1.5- entrepreneurs and leaders

Question 1

why are entrepreneurs important for setting up new businesses

Answer 1

• entrepreneur = person who sets up a business- take on risks of new business activity with the aim of gaining a reward- profit
• without them, no new businesses
• create and set up, run and develop, bringing innovation, overcoming barriers, anticipating risks and uncertainties

Question 2

financial motives

Answer 2

profit maximisation- making as much profit as possibble
profit satisficing- making enough profit but not pushing to maximise it

Question 3

non financial motives

Question 4

entrepreneur to leader

Answer 4

delegate responsibility
develop emotional intelligence
become less reactive

Question 5

business objectives

Answer 5

• survival= short term
• maximising profit
• sales maximisation= boost revenue
• increase market share= increase revenue
• improving cost efficiency= saving money
• impriving employee welfare= lead to lower costs and more sales
• increasing customer satisfaction= may become loyal customer= repeated purchases
• social objectives= customers more likely to buy from a firm they know is socially responsible

Question 6

what is a sole trader

Answer 6

business ran by individual
- full responsibility for financial control for their own business
- meeting running costs and paying the taxes
- unlimited liability- risky if the business goes bust with huge debts, owner is responsible for paying all the money back, even if it means they have to sell their personal assets

Question 7

what is a partnersihp

Answer 7

• can develop from sole trader
• minimum number of 2 people to set up a partnersip
• unlimited liability so owners have shared responsibility for businesses debts
• more owners means more capital put into the business
• also means profit has to be shared

Question 8

limited company

Answer 8

• private limited (ltd) and public limited (plc)
• owned by shareholders
• in plc anyone can buy shares in the business
• in ltd owners have to agree before anyone buys any shares
• all shareholders are paid a dividend in return for their investment- more shares, larger the dividend
• private and public limited companies have limited liability- business and owners have separate legal identities, personal assets are not at risk

Question 9

how can ltd grow into plcs

Answer 9

• may opt for stock market flotation and transition into a plc
• stock market flotation= business publically sells shares on the stock market for the first time
• business can raise lots of capital by selling shares
• more shareholders means business has to share profits
• supply and demand affect share value- if business is doing well demand for shares will increase causing value of shares to also increase

Question 10

what are the different types of business

Answer 10

franchising- agreemet contract allowing entrepreneur to use the business idea, name, model and reputation of an established business. allows franchisor to grow quickly
online businesses- trade through the internet, cheao and easy to set up. good for wrok life balance as can potentially work from anywhere
lifestyle businesses- focuses on profit satisficing to obtain and maintain a desired lifestyle
social enterprises- core aim to use profits to benefit society in someway

Question 11

what is a trade off

Answer 11

means one thing has to be reduced or given up in order to increase or gain another

Question 12

what is an opportunity cost

Answer 12

this is the benefit thats given up in order to do something else