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Buisness > 1.5 Entrepreneurs and Leaders > Flashcards

1.5 Entrepreneurs and Leaders Flashcards

1
Q

Name 2 businesses with unlimited liability

A

sole traders
partnerships

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2
Q

What is unlimited liability

A

owners of business are personally responsible for the debts caused by business

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3
Q

What is limited liability

A

owners/ shareholders not responsible for companies debts

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4
Q

What is a sole trader

A

A single person who starts and runs a business

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5
Q

Benefits of a sole trader

A

-owner has full control over decisions

-owner keeps all profits made

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6
Q

2 Negatives of a sole trader

A

-owner has unlimited liability

-hard to raise finance

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7
Q

What is a partnership

A

A business owned by 2 or more people

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8
Q

2 benefits of partnership businesses

A

-more owners can allow more finance to be raised

-partners may bring varied skills and experience

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9
Q

2 negatives of partnership businesses

A

-partners have unlimited liability

-potential disagreement among partners

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10
Q

Give 2 examples of businesses with limited liability

A

private limited company

public limited company

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11
Q

What is a private limited company

A

type of privately held small business

shares are not sold publicly- only privately

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12
Q

2 benefits of private limited companies

A

-limited liability

-easy to raise finance

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13
Q

2 disadvantages of private limited companies

A

-limited number of members

-greater administration costs

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14
Q

What is a public limited company

A

only type of business that can sell shares via stock market to general public

in order to become PLC- business must have £50,000 share capital

shares traded publicly on London Stock Exchange

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15
Q

Advantages of a public limited company

A

-shareholders have limited liability

the business has ability to raise additional finance through share capital

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16
Q

Disadvantages of a public limited company

A

expensive to set up- requires minimum of £50,000

shareholders will expect to receive a percentage of the profits as dividends

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17
Q

What is market capitalisation

A

total value of all the issued shares in a public limited company

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18
Q

Formula for market capitalisation

A

share price x number of shares issued

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19
Q

What is an unincorporated business

A

owner is the business
-has unlimited liability

(most operate as sole traders)

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20
Q

What is an incorporated business

A

-legal difference between company and owners

-company has separate legal identity

-owners have limited liability

-(most operate as private limited companies)

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21
Q

What is a franchise

A

license to use another businesses name and business model in return for payment

(e.g. McDonalds

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22
Q

What is a franchisee

A

entrepreneur/ company that buys license to do use another businesses name/ model

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23
Q

What is a franchisor

A

business that sells the right to use its name, logo and business model to other businesses and entrepreneurs

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24
Q

3 benefits of franchising

A

-support from franchisor in providing materials, fixtures, fittings

-advice and training on all business functions

-access to tried and tested formula for a business success

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25
Q

2 disadvantages of franchising

A

-restrictions on actions (e.g. selling)

-not cheap- initial fees to buy license, royalties, % revenue for franchisor

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26
Q

What is a social enterprise business

A

a not-for-profit organisation

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27
Q

What are lifestyle businesses

A

when someone starts up a business as it suits their desired lifestyle

-e.g. running own businesses allows flexibility in working hours to fit family commitments
-or may be based around hobbies

28
Q

Name the general habits of successful entrepeneurs and the way they run their businesses

A

-they measure performance in an unbiased way

-have an eye for detail

-love what they are doing

29
Q

What is intrapeneurship

A

name given to the encouragement of entrepenuerial behaviour within larger businesses

30
Q

Name 3 barriers to entrepreneurship

A

-funding -> due to financial crash 2008 -> banks less willing to lend to small firms, start ups

-gender bias -> 3x more likely to be male -> harder for women

-lack of public sector support -> many believe entepeneurs avoid tax, greedy ppl -> negative perception -> #kids being drawn away from entrepenuership

31
Q

Name 6 reasons why ppl set up a business

A

-profit maximising -> desire for maximum profit

-profit satisficing -> desire for profit & good reputation so set up own business

-independence -> don’t want to be ordered around -> set up own business

-home-working -> want to be able to work from home -> be with fam -> set up own business

-ethical stance -> want to work in environment they feel comfortable so set up own business

-social entrepreneurship -> start business bcs want to make positive contribution to community

32
Q

What is profit maximising

A

to seek to get the most profit from every business transaction

33
Q

What is profit satisficing

A

combining desire for profit with other factors; good reputation, building brand

34
Q

What does indepedence mean in terms of business

A

when entrepreneurs set up on business to avoid being ordered around/ fit into company policy

35
Q

What is a business objective

A

specific target set by a business

36
Q

What is a business strategy

A

plan set up by business to achieve objectives

37
Q

Name 4 common business objectives

A

-survival -> focusing on generating cash -> espec when starting up/ challenging external environments

-profit maximisation -> most profit possible

-sales maximisation -> growing no. of cust -> espec in rapidly growing markets -> ^ market share

-market share -> ^ MS to dominant level -> ensures long-term success -> market leaders

38
Q

What is franchising

A

the opportunity to start a business using a tried & tested formula

39
Q

What is a social enterprise

A

business which purpose is to fix social problem above profit motive when making decisions

40
Q

What is a lifestyle business

A

business set up bcs it suits entrepenuers lifestyle

-e.g. gives them flexibility -> ^ fam time

-or may be based on hobbies

41
Q

What is an opportunity cost

A

the cost of missing out on the next best alternative

-e.g. the benefits that couldve been gained by taking diff decision

42
Q

What is the opportunity cost of deciding not to work an extra 10 hours a week

A

-you lose a lot of money in terms of wages

43
Q

What is a trade-off

A

when having more of one thing results in having less of another

-e.g. less market research -> less successful new product launch

44
Q

Name 4 business issues when moving from an entrepeneur to a leader

A

-matching production to demand -> for growth -> new markets need to be targeted -> new branches opened -> sales forecast req to forecast demand in unfamil market -> over optimistic -> CF problems -> underestimate -> empty shelves

-financing growth -> to expand -> output needs ^ -> reqs ^ cash -> for more materials, new facilities -> challenege of how business raises extra finance

-overtrading -> product is trendy -> sales outstrip production -> invest in new capacity -> sales ^ but outflows rise faster -> cash flow crisis

-change in structure -> ^ in staff -> extra layers req -> but could change way business works -> employee roles may shift

45
Q

Why is matching production to demand difficult for entrepenurs moving to leaders

A

-matching production to demand -> for growth -> new markets need to be targeted -> new branches opened -> sales forecast req to forecast demand in unfamil market -> over optimistic -> CF problems -> underestimate -> empty shelves

46
Q

Why is financing growth difficult for entrepenurs moving to leaders

A

-financing growth -> to expand -> output needs ^ -> reqs ^ cash -> for more materials, new facilities -> challenege of how business raises extra finance

47
Q

What is overtrading

A

when firm expands too rapidly for its capital to cope with

48
Q

Why is overtrading difficult for entrepenurs moving to leaders

A

-overtrading -> product is trendy -> sales outstrip production -> invest in new capacity -> sales ^ but outflows rise faster -> cash flow crisis

49
Q

Why is change in structure difficult for entrepenurs moving to leaders

A

-change in structure -> ^ in staff -> extra layers req -> but could change way business works -> employee roles may shift

50
Q

Name 4 personal issues entrepeneurs face when moving from an entrepeneur to a leader

A

delegating -> if entrepeneur is sued to making decisions -> may find it hard to give this control to others

maintaining effective communication -> boss needs to know wa=hat customers are saying -> bottom-up comms -> if boss wants to set direction -> top-down comms is vital -> info may get lost in process tho

co-ordinating more ppl -> boss may struggle to form relationships w empliyees -> may make co-ordinating them harder

keeping an eye on big issues

51
Q

Name 2 reasons why people set up businesses

A

-financial motives; profit maximization, profit satisficing

-non-financial motives; ethical stance, social entrepreneurship, independence, home working

52
Q

What is an enterprise

A

the skills and abilities to take risks and create profits

53
Q

What is an entrepeneur

A

person who organises, operates, assumes the risk for a business venture

54
Q

Name 3 characteristics of a successful entrepeneur

A

-passionate
-driven
-focused

55
Q

What is a social enterprise

A

trade in goods/ services for a social purpose

56
Q

What are the roles of an Entrepeneur

A

Creating and setting up a business​

Running and expanding/developing a business​

Innovation within a business (intrapreneurship)​

Barriers to entrepreneurship​

Anticipating risk and uncertainty in the business environment

57
Q

What is a start up

A

a new business enterprise, formed by one or more entrepeneurs

58
Q

Name 3 ways to encourage intrapeneurship in a business

A

-give employees ownership of projects

-train employees in innovation

-encourage collaboration

59
Q

What is a risk

A

probability that things will not go as well as planned

60
Q

How do entrepeneurs deal with risk

A

-spread risk by diversifying

-look for higher returns

61
Q

What is cost efficiency

A

aims to achieve the most cost-effective way of delivering goods and services to the required level of quality​

62
Q

2 benefits of cost efficiency

A

-lower unit costs

-improved cash flow

63
Q

employee welfare objectives

A

-staff retention

-quality of customer service

64
Q

customer satisfcation objectives

A
65
Q

social objectives

A

Buisness (22 decks)

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