1.
1 Revision Questions
1. Explain one problem that a new business will face [2 points]
New businesses often struggle with lack of finance since they don´t have sufficient
liquidity to run the business on a daily basis, and entrepreneurs often underestimate how
much it would cost to keep the business running.
2. Describe two steps in setting up a new business [4 points]
Firstly, the entrepreneur must refine their idea, and spend some time collecting
feedback from others on this idea. In other cases, the entrepreneur needs to try out different
technologies, or they might need to conduct market research to ensure there is a market for
their product or service. The next step would be preparing a business plan, which is a
roadmap of how the business will achieve its goals and how they will get started and operate.
3. Describe added value with the help of an example [2 points]
Added value is the difference between what it costs to produce a product or service,
and the selling price. It's a measure of how much value was created through the process of
production. An example of this can be a business that offers English classes with native
speakers, even though the teacher only gets $15/hour, the class costs $20/hour because of the
added value of the business entity that connects the teachers and students, and manages the
resources of the business.
4. Explain factors of production with the help of an example of a business [4 points]
For winery that produces and sells their own wine, their land would be the vineyard
itself, their labour would be the farmers who take care of the vineyards, the capital would be
the machinery used to maintain the land and to water the vineyards, and the entrepreneurship
would be the knowledge and expertise on the wine industry and the marker that the owner of
the winery has.
5. Analyse two benefits to your country’s economy of an increase in the number of new
business start-ups by entrepreneurs. [6 points]
In Spain there are very high rates of unemployment, and more business start-ups
would generate way more job opportunities, reducing these rates. A reduction in
unemployment strengthens the economy by reducing the financial burden on government
welfare programs and increasing tax revenue from both employees and employers.
Additionally, it can lead to innovation and economic diversification, creating more
opportunities for the businesses in Spain to collaborate with businesses abroad, and sell their
products and services there.
Revision Quiz online:
https://www.bbc.co.uk/bitesize/guides/zpvw3k7/revision/1
Case study: Abu Dhabi added 80 economic activities in 2021
Abu Dhabi's economy has recovered strongly from the pandemic. Shutterstock
Abu Dhabi added 80 economic activities in 2021 spanning key sectors as the emirate seeks
to attract more businesses as the recovery from the coronavirus pandemic continues.
Last year's additions brought the total number of economic activities to 4,062, reflecting the
appeal of the capital's entrepreneurship scene, the Abu Dhabi Business Centre, a unit of the
emirate's Department of Economic Development (Added), said on Monday.
The new activities cover the commercial segment (40), followed by professional (25),
industrial (six), agricultural (five), crafts (two) and tourism (two), a statement said.
“The new added economic activities reflect the vitality of the business sector in Abu Dhabi,
which witnesses expansion in specialised activities,” Mohammed Al Mansouri, executive
director of the Abu Dhabi Business Centre, said.
“It also reflects the Abu Dhabi Department of Economic Development's efforts to ensure the
ease of doing business as we regularly study the economic sector to know the market
demands and requirements.”
Abu Dhabi's economy has recovered strongly from the pandemic, with its non-oil
economy rising an annual 4.1 per cent in 2021, driven by robust government policies.
The growth was led by the agriculture, forestry and fishing sector, which surged by more
than 23 per cent on a yearly basis, data from the Statistics Centre – Abu Dhabi showed.
In the same week, Added said the number of new economic licences issued in the emirate
rose 22 per cent in 2021 to 25,427, owing to government initiatives that strengthened
investor confidence.
“Adding new activities allows entrepreneurs to issue necessary licences to do business and
launch their projects, which will contribute positively to commercial activity and economic
development in Abu Dhabi,” Mr Al Mansouri said.
In January, Abu Dhabi removed more than 20,000 requirements to set up businesses in the
emirate as part of an overhaul led by Added as it aims to attract more investment.
The breeding of a number of animals was among the new economic activities added by Abu Dhabi in 2021.
Photo: Adihex
The revamp began in August last year, the month Abu Dhabi cut the number of
requirements to set up a business in the emirate by 71 per cent.
A month earlier, Added and other government entities cut business set-up fees by 94 per
cent to Dh1,000 ($272). Additional fee reductions were announced in September as the
emirate sought to boost its competitiveness.
New commercial undertakings added in 2021 included activities ranging from broadcasting
and eSports event management to securities and mortgages, as well as insurance and social
innovation.
The industrial sector added the manufacture of military equipment and systems, while
agriculture added bee-keeping and the breeding of animals to its set of activities.
The professional category included activities for customs consultancy, military aviation,
cyber security, gaming and farmer training, while new crafts and artisan activities included
engine cleaning and military ship maintenance.
Reference: (2022). Retrieved 15 October 2022, from
https://www.thenationalnews.com/business/economy/2022/04/18/abu-dhabi-added-80-economic-activities-in-20
21/.
(a) Define economic activities [2 points]
Economic activities refer to actions that produce, trade, sell, or distribute goods or services.
In the case of Abu Dabi, it ranges from breeding of animals to broadcasting and eSports event
management.
(b) Explain any two economic sectors with examples from the case [4 points]
In this case study the primary sector is present, when they mentioned the growth of the
agriculture, forestry and fishing sector. These three are all part of the primary sector because
they are activities involved with the extraction of natural resources, like crops, trees, or fish.
The secondary sector in this case study is represented through crafts.
(c) How can decreased business set up fees increase competitiveness in
Abu Dhabi’s market [4 points]
Decreased business set up fees can be seen as an opportunity for existing or new
entrepreneurs that have been wanting to start a new business, but were worried about the
financing since it's one of the biggest issues of starting up a business. The case study
mentions there has been a huge increase in economic activities since these fees were reduced.
(d) Evaluate the impact of thriving entrepreneurship in Abu Dhabi’s economy [10 points]
Thriving entrepreneurship will impact Abu Dhabi´s economy in a positive way because it will
boost business activities, which will increase the market size, and therefore it will create more
competition within the market. Clients will have more options to choose from and different
price ranges. As it´s mentioned in the case study it will also allow Abu Dhabi's economy to
rely on several sectors, and they no longer have to rely only on the oil industry. Additionally,
they are more independent as they don´t have to rely on other countries for products or
services of different sectors since they now have economic activity in more sectors. On the
other hand, this also bring risk into the country's economy since they now depend on how
these new entrepreneur’s business do, which can always have a great start, but then lead to a
fallout since they don´t have so much experience on these sectors.
