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Business > 1.5 - Entrepreneurs and Leaders > Flashcards

1.5 - Entrepreneurs and Leaders Flashcards

1
Q

What is an entrepreneur?

A

A person who organises, operates and assumes the risk for a business venture and takes the risk in starting a new business.

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2
Q

What are the benefits of business to society?

A
  • create employment and develop human capital
  • drive innovation through R&D and new products
  • pay taxes on profits earned & collect taxes for government
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3
Q

What may an entrepreneur need to do as the business grows?

A
  • employ staff
  • use the services of experts
  • delegate responsibility to others
    Other key decisions include:
  • moving to bigger premises
  • changing suppliers
  • expanding product range
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4
Q

What decisions may an entrepreneur have to make once their business becomes established?

A
  • managing resources including stocks, personnel and finances
  • making marketing decisions about aspects of the marketing mix such as what price to charge and how to promote the business
  • dealing with customers
  • maintaining financial resources
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5
Q

What are some barriers to entrepreneurship?

A
  • may not be comfortable working for others
  • lack of finance
  • knowledge and know how
  • risk- averse
  • lack confidence
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6
Q

What are some economic barriers to entrepreneurship?

A
  • taxation
  • market entry regulations
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7
Q

What are some financial barriers to entrepreneurship?

A
  • lack of start up capital
  • lack of cheap labour
  • lack of investment
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8
Q

What is risk?

A

The probability that things aren’t going to go as planned. E.g. the chance that money invested could be lost

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9
Q

What is uncertainty?

A

When businesses are unable to predict external shocks or future events - not measurable

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10
Q

How can risk be anticipated by entrepreneurs?

A
  • market research
  • understanding the industry
  • assessing personal losses
  • business plans
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11
Q

How can uncertainty be anticipated?

A
  • keep up to date with current business climate events e.g. Economic and political changes
  • make plans for unexpected events
  • spread risk e.g. a number of products or suppliers
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12
Q

What are some characteristics of an entrepreneur?

A
  • creative
  • hardworking
  • resilient
  • innovative
  • self confident
  • risk taker
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13
Q

What are some financial motives for staring a business?

A
  • profit maximisation - desire to earn substantial rewards
  • profit satisficing - sufficient profit to enable a satisfactory standard of living
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14
Q

What are some non- financial motives for starting a business?

A
  • more control over working life
  • need for flexible working
  • want to be the boss
  • change in personal circumstances e.g. redundancy
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15
Q

What is a social enterprise?

A
  • businesses trading for coil and environmental purposes
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16
Q

What are some profit reasons for starting a business?

A
  • want to make more money than current job
  • want to earn more than minimum wage
  • want to be self employed
  • want earnings to be unlimited
17
Q

What are some non-profit reasons for starting a business?

A
  • want to start a business as a legacy for children to take over
  • want flexibility and work life balance
  • want control in their life and to be independent and to be more creative
  • want to be their own boss - don’t want to be ordered around
18
Q

What are some ethical reasons for starting a business?

A
  • want to help others e.g. fair trade
  • want to make a difference to the planet - eco-friendly
  • want to start a business for the benefit of others e.g. community cafe
  • want to give something back to society
19
Q

What are corporate objectives?

A

What the business as a whole wants to achieve

20
Q

What are functional objectives?

A

Set for individual functions of a business and are designed to support corporate objectives

21
Q

What is an example of a corporate and functional objective?

A
  • if the businesses corporate objective is to increase sales, the functional objective may be to successfully launch 5 new products in the next two years
22
Q

What are some examples of corporate objectives?

A
  • survival
  • revenues - e.g. revenue growth, sales maximisation, market share
  • cost efficiency or cost minimisation
  • profits and profitability - e.g. specific level of profit, rate of profitability, profit maximisation
  • employee welfare
  • customer satisfaction - at the heart of most firms
23
Q

What are ‘SMART’ objectives?

A

S - Specific
M - Measurable
A - Achievable
R - Relevant
T - Time bound

24
Q

What is a sole trader?

A

A business owned by one person

25
Q

What is a partnership?

A

When two or more people (between 2 and 20) own a business.

26
Q

What is a private limited company (LTD)?

A

An incorporated business, so it can be described as a company. It is owned by shareholders however, only friends and family can buy these shares.

27
Q

What is a public limited company (PLC)?

A

A business that is owned and managed by shareholders. Anyone can buy shares in this type of company.

28
Q

What is a franchise?

A

When one business, the franchisor, gives permission to an entrepreneur, the franchisee, to set up a business using its brand name and selling its products.

29
Q

What is a social enterprise?

A

A business that trades for a social and/or environmental purpose.

30
Q

What is a lifestyle business?

A

A business that is set up and run by its founders with the aim of living or maintaining a certain lifestyle so that the owner can live their life as they like.

31
Q

What are the advantages and disadvantages of being a sole trader?

A
  • can make your own decisions
  • quick and easy to set up - only need to register with HMRC
  • sole trader keeps all of the profits
    BUT
  • unlimited liability
  • may be difficult to raise enough money to establish or grow the business
  • high pressure - no one to share the load with
32
Q

What are the advantages and disadvantages of a partnership?

A
  • partners can share ideas and decision making
  • risk of unlimited liability can be shared
  • financial information kept private
    BUT
  • may be disagreements
  • unlimited liability
  • profits are shared
33
Q

What are advantages and disadvantages of being a private limited company (LTD)?

A
  • limited liability
  • more capital can be raised by issuing shares
  • control over business cannot be least to outsiders
  • higher status
    BUT
  • have to publish financial info
  • profits are shared
  • cannot raise large amounts of money like PLC’s
34
Q

What are the advantages and disadvantages of being a public limited company (PLC)?

A
  • huge amounts of money can be raised from issuing shares
  • lower production costs as firm gains economies of scale
  • PLC’s can often dominate the market due to their size
  • easier to raise finance - institutions more likely to lend to PLC
    BUT
  • extremely high set-up costs
  • anyone can buy shares, which can lead to a divorce of ownership and control
  • financial information is available to the public
35
Q

What is stock market flotation?

A

This is when a company’s shares are offered to the public or when a company ‘goes public’.

36
Q

What is meant by an opportunity cost?

A

The cost of choosing the next best alternative

37
Q

What is a trade-off?

A

A trade-off involves choosing more of one and less than another, also known as a compromise

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