1.5- Entreprenuers And Leaders

Question 1

Definition of leadership

Answer 1

The action of leading a group of people or an organisation, or the ability to do this.

Question 2

Definition of management

Answer 2

The process of dealing with or controlling things or people, the responsibility for and control of a company or organisation

Question 3

What are the characteristics of leadership

Answer 3

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

Question 4

What are the characteristics of management

Answer 4

Directing and monitoring others • Problem solver
• Official position of responsibility • Plans
• Organises
• Co-ordinates
• Maintains
• Has employees
• Manages change

Question 5

What are the different types of leadership styles

Answer 5

1 Autocratic
2 Democratic
3 Paternalistic
4 Laissez-Faire

Question 6

What is autocratic leadership

Answer 6

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

Question 7

What is democratic leadership

Answer 7

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

Question 8

What is Paternalistic leadership

Answer 8

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

Question 9

What is laissez faire leadership style

Answer 9

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

Question 10

What are advantages of laissez faire leadership

Answer 10

superb in creative environments such as web designers or artists

Question 11

Disadvantage of Laissez faire leadership

Answer 11

lack of supervision may lead to poor productivity and lack of motivation

Question 12

Definition of an entrepreneur

Answer 12

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

Question 13

What is the definition of entrepreneurial characteristic

Answer 13

An entrepreneurial characteristic is the skill, quality or trait of the person starting the business e.g. creativity

Question 14

Definition of entrepreneurial motive

Answer 14

An entrepreneurial motive is the factor that drives a person to start a business e.g. to be their own boss

Question 15

Characteristics of an entrepreneur

Answer 15

1. Creativity
2. Hard-work
3. Resilience
4. Initiative
5. Self-confidence
6. Risk-taking

Question 16

What are six skills an entrepreneur should have

Answer 16

1. Communication
2. Team working
3. Problem solving
4. Organisation
5. Numeracy
6. IT

Question 17

What are financial motives for setting up a business

Answer 17

Profit maximisation

Profit satisficing - just enough profit to keep the business moving

Question 18

Non financial motives for setting up a business

Answer 18

1. Independence
2. Flexibility
3. Ethical reasons
4. Social purpose
5. Personal challenge

Question 19

Definition of a business form

Answer 19

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).

Question 20

Definition of limited liability

Answer 20

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.

Question 21

What’s unlimited liability

Answer 21

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

Question 22

What’s a sole trader

Answer 22

Business owned by one owner, but they can take on staff

Has unlimited liability

Question 23

Advantages of sole trader

Answer 23

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

Question 24

Disadvantages of a sole trader

Answer 24

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

Question 25

What’s a partnership

Answer 25

Two or more people – ie the partners - share the risks, costs and responsibilities of being in business

Question 26

Advantages of partnerships

Answer 26

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

Question 27

Disadvantages of partnerships

Answer 27

Unlimited liability
• Partners may have disagreements about;
• Control of business
• Sharing of profits
• Withdrawal from the partnership
• Inviting new partners into the business

Question 28

Advantages of a Ltd business

Answer 28

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

Question 29

Disadvantages of Ltd business

Answer 29

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

Question 30

What is a franchise

Answer 30

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.

Question 31

What’s a franchisee

Answer 31

This is the business owner who is buying the rights

Question 32

What is a Franchisor

Answer 32

this is the business that is selling the rights e.g. Subway

Question 33

Advantages of franchising

Answer 33

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.

Question 34

Disadvantages of franchising

Answer 34

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

Question 35

What’s a social enterprise

Answer 35

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)