WEBVTT 00:00:00.500 --> 00:00:03.955 Welcome to GCSE Edexcel Business revision. 00:00:04.105 --> 00:00:07.767 Unit B U S 1: Enterprise and entrepreneurship. 00:00:10.433 --> 00:00:14.187 A business combines resources to supply goods or services. 00:00:14.337 --> 00:00:19.674 Goods are physical products, such as bread; services are activities, such as a haircut. 00:00:19.824 --> 00:00:21.936 Many businesses provide both. 00:00:24.600 --> 00:00:26.648 Customer preferences change. 00:00:26.798 --> 00:00:35.469 Growing demand for reusable packaging might create an opportunity, while falling demand for a product can make an established business less successful. 00:00:38.133 --> 00:00:44.169 New technology creates opportunities to offer new products or to deliver existing services differently. 00:00:44.319 --> 00:00:47.933 A booking app can make a local tutor easier to find and pay. 00:00:50.600 --> 00:00:57.223 A product becomes obsolete when it is no longer useful or wanted, often because an alternative replaces it. 00:00:57.373 --> 00:01:01.519 Businesses must consider how quickly technology or habits might change. 00:01:04.200 --> 00:01:06.813 An original idea offers something new. 00:01:06.963 --> 00:01:17.430 Adaptation changes an existing idea, perhaps through a different design, lower price, new location or greater convenience; an idea does not have to be completely new to succeed. 00:01:20.100 --> 00:01:23.051 Innovation can improve a product or a process. 00:01:23.201 --> 00:01:30.689 A bakery might introduce gluten-free products or improve online ordering; either could help it serve customers more effectively. 00:01:33.367 --> 00:01:37.244 An opportunity needs customers who are both willing and able to pay. 00:01:37.394 --> 00:01:43.259 Interest on social media does not establish that enough people will buy at a price that covers costs. 00:01:45.933 --> 00:01:50.275 Businesses monitor customers and competitors and adjust their products. 00:01:50.425 --> 00:01:56.450 Responding too slowly can lose sales; changing too quickly without research can waste scarce finance. 00:01:59.100 --> 00:02:03.862 Risk is the possibility that an outcome differs from what the entrepreneur expects. 00:02:04.012 --> 00:02:09.653 Demand, costs and competitors' responses are uncertain, so success cannot be guaranteed. 00:02:12.333 --> 00:02:16.528 Business failure can mean closure because the business cannot continue trading. 00:02:16.678 --> 00:02:23.545 An unsuccessful owner may lose the savings invested and, with unlimited liability, other personal assets. 00:02:26.200 --> 00:02:29.493 Financial loss occurs when costs exceed revenue. 00:02:29.643 --> 00:02:33.746 Even a profitable business can fail if it lacks cash when bills fall due. 00:02:36.400 --> 00:02:45.955 Self-employment can offer less security than a regular wage: income may fluctuate, working hours may be long and the owner remains responsible for decisions. 00:02:48.633 --> 00:02:51.757 Profit is a possible reward for successful trading. 00:02:51.907 --> 00:02:57.911 It can support the owner's income or be reinvested; revenue alone is not the entrepreneur's profit. 00:03:00.567 --> 00:03:05.266 Independence gives an entrepreneur control over decisions and working practices. 00:03:05.416 --> 00:03:10.887 Success can also bring satisfaction from solving a problem or meeting a social objective. 00:03:13.567 --> 00:03:20.686 Research, cash-flow planning, insurance where appropriate and starting on a smaller scale can reduce particular risks. 00:03:20.836 --> 00:03:24.011 None removes uncertainty or guarantees success. 00:03:26.667 --> 00:03:32.436 Compare the size and likelihood of a risk with the possible reward and the owner's circumstances. 00:03:32.586 --> 00:03:36.779 A large loan may be more dangerous for an owner with little cash available. 00:03:39.433 --> 00:03:43.595 Enterprise involves identifying an opportunity and acting on it. 00:03:43.745 --> 00:03:50.139 The entrepreneur organises people, equipment, materials and finance to turn an idea into a business. 00:03:52.800 --> 00:03:58.101 Entrepreneurs make decisions about products, prices, suppliers, employees and location. 00:03:58.251 --> 00:04:03.479 They take risks because resources must often be committed before customer demand is known. 00:04:06.133 --> 00:04:11.785 Business activity aims to meet customer needs by producing goods or providing services. 00:04:11.935 --> 00:04:15.931 Sales are more likely when the offer provides a benefit customers value. 00:04:18.600 --> 00:04:24.709 Added value is the difference between a product's selling price and the cost of bought-in materials and components. 00:04:24.859 --> 00:04:29.765 It is not the same as profit because wages, rent and other costs still need paying. 00:04:32.433 --> 00:04:36.481 Convenience can add value by saving customers time or effort. 00:04:36.631 --> 00:04:41.442 A prepared sandwich may sell for more than the ingredients because it is ready to eat. 00:04:44.100 --> 00:04:48.697 Branding identifies a business and can create trust or a distinctive image. 00:04:48.847 --> 00:04:53.795 Quality and attractive, useful design can also make customers willing to pay more. 00:04:56.467 --> 00:05:01.373 A unique selling point (USP) is a distinctive feature that helps the offer stand out. 00:05:01.523 --> 00:05:05.799 It must matter to the target customer; being different alone is not enough. 00:05:08.467 --> 00:05:15.367 Worked example: a craft seller buys materials for 8 pounds and sells the finished item for 25 pounds. 00:05:15.517 --> 00:05:20.822 Added value equals 25 pounds minus 8 pounds equals 17 pounds . 00:05:20.972 --> 00:05:27.232 If labour and other costs are 12, pounds profit on the item is 5, pounds not 17 pounds. 00:05:27.382 --> 00:05:29.835 Added value and profit are different 00:05:34.500 --> 00:05:38.672 Fictional case: a local repair service offers evening collection. 00:05:38.822 --> 00:05:45.563 Busy customers may pay more for convenience, but collecting devices also increases labour and transport costs. 00:05:48.233 --> 00:05:57.245 Build an explanation from the case: evening collection saves working customers time leads to the offer becomes more attractive leads to sales may rise. 00:05:57.395 --> 00:06:01.223 The effect depends on whether extra revenue covers collection costs. 00:06:03.900 --> 00:06:09.409 When judging the idea, consider demand, competing services, available skills and cash. 00:06:09.559 --> 00:06:16.843 Recommend testing a limited collection area before committing to a costly expansion, explaining why that fits this business. 00:06:19.500 --> 00:06:22.305 That completes Enterprise and entrepreneurship. 00:06:22.455 --> 00:06:25.800 Revisit the notes and test yourself on the revision website.