1.5 Entrepreneurs & Leaders

Question 1

How technology leads to innovation

Answer 1

Changes in technology can lead to new product ideas that were not before possible.
For example, 10 years ago Virtual Reality would not have been possible before, but due to advances in technology it now is.

Question 2

Changes in consumer wants

Answer 2

A lot of ideas are thought up as a way to satisfy customer needs.
When customer needs are changing, new business ideas are thought up in order to satisfy these new needs. For example, GTech designed a cordless vacuum to fulfil customer wants.

Question 3

Products and services becoming obsolete

Answer 3

Technological advances can mean that certain products and services become obsolete. This can lead to new ideas.
For example, the DVD became almost obsolete because people could watch TV/movies online and the blu-ray became more popular.

Question 4

Original ideas

Answer 4

Original ideas have not been thought of before. They are usually very different to anything else that is currently on the market (for sale).
The introduction of hybrid cars is an example of this.
These products are thought up because there is a gap in the market.

Question 5

Adapting existing products (or services)

Answer 5

These new ideas make changes to current products to improve them in a way that no one had thought of before.
New technology may make the adaptations possible.
For example, Dyson didn’t come up with the idea of a vacuum cleaner, but he did adapt (change) the design to improve how it worked. Dyson’s dual cyclone vacuum cleaner was designed to not need a replaceable bag, whilst not losing suction.

Question 6

Risk of failure

Answer 6

Starting a new company is very risky as they are most likely to fail in their early days.
They face the risk that consumers may not want to buy their product, especially if it is a brand new product.

Question 7

Financial loss

Answer 7

Starting a new business often requires a lot of investment. Failure can often mean a large financial loss for the entrepreneur.

Question 8

Lack of security

Answer 8

Entrepreneurs often lose the security that they had with their job in terms of a regular wage or salary.
This means that if the business isn’t making any profit, the entrepreneur may have no money to live off.

Question 9

Financial reward

Answer 9

If a business is successful then an entrepreneur is able to make a profit.
They also may be able to sell the business for a large sum in the future.

Question 10

Be their own boss

Answer 10

Setting up your own business means that you can work for yourself.
This means that you are likely to have more flexible working hours and more choice over the type of work that you do.

Question 11

Dissatisfaction with their current job

Answer 11

Many entrepreneurs have had full time jobs in the past that they haven’t enjoyed which has led them to pursue their own idea.

Question 12

Pursue an interest

Answer 12

Some entrepreneurs simply want to set up a business doing something that they are passionate about.

Question 13

Enterprise effect on quality

Answer 13

The durability, finish, nature of the product may be better than what is currently being offered.

Question 14

USP

Answer 14

The Unique Selling Points (USP) is the thing about the product that is not currently being offered by similar products.

Question 15

Convenience

Answer 15

Convenience focuses on making the product more convenient for the customer in any way possible.

Question 16

Branding

Answer 16

Branding involves coming up with a distinctive logo/image that adds value to the customer.

Question 17

Role of enterprise on design

Answer 17

The product design may be superior to products currently offered on the market.

Question 18

Why does an entrepreneur need to be organised

Answer 18

An entrepreneur must organise or do everything needed to run a business.
This includes accounting, marketing, sales and business strategy.
To be successful, an entrepreneur must stay on top of these tasks every day, whilst also planning for the future.

Question 19

Why does an entrepreneur need to be innovative

Answer 19

Spotting gaps in the market and providing solutions to complex problems requires entrepreneurs to think outside of the box and be innovative.

Question 20

Why does an entrepreneur need to be hardworking

Answer 20

An entrepreneur must motivate themselves every day to work without someone telling them that they have to.
At the beginning, this can often mean working alone and without being paid.

Question 21

Why does an entrepreneur need to be willing to take risks

Answer 21

When setting up a business there is always a risk of failure.
However, if an entrepreneur never takes these risks when investing money and giving up their current job, then their idea (or business) cannot succeed.
A business faces a constantly changing environment and even if an entrepreneur is very organised and plans well for the future, they never know what will happen.

Question 22

Increasing market share as an objective

Answer 22

Market share is the percentage of sales that a company makes relative to all the sales made in that market.
New companies start with a 0% market share, so increasing market share is an important goal for them.
Gaining market share involves stealing or taking customers from competitors or getting new customers to enter the market.

Question 23

Profit maximisation as an aim

Answer 23

For most for-profit businesses, maximising profits is their main aim.
Some businesses may sacrifice short term profits in order to maximise profits in the long term.

Question 24

Growth as an objective

Answer 24

For lots of firms, one of their key objectives is to grow.
Growth can mean lots of different things - firms can grow sales, grow the number of customers or grow the number of employees.
Companies may also look to expand internationally as well as expanding by introducing different products.
Dyson, for example, started the business by producing vacuum cleaners and have recently expanded into the market for hair dryers and electric cars.

Question 25

Survival as an aim

Answer 25

More than half of new businesses in the UK don’t survive beyond 5 years.
Survival is therefore one of the biggest short-term aims for new businesses.

Question 26

Maximising shareholder value as an objective

Answer 26

For limited companies (both private and public), maximising value for their shareholders is a key objective.
Shareholders get value from a share of a company’s profits, but also by selling the shares in the future.
The overall value of a business (how much they could sell it for) increases depending on how well the business is doing. So, maximising profits or growing the business can maximise shareholder value.

Question 27

Social and ethical objectives

Answer 27

Some firms make sure that they do business without having a negative effect on society or the environment.
Often this means firms using renewable energy sources and funding projects aimed at benefiting society.
For example, Jaguar Land Rover uses recyclable materials in its production of cars.
For not-for-profit firms, especially charities, this is usually the main goal of the company.

Question 28

Customer satisfaction

Answer 28

This objective measures how happy the customers are with the good or service they are receiving from a company.
It can be a key objective because it has a large effect on both short-term and long-term profits.
If customers are not satisfied they won’t buy the product again and might instead buy competitors’ products.

Question 29

What is an aim

Answer 29

An aim is a long term, broad goal that does not need too many details to be set.

Question 30

What is an objective

Answer 30

An objective is a SMART target. Objectives exist to make aims possible. They are what allows a business to operate efficiently as it provides drive with a clear goal.