1.5- Entreprenuers And Leaders Flashcards
Definition of leadership
The action of leading a group of people or an organisation, or the ability to do this.
Definition of management
The process of dealing with or controlling things or people, the responsibility for and control of a company or organisation
What are the characteristics of leadership
Innovators – encourage others to accept change
• Natural abilities and instincts
• Respected and trusted by followers
• Inspires others
• Motivates
• Original
• Develops others
• Wins followers
• Creates change
What are the characteristics of management
Directing and monitoring others • Problem solver
• Official position of responsibility • Plans
• Organises
• Co-ordinates
• Maintains
• Has employees
• Manages change
What are the different types of leadership styles
1 Autocratic
2 Democratic
3 Paternalistic
4 Laissez-Faire
What is autocratic leadership
This style is used when leaders tell their employees what they want done and how they want it accomplished, without getting the advice of their followers
Staff are told what to do
What is democratic leadership
Democratic leaders offer guidance to group members, but they also participate in the group and allow input from other group members.
Employees have a higher degree of participation in the business
What is Paternalistic leadership
paternal means showing kindness like a father, but this could also be the leadership style of a woman.
• A leader who is being paternalistic makes the right decision for the employees that they are responsible for
• In this type of leadership there is a dominant authority figure who expects loyalty and trust from their employees
What is laissez faire leadership style
This style of leadership is where employees can carry out activities and make decisions freely
• They work in a very relaxed environment and have little direction and guidelines
What are advantages of laissez faire leadership
superb in creative environments such as web designers or artists
Disadvantage of Laissez faire leadership
lack of supervision may lead to poor productivity and lack of motivation
Definition of an entrepreneur
An entrepreneur is a person who sets up a business and takes risks in the hope of a profit, reward or for a social purpose e.g. to help the community
What is the definition of entrepreneurial characteristic
An entrepreneurial characteristic is the skill, quality or trait of the person starting the business e.g. creativity
Definition of entrepreneurial motive
An entrepreneurial motive is the factor that drives a person to start a business e.g. to be their own boss
Characteristics of an entrepreneur
- Creativity
- Hard-work
- Resilience
- Initiative
- Self-confidence
- Risk-taking
What are six skills an entrepreneur should have
- Communication
- Team working
- Problem solving
- Organisation
- Numeracy
- IT
What are financial motives for setting up a business
Profit maximisation
Profit satisficing - just enough profit to keep the business moving
Non financial motives for setting up a business
- Independence
- Flexibility
- Ethical reasons
- Social purpose
- Personal challenge
Definition of a business form
A business form is the legal structure that it takes (in the UK). It could be a sole trader, a partnership, a private limited company (Ltd) or a public limited company (PLC).
Definition of limited liability
Limited liability means that the owner of the business has no personal liability for business debts. The owner has a separate legal identity from the business and is NOT liable for payment of the debts from their own personal funds.
What’s unlimited liability
If a business gains debts, or goes bust or is sued this could be a problem for the owner
• If there is no money in the business then the owner would need to pay using their own savings, finances, they may even have to reportage their home or even sell their car to pay the debts
What’s a sole trader
Business owned by one owner, but they can take on staff
Has unlimited liability
Advantages of sole trader
Easy to set up – no complicated forms
• Make decisions quickly
• Less capital needed
• All profits kept by the owner
• Can offer personal attention to customers
• Don’t have to make any information about the company public
• They are their own boss
Disadvantages of a sole trader
Unlimited liability, this means that if the business has financial difficulties the sole trader could lose their own assets like their savings, house or car
• Difficult to raise money – seen as a risk
• Don’t have economies of scale (buying in
bulk)
• No one to take over for ill-health or holidays
What’s a partnership
Two or more people – ie the partners - share the risks, costs and responsibilities of being in business
Advantages of partnerships
Easier than a sole trader to raise extra capital, as partners all have their own sources of finance e.g. savings
• Profits go to partners, which is very motivating
• Smaller business means good working relationships
• No need to make public any information
• Partners contribute with range of skills
• Shared problems and decisions
Disadvantages of partnerships
Unlimited liability
• Partners may have disagreements about;
• Control of business
• Sharing of profits
• Withdrawal from the partnership
• Inviting new partners into the business
Advantages of a Ltd business
Limited liability
• Can raise extra capital by selling more shares, to friends and family, making it easier to expand
• Can employ managers to run business if the owners don’t want to do it themselves
• Has its own legal status – separate from the shareholders
Disadvantages of Ltd business
Accounts of the company cannot be kept private
• Audited each year
• Copy sent to Registrar of Companies
• Available for public to see
• More difficult and expensive to set up - more administration
• Cannot sell shares on stock exchange, which limits the amount of capital that it can raise
What is a franchise
A business that wants to expand but it doesn’t want the problems and expense of opening more stores – so it sells the business idea.
What’s a franchisee
This is the business owner who is buying the rights
What is a Franchisor
this is the business that is selling the rights e.g. Subway
Advantages of franchising
The franchisor chooses the franchisees carefully – knows what characteristic that make a successful franchisee
• The franchisor decides how much money the franchisee must invest in the business
• The franchisor provides support – management advice & training – help franchisee solve problems.
Disadvantages of franchising
Franchisee’s do not have freedom of running their own business;
Bound by rules e.g. Can’t vary product or price
• Franchisee pays percentage of profits in royalties
• Franchisee will never own the business outright
What’s a social enterprise
social enterprise is a business that trades for a social and/or environmental purpose.
• At the core of a social enterprise is the objective to help society or the planet in some way, they are not charities (which rely on donations)
