The purpose of business and enterprise
A business is an organisation that provides goods (physical, tangible products) or services (intangible actions performed for a customer) to satisfy customer wants or needs.
Before you start
No specific prerequisites - this is a good place to start.
Method
- Learn the definition of a business and distinguish a good (a physical, tangible product) from a service (an intangible product or action).
- Learn that enterprise means recognising a gap between what customers want and what is currently on offer, and taking the risk of setting up a venture to meet it.
- Learn the difference between a need (essential, e.g. food) and a want (non-essential, e.g. a takeaway coffee), since most GCSE case-study businesses exist to meet wants.
- For state or identify questions, give a single word or short phrase straight from the case, with no explanation needed.
- For explain questions on why a business exists or what purpose it serves, give one point (e.g. it meets a local need) and one linked consequence for the business or its customers (e.g. so nearby customers no longer have to travel further, increasing footfall).
- Learn how the scale of a business, from a small local sole trader through to a large public limited company, affects the scale of the need it can meet.
- Practise applying the definitions of business and enterprise to a named case-study business given in an exam extract, rather than only reciting a definition.
Worked example
Priya has noticed that her village has no bakery, and residents currently drive 20 minutes to the nearest town to buy bread. She is thinking about opening a small bakery in the village. Explain one reason why Priya's bakery idea is an example of enterprise.
- Identify the gap Priya has spotted: no bakery currently serves the village.
- Identify the risk she is prepared to take: investing her own time and money in premises, equipment and ingredients with no guarantee of success.
- Link the gap to the need it would meet: villagers currently have to travel to buy bread, so a local bakery would meet an unmet want closer to home.
- Write the explained answer: Priya's idea is enterprise because she has spotted a gap in provision, no local bakery, and is willing to take the risk of setting up a business to fill it, which meets villagers' want for bread without a 20-minute drive.
Practice questions
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Q1State the difference between a good and a service.Show answer
Answer: A good is a physical, tangible product, e.g. a loaf of bread; a service is an intangible product or action performed for a customer, e.g. hairdressing.
Q2Identify whether a haircut is a good or a service.Show answer
Answer: A service.
Q3State one reason why entrepreneurs take on risk when starting a business.Show answer
Answer: Because there is no guarantee customers will buy enough of the product to cover costs, so money invested could be lost.
Q4Give an example of a want, as opposed to a need.Show answer
Answer: For example, a cinema ticket, a designer handbag, or a takeaway coffee, none of which are essential to survival.
Q5What term describes the process of identifying a gap in the market and taking the risk to fill it?Show answer
Answer: Enterprise.
Q6Explain why most private sector businesses aim to make a profit.Show answer
Answer: Because profit is the reward owners receive for taking the risk of investing their own money, and it allows the business to survive and grow.
Q7A market trader sells umbrellas only on days when rain is forecast. Suggest what gap in the market they are meeting.Show answer
Answer: The want for protection from rain among people who did not bring their own umbrella.
Exam-style questions
Written in the style of a GCSE Business exam paper, with a full mark scheme.
Explain two reasons why an entrepreneur might decide to set up a new business rather than remain an employee.
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Zaid is a graphic designer who has worked for the same advertising agency for six years. He has saved enough money to cover three months of living costs, and two local businesses have already asked him to design their logos as freelance work. He is trying to decide whether to leave his job to set up his own graphic design business. Evaluate whether Zaid should leave his job to become an entrepreneur.
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See real GCSE Business past-paper questions, with official mark schemes →
Free printable worksheet
Want more practice on paper? Download the the purpose of business and enterprise worksheet pack - 8 pages of exam-style questions with a full mark scheme. One email opens every download in this browser for 14 days - no account, no card. Print it for personal and classroom use.
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