1.1 Enterprise

2026 Syllabus Objectives

By the end of this topic, you should be able to explain:

  1. The purpose of business activity
  2. The factors of production needed for business activity: land, labour, capital and enterprise
  3. The concept of adding value
  4. The nature of economic activity, the problem of choice and opportunity cost
  5. The dynamic business environment
  6. Why businesses succeed or fail
  7. Differences between local, national, international and multinational businesses
  8. The qualities entrepreneurs and intrapreneurs need for success
  9. The role of entrepreneurship in creating and starting up a business
  10. The role of intrapreneurship in the ongoing success of a business
  11. Barriers to entrepreneurship
  12. Business risk and uncertainty
  13. The role of business enterprise in the development of a country
  14. The meaning and purpose of business plans
  15. The key elements of business plans
  16. The benefits and limitations of business plans

Main Content

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1. The Purpose of Business Activity

A business is an organisation that uses human effort, physical resources and money to produce goods or services for customers.

Business activity has three main purposes:

① Produce goods or services

  • Goods are physical objects you can touch and store — for example, a car, a mobile phone, or a games console.
  • Services are things people do for you that you cannot touch or store — for example, a haircut, insurance, or banking. They happen at the moment they are needed.

② Meet customer needs

  • A business must identify what its customers want and then produce something that satisfies those wants.
  • When customers feel their needs are met, they keep coming back. This builds loyalty (repeat customers) and revenue (money coming into the business).

③ Add value

  • Simply producing a product is not enough. The business must make the product worth more than the raw materials used to create it. This is called adding value and is explained in detail below.

2. The Factors of Production

To produce anything, a business needs resources. These resources are grouped into four categories called the factors of production.

FactorWhat it meansExample
LandNatural resources that exist in the world and are not made by peopleOil, farmland, timber, water
LabourThe human effort — both physical and mental — used in productionA factory worker, a teacher, a programmer
CapitalMan-made tools and equipment used to produce goods/servicesMachines, computers, factory buildings
EnterpriseThe willingness of a person to take a risk and organise the other three factors to produce goods/servicesAn entrepreneur starting a business

Important detail about Labour: Not all labour is equal. A highly trained surgeon contributes more than an unskilled worker because of education, training and experience. Better-quality labour usually means higher productivity (more output per worker).

Important detail about Enterprise: The entrepreneur combines land, labour and capital. Without enterprise, the other three factors sit idle and nothing is produced.

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