
and this thing called multiply effect
it's not in the
igcc business spec points but it's in
the iccc geography spec points and i
made a video about it in geography
and i'll link into the description but
anyway what the multiplier effect is
that
when the new business sets up it can uh
it can introduce or it can
um increase employment
and some job opportunities around the
area and this
in turns bring up the land prices around
it and more businesses will be attracted
to set up in that location
and number two to increase competition
new businesses give consumers more
choice and compete with already
established businesses like economic
growth
and to increase output the economy
benefits from increased output of goods
and services which include
which increases the gdp the growth
domestic product
to benefit society entrepreneurs may
create social enterprises which offer
benefits
to that society other than jobs and
profit
for example supporting disadvantaged
groups of society
and they can grow further and all large
businesses
were small ones by supporting today's
new firms
the government may be helping some other
firms that grow to become very large or
important in the future
which brings us back to the benefit
society
then we have 1.3.2 the methods and
problems of measuring business size
we have like for example the number of
people employed value of output
capital employed and missing size and
distance can vary greatly in terms of
the size for example the firms can be
owned and run by a single individual
and some business can employ and employ
like hundreds of thousands of people
or workers all over the world and who
find it useful to compare the size of a
business and it
includes the investors which before
deciding which business to invest
the government and their different tax
rates for small and large businesses
competitors to compare their size and
importance with other firms
workers to have some idea of how many
people they might be working with
and the banks to see how important a
loan to the business is compared to its
overall size
the most common way to measure business
size are including
the number of people employed the
workers to have all the employees
the value of output the value of sales
and the value of capital employed
and then here's more about the
limitations of methods of measuring
business size
the number of people employed some firms
use methods which employ very few people
but produce high output levels like
automated factories
these are called capital intensive firms
because they use
a lot of capital a lot of money to buy
the machineries to automate the
processes
the value of output a high level of
output doesn't mean that a business is
large when using other other methods of
measurements
a firm employing fewer people might
produce several very expensive computers
each year
this may give higher output figures than
the firm selling cheaper products by
employing more workers
the value of sales it could be
misleading to use this measure when
comparing the size of businesses that
sell very
different products for example market
store selling street
versus retailers selling luxury handbags
the value of capital employed this has
similar problems to the one of the first
one the number of people employed
a company employing many like many works
may use labor intensive methods of
production or like the workers
and this gives low output levels and use
little capital equipment
and then we have the benefits which is
1.3.3 why
some businesses grow and others remain
small
and heading is what the owners of
business may want to expand in business
which brings us to the benefits of
expanding business
which includes the possibility of higher
profits for the owners
more status and privilege for the owners
and managers which in turn
gives higher salaries and often paid to
the managers who control bigger
businesses
number three lower average cost which
relates to the economies of
economies of scale and number four
larger share of its market
which the proportion of the total market
sales it makes is greater
this this gives a business more
influence when dealing with supplies and
distributors
and consumers are often attracted of the
bit names in the industry
for example we know that google facebook
and other stuff
then we have different ways in which a
business can grow
there are two main different ways which
includes internal growth for example a
russian owner could open another
restaurant in the other towns
this growth is often paid for by the
like the profits off from the existing
business
this type of growth is often quite slow
but easier to manage than external
growth
which brings us to the second way which
is external growth which involves a
takeover or a merger with another
business
here are three examples of external
growth and the benefits
number one horizontal merger or
horizontal integration
and when one firm manages with optics
over another one used in the same
industry
at the same stage of production and the
merger reduces the number of competitors
and opportunities for economies of scale
number two vertical measure of vertical
integration
it's when one business merges with all
things over another one in the same
industry but at different stages of
production
and this separates into forward and
backward
and forward is when business integrates
with another business
which is at a later stage of production
which is closer to the consumer like at
let's say the tertiary industry tertiary
sector
and which is when merger gives an
assured outlet for its product and
retailer could be prevented from selling
competitive models of car and another
one is backward is when a business
integrates with another business at an
earlier stage of production
which is closer to the raw material
supplier which is in the primary or
secondary sector
and merger gives a supply of important
components and supplies could be
prevented from supplying another
manufacturers
and lastly is conglomerate merger or
conglomerate integration
it's when one business merges with
autism over another business
in a completely different industry this
is known as diversification
diversification and this means that the
business spreads
the risk as they diversify its activity
and there may be a transfer of idea
between different sections
or different sectors which the business
owns
then we have the problems linked to
business growth and how these might be
overcome
and not all business expansion leads to
success
and there are several reasons why
business expansion can fail to increase
profit or achieve the other objectives
set by the managers
and here's some problems resulting from
expansion and possible ways to overcome
and larger business is difficult to
control but you can operate your
business in small units
and this is a form of decentralization
larger businesses that business leads to
poorer communication which means a
longer chain of command
and you can operate the business in
smaller units and use the latest iot
equipment and
telecommunication but even these can
cause problems which
mean they may fail or may not be working
correctly
and expansion costs so much that the
business is short of finance
which means the cost increases then
a possible way to overcome is to expand
more slowly
and use profits from slowly expanding
business to pay for the further growth
to ensure sufficient long-term financing
is available
number four integrating with another
business is more difficult than expected
which means there may be poor management
and this can be overcome by introducing
a different style of management requires
good communication with the workforce
and they will need to understand the
reason for the change
then we have why some businesses remain
small
and why many businesses remain small and
not all businesses grow
there are several reasons why many
businesses remain small including
the type of industry that the business
operates in the market size which is
which means that if there's a mass
market on the niche market
and the owner's objectives and here are
the types of industry that the business
operates in
from the top here some examples of
industries where most businesses remain
small
are hairdressing car repairs convenience
store
which is about some convenience store
are quite big like 7-eleven
and businesses in this industry offer
personal services are specialized
products
and if they want to grow too large they
will find it too difficult to offer the
clothes and personal service demanded by
products
and we have the market size
if the market which is the total number
of consumers is
small the businesses are likely to
remain small
this is because even if your supply is
high your customers demand is low
and the owner's objectives some business
owners prefer to keep their
businesses small and they can be more
interested in keeping control over small
business knowing all their stuff in
customers
then running a much larger business
owners sometimes also wish to avoid the
stress and
worrying a worry of running a large
business
then we have 1.3.4 why some new or
established businesses fail
we have the cause of business failures
and not all businesses are successful
the rate of failure of uniform business
are high
and even all established businesses can
close down because they make losses or
run out of cash
and here are the main reasons for some
why like why businesses fail
including the lack of management skills
and the lack of experience
can lead to bad decisions and family
businesses can feel because the children
of the founders of business do not
necessarily make
good managers number two the changes in
the changes in business environment
the failure to plan for a change is a
feature in many of the later chapters
as it adds to the risk and uncertainty
of operating the business
new technology powerful new competition
competitors and major economic changes
are just some of the factors
that can lead to business failures if
they're not responded to efficiently
number three liquidity problems or poor
financial management
a shortage of cash flow or cash means
workers
suppliers and landlords and governments
cannot be paid for what they are owned
failure to plan or forecast cash flows
can lead to this problem and it's
and it is a major cause of businesses of
all sizes failing
number four over expansion of which is
the this economies of scale
when your business expands too quickly
it can lead to big problems of
management and finance
if these are not not solved these
difficulties can lead to the whole
businesses closing down
and then we have why new businesses are
at a greater risk of failing
many new businesses fail due to the lack
of finance and other resources
which includes poor planning and and
inadequate research
and in addition the owner of a new
business may let the experience and
decision making skills
of managers who work for larger
businesses this means that the new
businesses are nearly
always more at risk of failing than
existing well-established business
and also because of the new uh like
sorry not new but because existing and
well established businesses already have
their foot on the ground
and they have a stable income not sorry
they have a stable revenue
and know what the market is like so it's
really difficult for a new business to
just
join into the industry or market to and
it takes lots of time to actually
know and analyze the market
and then we have some key terms for the
1.3 enterprise and business growth and
the size
entrepreneur is a person who organizes
operates and takes the risk for a new
business venture
business plan is a document containing
the objectives
and the business objectives and the
important details about the operations
finance and the owners of the new
business
capital employee is the total value of
capital use in the business
internal growth is occurred it appears
when your business expands
its existing operations external growth
is when your business takes over or
merges with another business
it's often called integration as one as
one business is integrated into
another one takeover is our over or
acquisition
is when one business buys out the owner
of another business
which then becomes part of the predator
business which the business which has
taken and taken it over and the merger
is when the owner of two businesses
agreed of two business to
like to join the businesses together to
make one business
and horizontal integration is when one
business business merger with
or takes over another one in the same
industry at the same stage of production
then we have vertical integration
inventory integration is when one
business merges with artists over
another one in the same industry but at
a different stages
stage of production and vertical
integration can be forward or backward
and forward is closer to the consumer
stage and backward is closer to the raw
material stage
an area of conglomerate and integration
and diversification
conglomerate integration is when one
business merges with arctics over
business in a completely different
industry this is also known as
diversification
and that's it for this long video for
1.3 specifications for enterprise
business growth and size and i hope you
guys found it useful and found it
helpful and if you did
please leave a like and subscribe and
comment down below if you have any
questions or criticisms
and drop me an email if you have any
questions or any requests
and check out my instagram in the
description for more daily content
and i hope you guys found it useful and
i'll see you guys in the next video
until then stay safe and
happy learning
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