1.5 Flashcards
What is an intrapreneur
The name given to the encouragement of entrepreneurial behaviour within larger business
Define business objectives
Shorte term goals of a business used to eventually achieve the aims. Objectives should be smart “SMART”
What does SMART stand for
Specific
Measurable
Achievable
Realistic
Time-bound
Explain survival objective
Focus of on generating sufficient cash to sustain the business
TP= When starting up, or when a challenging external environment threatens the future of the business, such as a recession or the arrival of a new powerful competitor
Explain profit maximisation +TC
Earning the most profit possible in a given time period
TC= A common objective of a business- reflecting the need to generate a profit for owners as a primary purpose of a business
Explain sales maximisation +TC
Growing the number of customers, without a major focus n controlling costs
TC= In a rapidly growing market, firms may try to maximise their share of the market, with an expectation of generating profits once market growth has slowed + competition reduces
Define market share +TC
Increasing market share to a dominant level helps to ensure long-term success through greater distribution + preventing new entrants from challenging in the market
TC= Market leaders will often see to increase their lead and thus power by increasing market share
Define cost efficiency + TC
A focus on seeking to minimise the costs of producing a product or service + the running costs of the business.
TC+ This objective is key for firms who are trying to follow an aim to undercut their rivals on price. If they can keep their costs low, they should still be able to make a profit even with a low price
Define employee welfare +TC
Looking after staff by treating them well and looking to develop them using training and external recruitment
TC+ Where people play a key role in gaining a competitive advantage whether that be through customer service or through innovation
Define customer satisfaction +TC
Prioritising the need to ensure that every customer has a positive interaction with the business
TC= Crucial when attracting new customers is costly and losing existing customers is very expensive such as when providing a regular service such as mobile phones networks or banking
Define social objectives + TC
Objectives that relate to the beneficial role a business can play within society
TC= Some businesses see improving society as a key purpose and will therefore set a social objectives in a meaningful way. Social enterprises will have social objectives as a top priority
Sole trader def + 3adv 2 dis
A person who starts and runs a business without turning it into a company. The owner is liable for any business debts thus if the business goes bust, the owner has to use personal assets to repay those to whom the business owes money.
Adv -
Owner has full control of decisions
Owner keeps all profits that are made
Minimal paperwork needed to start up
Dis-
Owner has unlimited liability
Hard to finance
Partnership def 3adv+2dis
A sole trader where several owners are allowed. Helps to raise finance as each partner can bring capital into the business. In addition burden of responsibility can be shared between the partners of whom may have various skills and experience. Partners, like sole traders have unlimited liability for debts incurred in running the business
Adv-
More owners can allow more finance to be raised
Partners may bring various skills and experience
Shared burden of responsibility among partners
Dis-
Partners have unlimited liability
Potential for disagreement among partners
Private limited company (LTD) def 3 adv + 3dis
Businesses with limited liability where finance can be raised by privately selling shares
Adv-
Ability to raise finance through selling shares
Limited liability
Shareholders must be invited so are likely to be supportive
Dis-
More complex accounting and reporting requirments
High set up costs (legal and administrative)
Profits only shared with shareholders so may be difficult to motivate and control workers
Public limited company (PLC) def 3 adv 3dis
A company able to offer its shares to the public
Adv-
Better access to capital
Offering shares to public spreads risk of company ownership
Growth+Expansion opportunities as a result of business being able to raise finance
Dis-
Have to publish their details to the public domain
Hard to control who is a shareholder could lead to owners losing control
Vulnerable to hostile takeovers
Explain the meaning of stock market flotation
The process of converting a private limited company into a public limited company by issuing shares available for the public to purchase
Define franchises
A license to use another businesses name and business model in return for payment
Difference between franchisee and franchisor
Franchisee is an entrepreneur or company that buys a license to use another businesses name +business model whilsts a franchisor is a business that sells the right to use its name, logo and business model to other businesses or entrepreneurs.
3 adv and 3 dis of being a franchisor
regular flow of income from franchisees
Risk shared with franchises
Rapid growth of franchise is possible
dis-
Reputation may be adversely affected by franchisees
Can be expensive to monitor franchisees
Profit from franchisor is shared with franchisees
3 adv and 3 dis of being a franchisee
Adv-
Has access to free training and marketing
Part of an established business with loyal customers
Potentially lower risk than starting up a new business
Dis-
Must pay a % of profits to the franchisor (known as royalties)
Can be expensive to set up
Cannot make individual decisions without consulting franchisor
What is a social enterprise
A business that reinvests its profits in projects that benefit society and the environment
Define thee social enterprises: Co-operatives, worker co-operatives, mutual organisations, charities
Co-operatives are businesses owned by “member -owners” they are democratically controlled by their member-owners and each member gets a voice in how the business is run
Worker co-operatives are co-operatives owned and self-managed by its workers
Mutual organisations are private firms owned by its customers or policy holders. As such, they are entitled to receive a share of the profits generated by the mutual company.
Charities are businesses with mainly social or environmental objectives. Profits from business are principally reinvested for social objectives, rather than being used to maximise owner or shareholder value.
What is meant by opportunity cost
The value of the next best option foregone when a business decision is made.
What is meant by business choices
Any decision that affect a business operations, goals and future activities.
What’s made by trade-offs?
The consequence/compromise of a choice made. More of one thing= less of another
Less market research= less successful new product launch
Roles of an entrepreneur
Creating and setting up a business
b) Running and expanding/developing a business
c) Innovation within a business (intrapreneurship)
d) Barriers to entrepreneurship
e) Anticipating risk and uncertainty in the business
environment
Barriers of entrepreneurship
Access to finance
Lack of entrepreneurial capacity
risk of failure
Lack of training / know how
Reasons to entrepreneurs start a business
financial motives: profit maximisation and profit
satisficing
o non-financial motives: ethical stance, social
entrepreneurship, independence and home working
4 difficulties faced by entrepreneurs in transitioning into a leader
Need to delegate tasks- can be difficult as used to having control of all business
Learning to listen to staff who may bring innovative ideas
Developing emotional intelligence
Need to understand how to understand and manage their and their staffs emotions
Being less reactive
Entrepreneurs usually very reactive, making quick decisions
As a leader, they must take a more strategic and measured approach to decision making
