1.5 Entrepreneurs and Leaders

Question 1

Characteristics of an entrepreneur

Answer 1

Self motivated. enthusiastic, visionary, opportunity seeker

Question 2

skills of an entrepreneur

Answer 2

communication, numeracy, literacy, problem solving

Question 3

Roles of an entrepreneur

Answer 3

1) Setting up and running a business
2) Expanding and developing the business
3) Barriers to entrepreneurship
4) Anticipate risks and uncertainties
5) Intrapreneurship

Question 4

Motives of an entrepreneur

Answer 4

fulfilling a dream, providing a service, be independent/ your own boss, work/ life balance

Question 5

Definition of an entrepreneur

Answer 5

a person who spots an opportunity and has a willingness to take risks to benefit from the potential rewards.

Question 6

Difficulties of moving from an entrepreneur to a leader

Answer 6

relinquishing control is not easy as entrepreneurs are attached to the success of the business. ~ loss of power in decision making. ~ learning to listen and accept the opinions of others. ~ to trust others and not feel the need to micro-manage

Question 7

Financial motives:

Answer 7

Profit maximisation- making as much money as possible.
Profit satisficing- making enough money to keep the business stable and running.

Question 8

Non-financial motives:

Answer 8

Ethical and social
Social entrepreneurship
Independence

Question 9

SMART:

Answer 9

Specific, measurable, Achievable, Realistic, Timed

Question 10

Dividend:

Answer 10

What investors can get back from companies they invest in.

Question 11

INTRAPRENEURSHIP

Answer 11

entrepreneurial activity done by employees and managers; Rewards (mainly) go to the company; Risks are taken by the company.

Question 12

ENTREPRENEURSHIP:

Answer 12

Entrepreneurial activity by Entrepreneur; Rewards go to the entrepreneur; Risks are taken by the entrepreneur.

Question 13

WAYS TO ENCOURAGE INTRAPRENEURSHIP:

Answer 13

~Structured time away from work to allow for development of business ideas.
~Staff competitions and innovation days.
~Lead cross-functional teams to lead innovation projects.

Question 14

WHY ARE LARGE BUSINESSES OFTEN NOT ENTREPRENEURIAL:

Answer 14

~Complacency/ arrogance
~Bureaucracy/ stifling initiative
~Reward systems don’t provide an incentive to innovate.

Question 15

WHAT LARGE BUSINESSES NEED FOR SUCCESSFUL INTRAPRENEURSHIP:

Answer 15

~Senior management support/ mentoring
~Communication to show the business encourages new ideas.
~Reward systems- financial or other incentives for innovation.
~Resources- to show the business backs the creation of new ideas.

Question 16

Other business objectives:

Answer 16

~Benefit the community/ social objectives
~Market share
~ Sales maximisation
~Customer satisfaction
~Cost efficiency
~Employee welfare

Question 17

Factors that can influence Business Objectives:

Answer 17

~Age of the business ~Size and legal status
~Ownership ~Views of owners and managers
~Market conditions ~Legislation
~State of the economy ~Competition
~Risk and attitude to risk ~Corporate Culture
~Political factors ~Social attitudes.

Question 18

Business Objective: Survival

Answer 18

To continue to exist as a business
This may be the most important objective in the short term
This may be the primary objective of a start-up business or one experiencing difficult trading conditions
To achieve this a business may set a cash flow objective to ensure sufficient cash is available to meet day to day expenses
Cash flow is the flow of cash into and out of a business over a period of time

Question 19

Profit maximisation (The most common?)

Answer 19

To produce at the level of output where the surplus of sales revenue over total costs is at its highest, profit = SR – TC
This will help keep investors happy as well as fund growth

Question 20

Mission statements

Answer 20

a mission statement is a brief written statement of the purpose of a company or organisation. Ideally, a mission statement guides the actions of the organisation, spells out its overall goal, provides a sense of direction and guides decision making for all levels of management.

Question 21

Advantages vs disadvantages of mission statements

Answer 21

AD: they clarify purpose and determine direction
~can motivate employees and managers
~ send out powerful messages to the public
DISAD: are often seen as marketing material rather than statements of intent
~ are ineffective if not followed by all levels of employees and managers
~ can sometimes be too ambitious and ruin employee morale when not met.

Question 22

Sole Trader

Answer 22

~One person owning the business- can employ people
~They have Unlimited Liability so are personally responsible for any debts
~Most common type of business

Question 23

Advantages of a sole trader

Answer 23

-complete control
-more flexibility
-low registration and start up costs
-lower accounting fees
-no sharing of profits
-simplified taxes
-greater company privacy

Question 24

Partnerships

Answer 24

-2-20 people
-share raising the finance
-partners bring varied skills
-share the burden
-partnerships have Unlimited Liability

Question 25

Advantages of a Partnership

Answer 25

• lower start up costs as they’re divided more
  -more ideas and skills available
  -better credit and status in the eye of investors
  -increased credibility with customers
  -less paperwork and tax burden

Question 26

Public Limited Companies PLCs

Answer 26

-shareholders are not liable for company debts
-shares CAN be, but don’t have to be bought and sold onto the stock exchange- Stock market floatation
-If in debt the company is closed
-subject to greater regulation in terms of public disclosure of financial information
-Minimum share capital of £50,000
-Costly to administer
-If too many shares sold the owner could lose ownership

Question 27

Private Limited companies LTDs

Answer 27

-Has limited liability
-Shares are not sold onto the stock market but can be sold to friends or family IF agreed by director
-Privately owned
-usually just 1 or few shareholders
-quick and heap to set up and administer

Question 28

Advantages of PRIVATE L.C.

Answer 28

AD: limited liability
-can raise finance easier than sole/partner
-stable structure
-shares bought only with directors approval
-higher business status than sole trader
-Separate legal existence to the owners

Question 29

DISADVANTAGES of PRIVATE L.C

Answer 29

-Audited annual returns and accounts must be made to the Registrar of Companies
-more expensive/ time consuming to set up than sole/partner
-professional help will be needed to set it up
-separation of control so owners no longer make all decisions

Question 30

ADVANTAGES OF PUBLIC L.C.

Answer 30

-limited liability
-better access to capital
-liquidity- shareholders can sell shares
-more prestigious profile
-value of shares is shown by market capitalisation

Question 31

DISADVANTAGES of PUBLIC L.C.

Answer 31

-once shares are on the stock exchange the company is less likely to know who has shares
-No control over who owns shares
-Greater public scrutiny of company’s financial performance
-financial markets will govern the value of company’s shares

Question 32

Why PLC over LTD?

Answer 32

more prestigious profile
-greater amount of finance
-potentially less control
-potentially the risk of takeover

Question 33

Public sector organisations

Answer 33

many organisations that provide a public service that is funded by the government through taxes