Why new business ideas arise
Business is dynamic, so new opportunities keep emerging. Three drivers spark new ideas: changes in technology (new tech creates products that did not exist, e.g. streaming replacing DVD rental, and makes old ones obsolete); changes in consumer wants (tastes shift, so a firm that fails to adapt loses customers); and products becoming obsolete (when a product stops meeting needs, a gap opens for a new business).
Original vs adapted ideas; adding value
New ideas come from two routes: an original idea (a brand-new invention — rare, high-risk) or adapting an existing product (improving something already proven — lower risk). The role of enterprise is to combine resources to make goods that meet customer needs and add value — worth more than the input cost. Value comes from convenience, branding, quality, design or a USP. The purpose of business activity is to do this profitably.
The entrepreneur: organise, decide, risk
An entrepreneur organises resources (land, labour, capital, enterprise), makes the key decisions (what to sell, at what price) and takes risks — staking their own money and reputation, risking loss if the business fails. The reward is usually profit, though non-financial goals (independence, challenge) matter too. Key traits: calculated risk-taking, spotting an opportunity, determination and strong decision-making.
Drawn from real examiner reports.
Adapting route: name what is specific
A question on the impact of adapting an existing product wants what is specific to that route — lower cost, faster speed to market, an already proven market — not the general benefits of launching any new product. Answers praising a new product as exciting, without tying those gains to it being adapted, read as generic and scored 0 on AO2 despite sound AO1.
June 2023 Paper 1 Q3(e): roughly half wrote generically about launching any new product and never addressed the adapting route, scoring 0 despite good structure.
Original idea ≠ adapting existing
An original idea has never existed before — a genuine invention with no proven market. Adapting changes or improves an existing product. They carry different risks: an original idea has no proven demand (higher risk, no direct rival); adapting starts from a proven market (lower risk, but many rivals). Name the route correctly before weighing pros and cons.
Entrepreneur ≠ manager
An entrepreneur creates the business and takes the founding financial risk, staking their own money to start it. A manager runs an existing business day-to-day and is usually paid a salary rather than risking personal capital. In an enterprise answer, credit goes to the risk-taking, opportunity-spotting founder — ordinary management duties miss the question.
A USP must be unique to you
A USP (unique selling point/proposition) is a feature that no rival offers — it is what makes the product genuinely distinctive. A feature every competitor also has (e.g. simply "we sell coffee") is not a USP. In added-value or competitiveness answers, name the specific feature that sets this firm apart, then link it to why customers choose it over rivals.
Taking a risk ≠ certain failure
Risk means the possibility of loss, not a guarantee of it. Entrepreneurs take calculated risks — informed by research — in pursuit of a reward, usually profit. Calling a decision bad simply "because it is risky" earns nothing; every business decision carries some risk. Judge instead whether the likely reward outweighs the size and likelihood of the possible loss.
Adding value ≠ making a profit
Adding value means the customer sees the product as worth more than its bought-in inputs (branding, design, quality or a USP). A T-shirt costing £3 to make but sold for £40 has £37 of added value. Profit is what remains after all costs are taken from revenue, so a firm can add much value yet make little profit. Explain the method, not "it charges more".
AO3: weigh, do not reverse or list
On a 9-mark Justify or 12-mark Evaluate, the AO3 marks reward a supported judgement. Reversing the argument, or listing both options' benefits, is not evaluation. Pick one option for THIS firm, say why it outweighs the other, and end with a new "it depends" point.
Impact items: two sides, five strands
On an "impact" or "benefit" levelled item you may cover up to two impacts (one positive, one negative is fine). Two short paragraphs make it easier to build the five linked development strands a Level 3 answer needs — two advantages alone are not two strands.
Match the command word
Read the command word exactly. "State/identify" wants the term only; "explain a benefit/impact" wants why (a point plus two linked strands); "explain a method/way" wants how it works. Never open by repeating the question — it earns nothing.
No application caps you at 3 of 6
In Sections B and C every point must be applied to the named business — repeating its name from the stem is not context. A generic answer, however strong, cannot beat 3 out of 6 on an "Analyse" item. Weave the firm's product, market or figures into each paragraph.
Business is dynamic — it changes constantly. Three main triggers create new opportunities:
| Trigger | How it creates an opportunity |
|---|---|
| Changes in technology | New technology makes new products possible (e.g. smartphones), and makes old ones obsolete (e.g. printed maps) |
| Changes in consumer wants | Tastes shift — demand for healthier food, sustainability, or personalisation opens gaps a new business can fill |
Full notes, flashcards, Q&A and the topic quiz for every premium subject.
Premium plans are US$8.99/month or US$49.99/year — first month free.
Studying with a parent's blessing? Show them this.
