BM U1 AoS 1 Notes Flashcards
entrepreneurship
The act of starting and operating a new business in response to opportunities, assuming all the risk in the hope of making a profit.
Three significant ideas are featured in this definition:
-the pursuit of business opportunities
-seeking growth
-innovation
entrepreneurship
-the pursuit of business opportunities
-Gaps in the market that no-one else has noticed or paid attention to.
-An entrepreneur converts these opportunities into manageable business ideas and makes the idea a reality.
entrepreneurship
-seeking growth
-Entrepreneurs work hard to pursue growth.
-Growth is necessary for the survival of a new business.
-Becoming bigger would be expected to increase sales, market share and profit.
entrepreneurship
-innovation
-Another feature of entrepreneurship involves innovation: change, improvement and/or transformation. Often used as a source of business opportunity.
The personal motivation behind starting a business
-The success or failure of a business will largely depend on the owner’s abilities, resources, enthusiasm, initiative, level of expertise and motivation.
-the desire for independence
-to make a profit
-to fulfil a market need
-to fulfil a social need
The personal motivation behind starting a business:
-the desire for independence, to make a profit, to fulfil a market need, to fulfil a social need
The desire for independence:
-A person may want freedom to choose when and where they work and want full control over their own destiny.
To make a profit:
-Monetary reward.
To fulfil a market need:
-A person may recognise that particular goods or services that are in demand are not available in a particular area.
To fulfil a social need:
-A social enterprise may be established in order to provide a community or environmental need.
Characteristics of successful business managers and business entrepreneurs:
-business entrepreneurs
An entrepreneur is a person who is willing to seize opportunities to start and operate a business, and is prepared to take risks in the hope of making a profit
.
Entrepreneurs tend to have:
-A shared vision – everyone in the business working towards the same thing
-Initiative - Willing to take the first step, usually independently
-Innovation and enterprise - innovation is creating something new or adding to an existing product. To be enterprising is to take risks.
Characteristics of successful business managers and business entrepreneurs:
-business managers
-Business owners or managers run the day-to-day operations of the business in order to make a profit.
-They are less likely to take risks and tend to make calculated decisions.
-There is no simple checklist of personal characteristics that guarantee success however studies show that some characteristics are helpful in managing a business.
Identifying business opportunities
-Identifying a business opportunity is not just about having an idea.
-Potential business owners are always looking for new products, new customers and new ways of running businesses.
-innovation
-market opportunities
- changing customer needs
-research and development
-technological developments
-global markets
identifying business opportunities
-innovation, market opportunities, changing customer needs
Innovation:
-The process of creating a new good, service or process, or significantly improving an existing one.
Market opportunities:
-Markets are places where buyers and sellers interact to trade goods and services. A potential business owner may be able to identify opportunities from changes in markets.
Changing customer needs:
-The needs of customers in the market for any product can change due to:
-Changing incomes
-Changing tastes and fashions
-Changing population
-Changing prices of complimentary or substitute goods and services
identifying business opportunities
-research and development, technological developments, global markets
Research and development:
-R & D is a set of activities undertaken to improve existing products, create new products and improve production processes.
Technological development:
-Refers to development of new products and processes.
Global markets:
-This means goods and services are exchanged between businesses and customers across the world.
Goal setting and decision-making in business
Goal setting and decision-making in business
-the importance of goal-setting
The importance of goal setting:
-A business goal describes what a business expects to accomplish over a set period.
-Goals provide a business with direction and help to measure results.
Goal setting and decision-making in business:
-smart goals - goal setting
S - specific - goals should be clear and focused. for example, “obtain 500 new customers in the market”
M - measurable - goals should be quantifiable. (i.e. they should contain numbers to allow the business owner to know whether or not they are on track).
A - attainable - goals should be challenging but they should be realistic. an attainable goal will usually address the question, ‘how can the goal be accomplished?’
R - relevant - goals should be worthwhile, support other goals and should be based on current conditions in the market.
T - time bound - a deadline or time limit should be set.
Goal setting and decision-making in business
-financial goals
- MAKING A PROFIT
-A financial goal that is central to many businesses.
-profit is what is left after business expenses have been deducted from money earned from sales (revenue). - INCREASE SALES
-how businesses seek to increase sales through more clever marketing, creating innovative products, delivering better service than other businesses, or selling products at a lower price so customers purchase more. - INCREASE MARKET SHARE
-market share is a business’s share of total industry sales. - EXPAND THE BUSINESS
-the way in which the business plans to grow which could be achieved by, opening more outlets, employing more staff, starting new projects, introducing innovative products or merging with other businesses. - MAXIMISING THE RETURN ON INVESTMENT
-the return on investment is a ratio that relates the money gained or lost on an investment relative to the cost of the investment. - IMPROVING THE WAY THE BUSINESS OPERATES
-three key aspects of measuring operational performance include productivity, efficiency and effectiveness.
Goal setting and decision-making in business
-social goals
1.Community service
-business sponsorship of a wide range of community events, promotions and programs have rapidly increased during the last decade. Many business owners plan to financially support educational, cultural, sporting and welfare activities.
- Provision of employment
-most business owners do not regard employment of people as a main goal. - Social justice
-everyone has the right to be treated fairly. - Ecological sustainability
-businesses have to take increasing responsibility for the protection of the environment.
Goal setting and decision-making in business
-personal goals
Often the nature and operation of a new business will tend to reflect these personal goals, especially in small business.
Decision-making in business
-Decision-making is an important skill for a prospective business owner to have when taking a business idea and making it a reality.
-Decision making is the ability to identify the options available and then choose a specific course of action from the alternatives.
-Effective decision making underlies every aspect of creating and developing a business idea, including identifying opportunities and business planning.
