1.3 – Enterprise, Business Growth and Size

Question 1

Define Entrepreneur

Answer 1

A person who organizes, operates and takes risks for a new business venture

Question 2

Qaulities of Entrepreneur

Answer 2

1. Risk taker
2. Creative
3. Optimistic
4. Self-confident
5. Innovative
6. Independent
7. Effective communicator
8. Hard working

Question 3

Define Business Plan

Answer 3

A document containing business objectives and important details about operations, finance and owners of new business

Question 4

Contents of Business Plan

Answer 4

1. Owner
2. Business
3. Market
4. Advertising
5. Costs
6. Expansion
7. Business organisation

Question 5

Pros of Business Plan

Answer 5

1. More focus of mission
2. Help motivate workers
3. Help get loan/overdraft

Question 6

Define Start-up

Answer 6

Company in first stages of operations

Question 7

Why governments help start-ups?

Answer 7

1. Provide employment
2. Contribute to economy growth
3. Contribute to country exports
4. introduction of fresh idea/technologies

Question 8

How governments support businesses?

Answer 8

1. Organise advice
2. Provide low cost land
3. Provide loan at low interest rate
4. Give grants for capital
5. Give grants for training
6. Give tax breaks/ holidays

Question 9

How to measure business size?

Answer 9

1. Number of employees
2. Value of output
3. Value of capital employed

Question 10

Define Internal Growth

Answer 10

Expands its existing operations

Question 11

Define External Growth

Answer 11

When business takes over or merges with another business (Intergration)

Question 12

Define Merger

Answer 12

When owner of two businesses agree to join together to make one business

Question 13

Define Takeover

Answer 13

When one business buys another business

Question 14

Types of External Growth

Answer 14

1. Horizontal
2. Vertical (back/front)
3. Conglomerate

Question 15

Define Horizontal merger/integration

Answer 15

When one firm merges with/takes-over another one in same industry at same stage of production

Question 16

Pros of Horizontal merger/integration

Answer 16

1. Reduce competition
2. Opportunities of economies of scale
3. Increase market share

Question 17

Define Vertical merger/integration

Answer 17

When one firm merges with/takes-over another one in same industry but at different stage of production

Question 18

Define Backward vertical merger/integration

Answer 18

When one firm merges with/takes-over another one in same industry but at a stage of production behind ‘predator’ firm

Question 19

Define Forward vertical merger/integration

Answer 19

When one firm merges with/takes-over another one in same industry but at a stage of production ahead ‘predator’ firm

Question 20

Define Conglomerate merger/integration

Answer 20

When one firm merges with/takes-over a firm in different industry (diversification)

Question 21

Cons of Growth

Answer 21

1. Difficult to control staff
2. Lack of funds
3. Lack of expertise
4. Diseconomies of scale

Question 22

Why businesses stay small?

Answer 22

1. Type of industry
2. Market size
3. Owners objectives

Question 23

Why businesses fail?

Answer 23

1. Poor management
2. Lack of experience/planning
3. Over-expansion
4. Failure to plan for change
5. Poor financial management

Question 24

Why new businesses have greater risk of failure?

Answer 24

1. Less experience
2. New to market
3. Don’t have lot of sales
4. Don’t have lot of money to support business