Understand the principle of taking a

calculated risk

Understand that weighing up the risks and

the rewards of a new business idea is an

important part of the process of judging the

outcome and viability of a start-up

To see mistakes as part of the process of

learning to succeed

Risking it all : Opening a restaurant

‘The Modern Pantry’

In small groups Think of all of the risks associated with

starting up a small business

Why are they risks?

What are the rewards of such risks?

Are they worth taking?

We will watch 15 minutes of Dragon’s Den

After each pitch; we will discuss what risks the Dragons may have been considering

Watch: here

Risks

If the risks

work, the business

is successful

RewardsIs there a big enough gap in the market?

Have you got enough capital?

Getting the right people working for you

Will I secure enough customers from other rivals?

Become wealthy

Selling the business once it is established

Get excitement

The buzz of risks paying off motivates many people

Have control

Many people dislike being told what to do.

Does the product say what it says it does?

Is it really what customers want?

Invest enough

money to

upgrade the

iPhone?

Look to upgrade the

phone’s ability?

Invest money in

advertising?

Voice technology

Update the phone

design?

Create a new image

Lose competitive edge

YES

YES

YES

NO

NO

NO

Risks are not always risky – Bloomsbury risked £2500 on the Harry Potter book, which is not a lot of money for a business, and now generates yearly profits of £20 million

Big firms calculate that 1 in 5 products is successful They therefore release lots of new products backed

by expensive advertising.

A flopped product may cost them £10 million

A successful product can makes them £100 million.

Four flopped products costs £40million, one successful product is £100 million

Therefore the risk is worthwhile.

To produce

another film

sequel in the

Harry Potter

series

Risks

If the risks

work, the business

is successful

RewardsIs there a big enough gap in the market?

Have you got enough capital?

Getting the right people working for you

Will I secure enough customers from other rivals?

Become wealthy

Selling the business once it is established

Get excitement

The buzz of risks paying off motivates many people

Have control

Many people dislike being told what to do.

Does the product say what it says it does?

Is it really what customers want?

Microsoft are thinking of marketing a laptop

which is completely run on voice commands

and touch screen

Meaning no keyboard and no mouse.

Calculate the risks of this product for the

company.

Market Gap

Capital

Getting the right people to work for you?

Getting customers from rivals?

Does the product do what it should?

Is it what customers want?

Voice

activated, touc

h screen

computer

A new business starts out with few, if any, customers and is likely to face __________ from existing firms. To succeed it needs to plan its launch carefully and work out how to create a competitive ________ over its rivals. To gain this advantage, it needs to offer a product which customers prefer to a rival's product.

Setting up a business involves ____ and ______. Profit is the reward for risk-taking. Losses are the ______ of business failure.

An owner may decide to close a business if losses are being made, or if the level of ______ is not enough to make trading risks or hours worked worthwhile.

Competition advantage risks reward penalty profit

UK Red bull wesbite: here

Answer Q: 1,2,3

Worksheet GCSE A-Z Calculated Risk: here