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Characteristics Economic and Dynamic Activity:: Profit Potential

Enterprise involves organizing factors of production through starting a business to make a profit while bearing risks. Entrepreneurs plan, start, and manage businesses while risking losing money if unprofitable. They decide what to produce based on demand and how to produce it. Enterprise combines labor, land, capital and results in profit. It is an economic and dynamic activity that creates wealth through allocating scarce resources. Profit potential is the expected return for entrepreneurs' risk. Risk bearing is essential as new ideas may not immediately succeed and entrepreneurs must be patient. Enterprise is connected to innovation through constantly searching for new ideas to assess and improve business operations.

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364 views

Characteristics Economic and Dynamic Activity:: Profit Potential

Enterprise involves organizing factors of production through starting a business to make a profit while bearing risks. Entrepreneurs plan, start, and manage businesses while risking losing money if unprofitable. They decide what to produce based on demand and how to produce it. Enterprise combines labor, land, capital and results in profit. It is an economic and dynamic activity that creates wealth through allocating scarce resources. Profit potential is the expected return for entrepreneurs' risk. Risk bearing is essential as new ideas may not immediately succeed and entrepreneurs must be patient. Enterprise is connected to innovation through constantly searching for new ideas to assess and improve business operations.

Uploaded by

Kh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Enterprise

def:= Enterprise, or entrepreneurship, is the organizing of the factors of production by an


entrepreneur who takes a risk in starting a business with the expectation of making a profit.
Entrepreneurs are the people who go through the process of planning, starting, and managing a
business and who crucially carry the risk of losing their money if the business does not profit.
Entrepreneurs decide what to produce – taking into account consumer demand, and how to
produce it. Enterprise combined with labour, land and capital results in profit.

Characteristics

● Economic and dynamic activity:


Entrepreneurship is an economic activity because it involves the creation and operation of an
enterprise with the aim of creating wealth by allocating scarce resources efficiently. Since this
allocation takes place continuously in the midst of a volatile business environment,
entrepreneurship or enterprise is regarded as a dynamic force.

● Profit potential
Profit potential is the most likely level of return to the entrepreneur for taking on the risk of
starting a business.” Without profit potential, the actions of entrepreneurs would be only an
abstract and a hypothetical leisure activity.

● Risk bearing:
The essence of enterprise is the ‘willingness to assume risk’ arising out of the fabrication and
execution of new ideas. Uncertainty often follows new ideas and their results may not be
immediate and favorable. An entrepreneur should be patient to see his work produce results. In
the intervening period (time gap between the conception and implementation of an idea and its
results), an entrepreneur has to assume risk. If an entrepreneur is not willing to assume risk,
entrepreneurship would never succeed.
● Connected to innovation:
Enterprise involves a constant search for new ideas. Enterprise drives people to continuously

assess the existing methods of business operations so that more efficient and advantageous

systems can be designed and put into effec​t.

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