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Business Studies Theme 1 (A- Level) > 1.5 Entrepreneurs and Leaders > Flashcards

1.5 Entrepreneurs and Leaders Flashcards

1
Q

Define an entrepreneur

A

An entrepreneur is a person who is willing to take the risks involved in starting a business , because they believe the risks will be worth the reward

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2
Q

What are the sources of generating a business idea (4)

A

Observation (competitor and consumer behaviour)
Thinking ahead (spotting trends)
Innovations (generating a business idea)
Spotting an opportunity (changes in society, technology or the economy)

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3
Q

What does an entrepreneur need when running and expanding a business

A

Eye for detail : notice small improvements to be made for the firm

Identify problems

Be motivated to make the firm become successful

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4
Q

Define Intrapreneurship

A

Is when employees in a larger business are given encouragement to think like an entrepreneur , driving innovation and understanding trends

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5
Q

What are barriers to entrepreneurship

A

Entrepreneurial capacity : does not have the skills and characteristics to be successful

Lack of finance

Lack if training

Fear of failure

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6
Q

Define risk

A

Is the possibility that a business will have a lower than normal profit or loss , can be predicted or prepared for

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7
Q

Define Uncertainty

A

When a business is unable to predict external shocks or future events, cannot be predicted or prepared for

Requires flexibility , resilience and good management

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8
Q

What are the main skills of a successful entrepreneur (4)

A

Financial skills: understanding financial documents and how finance allows a business to function

Persuasive abilities : find ways of persuading people to do things the business needs

Problem solving : ability to identify and solve a problem

Networking skills : wide range of business contacts who can help the business when in need

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9
Q

What are the main characteristics required to become a successful entrepreneur (5)

A 
Understanding the market 
Determination
Passion
Resilience 
Ability to cope with risk
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10
Q

What are the possible reasons why people set up a business (6)

A

Profit maximisation : get the most profit out of every business transaction
Profit satisficing : blend of desire for profit as well as building a good reputation and work - life balance
Independence : avoid the need to take orders from others
Home-working : work in your own environment
Ethical stance : strongly oppose a businesses operations
Social entrepreneurship: provide a service which benefits people

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11
Q

Define an objective

A

Is a specific target set by a business

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12
Q

What is a strategy

A

The plan devised by the business to achieve its objectives

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13
Q

What should objectives be

Acronym

A 
Specific
Measurable 
Achievable 
Realistic 
Time bound
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14
Q

What are the common business objectives (7)

A

Survival : (focusing on generating enough cash to sustain the business)
Profit maximisation : (earning the most profit in a given time period )
Sales maximisation: (growing the number of customers without a focus on costs)
Market share : (increasing the power in the market)
Cost efficiency : (focus to minimise the cost of production )
Employee welfare : (looking after staff and trying to help them develop)
Customer satisfaction: focusing on providing a positive interaction with customers
Social objectives : (focus to benefit society and have environmental and ethical considerations)

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15
Q

Define a business form

A

Is the legal structure a business takes . It can be a soletrader , partnership , private limited company (Ltd) or a public limited company (plc)

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16
Q

Define a soletrader

What are the advantages and disadvantages

A

Is a person who starts and runs a business with unlimited liability

A:
Owner has full control over decisions
Owner keeps all profits
Easy and quick to set up

D:
Unlimited Liability
Hard to raise finance
No one to run business if owner is ill or on holiday

17
Q

Define a partnership

What are the advantages and disadvantages

A

Is where two or more owners own a business with unlimited liability

A:
Allows more finance to be raised
Bring different skills and ideas
Burden of responsibility is shared

D:
Unlimited Liability
Potential disagreements among partners

18
Q

What is a deed of partnership

A

Is a legal agreement draw up to assign roles and responsibilities as well as the % of profits shared among partners

19
Q

Define a Private Limited Company (Ltd)

What are the advantages and disadvantages

A

Is a business owned by shareholders, invited to buy shares by majority shareholder, with limited liability

A:
Limited Liability
More professional status
Easier access to finance

D:
Complicated to set up
Accounts are made public

20
Q

Define a public limited company (plc)

What are the advantages and disadvantages

A

Is a company which sells its shares to the public, with limited liability

A:
Easy to raise capital and expand
Limited liability
Recognised in the public eye

D:
No control over who can buy shares
More vulnerable to takeovers
Accounts and activity must be made public
Stock market flotation is expensive
Divorce of ownership of control is more likely

21
Q

Define Unlimited Liability

A

Occurs for a soletrader or partnership where the owners personal assets are at risk if the business fails to pay its debts

22
Q

Define Limited Liability

A

Occurs for a Ltd or a plc where only what the owner has invested into the business is at risk if the business fails to pay its debts

23
Q

Define a Franchisor

What are the advantages and disadvantages

A

Is a business that sells its naming rights, logo and business model to another business/entrepreneur

A:
Allows quick growth
Receive Royalties and franchise fees
Franchisees are motivated

D:
Not total control over franchisees
Have to pay for training and support
One franchise can ruin the reputation of the firm

24
Q

Define a Franchisee

What are the advantages and disadvantages

A

Is a business or entrepreneur that buys a license to use another businesses name and business model

A:
Access to a successful, operating business
Advice and training provided by franchisor
No marketing costs
Easier access to finance (loans)

D:
Do not have total control over operations
Have to follow strict guidelines
Have to pay royalties

25
Q

Define Social Enterprise

A

Is a business with a desire to fix a social problem above making a profit

26
Q

Define Opportunity cost

A

Is the cost of a choice in terms of the next best alternative foregone or sacrificed

27
Q

What is a trade off

Give an example

A

Is when a business potentially has to make a choice between two competing objectives

E.g. Minimum costs and high quality

28
Q

What are the attributes needed to successfully manage trade offs

A

Experience
Understanding of consumer tastes
Understanding of business positioning
Understanding of external issues influencing the decision

29
Q

State the common personal issues when moving from an entrepreneur to a leader

A

Delegating
Maintaining effective communication
Co-ordinating far more people
Keeping an eye on the big issues

30
Q

Explain how delegating is a personal issue when moving from an entrepreneur to a leader

A

An entrepreneur is used to making all the decisions , they may find it difficult to let go of authority to subordinates. Also they need to be able to trust their subordinates to make decisions

31
Q

Explain how maintaining effective communication is a personal issue when moving from entrepreneur to leader

A

Communication is vital but hard to ensure in a growing business. As a leader they need to make sure all communication flows up to them to deal with problems and manage the business

32
Q

Explain how co-ordinating far more people is a personal issue when moving from entrepreneur to a leader

A

As a start up the entrepreneur is likely to know staff on a personal level. As the business grows a leader has to make sure that all employees are heading in the same direction even without personal communication.

33
Q

Explain how keeping an eye on the big issues is a personal issue when moving from entrepreneur to a leader

A

A leader should be able to understand where the business should be heading and inspiring employees to have that vision.
The leader also needs to have an eye on the issues facing the firm , to know what to sell and how, as well as effectively managing resources

Business Studies Theme 1 (A- Level) (7 decks)

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