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a level business - all > 1.5 entrepeneurs & leaders > Flashcards

1.5 entrepeneurs & leaders Flashcards

1
Q

define entrepreneur

A

a person who is willing to take a risk in setting up and growing their own business

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2
Q

what do entrepreneurs do?

A

-organise resources
-make business decisions
-take risks
-innovate and invent

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3
Q

the role of entrepreneurs: organising resources

A

-gather and coordinate the resources necessary to start and operate a business

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4
Q

the role of entrepreneurs: making decisions

A

entrepreneurs must be able to make decisions that will determine the success or failure of their business (decisiveness)

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5
Q

the role of entrepreneurs: taking risks

A

entrepreneurs are often willing to risk their career and financial security to make their idea work

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6
Q

the role of entrepreneurs: innovating & inventing

A

they create new ideas, products and services

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7
Q

where do entrepreneurs ideas come from?

A

business experience:
some start a new business using the experience of their current job or profession

personal experience:
a business may be based on a hobby or interest

lifestyle choice:
some people may set up a business in order to be their own boss and work on their own terms

spotting a gap

skills:
some people set up a business based on their interpersonal, artistic or technical abilities

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8
Q

what are the stages of setting up a business?

A

1) the idea
2) research
3) planning
4) financing
5) location
6) resources
7) the launch

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9
Q

setting up a business: the idea

A

could come from previously stated ways

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10
Q

setting up a business: research

A

research into…
the market
customer needs
competition
profitability
potential suppliers

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11
Q

setting up a business: planning

A

detailed business plan made

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12
Q

setting up a business: financing

A

entrepreneurs will explore a variety of internal and external sources of finance

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13
Q

setting up a business: location

A

for some businesses, location is a key strategic decision
for others, such as online retailers, it may be less critical but still important

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14
Q

setting up a business: resources

A

suppliers, human resources, legal issues, utilities, manufacturing and marketing

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15
Q

setting up a business: the launch

A

the launch may involve an opening event to create good public relations (PR) or activities to create awareness of the new business

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16
Q

which functions must entrepreneurs coordinate to run, expand and develop their businesses?

A

-financial management
-purchasing
-managing people
-production
-marketing
-administration

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17
Q

what does the financial management function entail?

A

raising capital, managing costs, profitability and cash flow

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18
Q

what does the administration function entail?

A

insurance, legal setup, tax and business records

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19
Q

what does the marketing function entail?

A

research, promotion and branding

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20
Q

what does the production function entail?

A

production of goods, storage, quality management and delivery

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21
Q

what does the managing people function entail?

A

recruitment, training, motivation

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22
Q

what does the purchasing function entail?

A

liaising with suppliers, deliveries, logistics

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23
Q

what is intrapreneurship?

A

the practice of promoting entrepreneurial thinking and behaviour within an existing business

(empowering employees to think and act like entrepreneurs)

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24
Q

what do intrapreneurial employees do?

A

solve problems, create new products, take risks

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25
Q

how do intrapreneurial employees help businesses?

A

-add value
-give competitive advantage
-generate new products/services or processes

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26
Q

why is intrapreneurship good for employees?

A

it creates a culture that generates a sense of ownership and engagement among employees → increases motivation and helps to retain top talent

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27
Q

how can businesses promote intrapreneurship amongst employees?

A

-providing resources to employees
-offer incentives/rewards for successful projects (motivation£

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28
Q

define barrier to entrepreneurship:

A

things that prevent individuals from starting or growing a successful business

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29
Q

examples of barriers to entrepreneurship:

A

-entrepreneurial capacity
-access to finance
-lack of training/knowledge
-fear of failure/lack of confidence
-competition from large, established businesses
-legal barriers

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30
Q

define entrepreneurial capacity

A

to an individual’s ability to think creatively, take risks, and identify and seize business opportunities

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31
Q

what is access to finance? (barriers)

A

many aspiring entrepreneurs struggle to secure the funding necessary to start or grow their businesses

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32
Q

how is lack of training/knowledege a barrier?

A

starting and growing a successful business requires a range of skills, including marketing, finance, management, and leadership

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33
Q

how is fear of failure/lack of confidence a barrier?

A

entrepreneurship is inherently risky and individuals/businesses may be held back by a fear of failure or a lack of confidence

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34
Q

what is risk?

A

something an entrepreneur can plan for
(probabilities of outcomes are known)

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35
Q

what type of decision is risk-taking?

A

a conscious decision

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36
Q

what is uncertainty?

A

caused by unexpected factors outside of the entrepreneur’s control
(sometimes predictable)

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37
Q

examples of things that cause uncertainty:

A

-environmental factors
-economic changes
-the entry of new competitors
-changes in local and national legislation
-changes in the political party governing the country

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38
Q

what can successful entrepreneurs do concerning uncertainty?

A

manage risk and quickly respond

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39
Q

how can successful entrepreneurs reduce risk and prepare for uncertainty

A

-carrying out detailed research
-producing detailed plans
-analysing external influences (PESTLE)
-developing contingency plans

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40
Q

what do entrepreneurs require?

A

a unique set of characteristics and skills

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41
Q

what skills do entrepreneurs need?

A

-communication & managing ppl
-team working
-problem solving
-organisation
-numeracy
-financial management
-negotiating

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42
Q

what characteristics do entrepreneurs need?

A

-creativity
-hard working
-resilience
-initiative
-self confidence
-risk taker

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43
Q

what are the two types of incentives for setting up a business?

A

-financial motive
-non-financial motive

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44
Q

financial motives for setting up a business:

A

profit maximisation
profit satisfying

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45
Q

what is profit maximisation?

A

creating a business so that it is profitable & generates substantial revenue and profit for themselve

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46
Q

what is profit satisfying?

A

creating a business to generate enough income to live a comfortable lifestyle

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47
Q

non-financial motives for starting a business:

A

-ethical stance
-social enterprise
-independence
-home working

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48
Q

what is an ethical stance? (non-financial motives)

A

running a business to support their ethical principles

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49
Q

what is a social enterprise? (non-financial motives)

A

running a business for a social or environmental cause

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50
Q

independence: non-financial motives

A

-many people want to be their boss and have control over their work
-they may be dissatisfied with traditional employment structures

51
Q

home working: non-financial motives

A

-due to technology, many people have started businesses from their homes
-this offers them more flexibility and a better work-life balance

52
Q

what are objectives?

A

medium to long-term plans that are established to coordinate the business and act as targets

53
Q

what are corporate objectives & what do they effect?

A

those set by the owners or directors of the business, they influence the functional objectives set at departmental level

54
Q

why do businesses set objectives?

A

-provide steps to achieve aims
-clarify direction of the business
-measure success against targets
-motivate employees to achieve

55
Q

acronym for objectives:

A

S - specific
M - measurable
A - agreed
R - realistic
T - time-related

56
Q

are business objectives fixed?

A

no, objectives may change over time

57
Q

what is the aim of most start up business?

A

to survive the initial entry into the market and to generate enough cash flow to remain in business

58
Q

what does a businesses objective usually switch to after they have successfully entered a market?

A

profit maximisation

59
Q

what are the two categories of business objectives?

A

-financial
-non-financial

60
Q

examples of financial business objectives:

A

-survival
-profitability
-growth
-market share
-shareholder value
-sales maximisation
-cost efficiency
-profit maximisation

61
Q

what is sales maximisation? (objective)

A

focus = generating the max revenue possible by selling products/services

62
Q

what is market share? (objective)

A

a business may aim to increase its market share by producing and selling better quality products than its competitors

63
Q

what is cost effectivency? (objective)

A

this objective is crucial for companies that operate in highly competitive markets as low costs enable them to compete with low prices

64
Q

define cost effectiveness

A

refers to a company’s ability to produce and deliver its products at the lowest possible cost

65
Q

examples of non-financial objectives:

A

-personal satisfaction
-brand recognition
-sustainability
-customer satisfaction
-employee welfare
-social objectives

66
Q

what is employee welfare? (objectives)

A

a business may aim to promote employee welfare by offering competitive wages, comprehensive benefits packages and promoting a healthy work-life balance

67
Q

define employee welfare

A

a company’s commitment to providing a healthy and safe working environment for its employees

68
Q

what is customer satisfaction? (objective)

A

a business may aim to achieve customer satisfaction by delivering high-quality products, providing excellent customer service and offering attractive pricing

69
Q

what are social objectives?

A

-a company’s commitment to addressing social or environmental issues
-important for businesses that aim to operate sustainably and build a positive reputation

70
Q

survival (objective)

A

keeping the business operating for a certain amount of time

71
Q

influences on business objectives:

A

-size (objectives may change as a business grows)
-sector (public doesn’t need profit)
-market (competitive?)
-ownership (shareholders?)
-owner

72
Q

importance of profit maximisation:

A

-profit can be reinvested into new projects
-profit secures the long-term success of a business
-profits can be reinvested to help the business grow

73
Q

what are the 4 forms of business?

A

-sole trader
-partnerships
-private limited company
-public limited company

74
Q

common forms of business for start ups:

A

sole trader
partnership
private limited

75
Q

what is a sole trader business form?

A

a business that has a single owner (although they may still hire employees)

76
Q

advantages of a sole trader form:

A

-easy and inexpensive to set up
-the owner has complete control over the business
-all profits belong to the owner
-simple tax arrangements

77
Q

disadvantages of a sole trader form:

A

-unlimited liability
-limited access to finance and capital
-limited skill sets (requires a wide range of skills)
-owner is likely to work long hours

78
Q

what is a partnership business form?

A

-two or more people join together to form a business
-a contract of relationship will be set up through a deed of partnership

79
Q

advantages of a partnership business form:

A

-easy to set up and inexpensive
-shared responsibilities and decision-making
-more skills and knowledge
-increased access to finance

80
Q

disadvantages of a partnership business form:

A

-unlimited liability
-disputes between partners?
-profits are often shared equally, regardless of the contribution
-dfficult to transfer ownership

81
Q

what is a private ltd company?

A

-ownership of the business is broken down into shares
-these shares can be sold by the owner,
-decision-making usually rests with the person appointed to run the company, (managing director or CEO)

82
Q

advantages of a private ltd company:

A

-limited liability
-access to greater finance and capital (internal shareholders)
-has a higher status than a sole trader

83
Q

disadvantages of a private ltd company:

A

-more expensive and time-consuming to set up
-more complex legal requirements and regulations than sole traders
-accounts published and publicly available
-cannot raise large amounts through selling shares publicly

84
Q

how does a business become a separate legal identity?

A

when it goes through a process of incorporation to become a limited company

85
Q

what is a public limited company? (plc)

A

a company that is able to offer its shares to the public

86
Q

advantages of public limited companies:

A

-better access to capital (share capital)
-size is measured by market capitalisation
-has a higher status than a sole trader
-huge amounts of money can be made through stock market floatation

87
Q

disadvantages of public limited companies:

A

-accounts are openly available to the public
-greater external pressures from the media and pressure groups

88
Q

what is incorporation?

A

involves separation into two legal entities: the shareholders and the company

89
Q

the 4 less classic forms of business:

A

-franchises
-social enterprises
-lifestyle businesses
-online business

90
Q

what is franchising?

A

-an individual (franchisee) buys the rights to set up an identical operation in a new region
-the business can expand without the owners taking direct responsibility for each branch/store/division

91
Q

advantages & disadvantages of franchising for the franchisor:

A

adv:
-effective way to grow the business.
-franchisor gets setup fee and royalty payments

dis:
-risk of franchisee lamaging brand if not run effectively

92
Q

advantages & disadvantages of franchising for the franchisee

A

adv:
-franchisees are provided with training and support from franchisor
-franchisees receive a business in a box’ plans, products, marketing

dis:
-expensive setup fees and little freedom to change the business format
-royalty payments (a share of sales go back to the franchisor)

93
Q

what is a social enterprise?

A

a business that has the primary purpose to create social or environmental impact

94
Q

examples of social enterprises:

A

-cooperatives
-mutual organisations
-charities.

95
Q

what do social enterprises usually do with profit?

A

reinvest it into the business / use to create positive social change or address an environmental issue

96
Q

a benefit of being a social enterprise

A

may pay lower tax rates

97
Q

what is a lifestyle business?

A

usually a small, owner-operated business that is run to sustain a specific lifestyle or personal interest of the owner over profits or growth

98
Q

examples of lifestyle businesses:

A

yoga instruction, personal training, business coaching

99
Q

what is an online business?

A

providing products and/or services solely through the internet

100
Q

benefits of an online business:

A

-low overhead costs
-can operate from anywhere with an internet connection

101
Q

why might a company want to become a PLC?

A

when a business is growing rapidly it may require a significant amount of capital to fund its expansion

102
Q

what is the main thing a business must undergo in order to become a PLC?

A

undergo a stock market flotation

103
Q

what is a stock market flotation?

A

the company’s shares are offered on sale to the general public

104
Q

disadvantages of the process of being listed on a stock market:

A

-expensive
-time-consuming

105
Q

the 5 stages of being listed on a stock market:

A

1) issue a prospectus advertising the company to the public

2) the prospectus and information on the company are reviewed by lawyers

3) a minimum of £50000 share capital has to be provided up front

4) if successful a certificate to sell shares will be issued

5) the initial public offering (IPO) goes live and the business can start trading on the stock market

106
Q

what are share prices affected by?

A

-the company’s performance
-the business environment in which it trades

107
Q

what can happen when share prices rise?

A

-managers may receive a bonus
-the company finds it easier to raise capital
-consumers with shares feel more confident to spend.
-the business may receive positive publicity

108
Q

what can happen when share prices rise?

A

-managers may receive a bonus
-the company finds it easier to raise capital
-consumers with shares feel more confident to spend
-the business may receive positive publicity

109
Q

what can happen when share prices
fall?

A

-the company may become vulnerable to a takeover
-price fall gives an indication of poor performance
-the company finds it harder to raise capital

110
Q

what is opportunity cost?

A

the value of the option not taken when a business makes a decision

111
Q

what is opportunity cost caused by?

A

because of scarcity, choices have to be made about how to best allocate limited resources amongst competing wants and needs

112
Q

can opportunity cost be calculated financially?

A

not always

113
Q

what is a trade off (+example)?

A

the loss or compromise of another option or factor

(improving productivity in a factory may lower the quality of the products being made)

114
Q

factors that a business will consider when making decisions:

A

-pros and cons of each option based on the information available and research
-the probability of success
-risk vs support

115
Q

when must an entrepreneur become a leader?

A

when start ups become larger, gain an organisational structure and more employees

116
Q

when must an entrepreneur become a leader?

A

when start ups become larger, gain an organisational structure and more employees

117
Q

skills that leaders require:

A

-the need to delegate
-trusting team members
-listening skills
-having an open mind
-being less reactive
-developing emotional intelligence

118
Q

leader skills & entrepreneurs:
the need to delegate

A

-entrepreneurs need to learn to delegate tasks and responsibilities to others
-this can be difficult for entrepreneurs who are used to having control over every aspect of their business

119
Q

leader skills & entrepreneurs: trusting members

A

-as a leader, it’s important to trust your team members to do their jobs effectively
-it’s also important to verify that tasks are being completed correctly and on time

120
Q

leader skills & entrepreneurs: listening skills

A

-entrepreneurs are often driven by their ideas and visions
-as a leader, it’s important to listen to the ideas and perspectives of others

121
Q

leader skills & entrepreneurs: having an open mind

A

leaders need to be open to new ideas and willing to adapt to changing circumstances

122
Q

leader skills & entrepreneurs: being less reactive

A

-entrepreneurs are often used to taking quick action and making decisions on the fly
-as a leader, it’s important to take a more strategic and measured approach to decision-making

123
Q

leader skills & entrepreneurs: developing emotional intelligence

A

-leaders need to be able to understand and manage their own emotions, as well as the emotions of their team members
-many entrepreneurs are used to being driven by passion and enthusiasm rather than emotional intelligence and empathy

a level business - all (6 decks)

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