BME study Flashcards
Identify and explain different motivations and objectives for businesses including:
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Identify and explain different motivations and objectives for businesses including:
Financial
Financial
Survival: Many businesses do not survive past their initial set up stage, as they use all their money setting up and do not allow any cash to get them through until the profits start to be made. A business has many expenses to pay (suppliers, wages, rent, raw materials etc) so it is important that there are funds to carry a business through until the profits build up.
Profit and Income: Profit is the most important objective for a new business. A profit is earnt when income excesses the total costs of running the business. Profits allow the business to reinvest he profits or take them as a personal payment.
Wealth: Profit provides income to live and after a few years of operation, hopefully it is more than sufficient, increasing the owners overall wealth and financial security.
Financial Security: Profits are the return for hard work and risks taken and the reward for making in investment that gives an owner financial security.
Identify and explain different motivations and objectives for businesses including:
Non-Financial
Non-Financial
Personal satisfaction/challenge: Personal satisfaction in pursuing an interest or building a business and being successful.
Independence and control: Need for greater independence is a major motivator for many business owners. It gives them more control over their working life. Excaping an uninteresting job or career and wanting a greater share of rewards for effort, compared to being paid by an employer. Fed up of working for others and having to co-exist with others.
Development of an innovative product or service: A desire to pursue an interest or hobby. To be able to create a product or service you are passionate and enthusiastic about, giving financial gain and personal satisfaction.
Social Enterprise: is an organisation that uses commercial strategies to maximise improvements for human and environmental well-being, rather than maximise their profits for shareholders. A business who’s primary purpose is to do common good, by using methods of business for power in the market place to advance their social, environmental and human justices agenda. EG: Jamie Olivers 15 Restaurant
The Big Issue
Divine Chocolate
Definition of an Entrepreneur
• A person who starts a business and is
willing to risk loss in order to make a
financial gain.
• Entrepreneurs assist in bringing
innovations to market and leading the
creation and development of new and
exciting enterprises to make the
innovation a success.
A person who organises and manages any enterprise, especially a business, usually with considerable initiative and risk
Identify and explains the key skills, characteristics and attributes of Entrepreneurs making use of real life, specific examples
• Dick Smith is a successful entrepreneur
who conducted his day to day operation
with many of the key attributes of an
entrepreneur.
• Entrepreneurs are: o hard-working, committed & passionate o Creative, Innovative, Courageous o Willing to take risks o Listen and learn from others o Supportive of social and environments issues o Give back to the community
Definition of Invention:
• Transforming new thoughts into tangible ideas and bringing new solutions to the world. • Inventions lead to the innovation of further inventions.
Definition of Innovation:
• Using creativity and inventions to
produce ideas/products that people can
and wish to use and making them
marketable to users.
• Does not have to be new to the world,
but a first to a business.
• Something that is inspiring, useful and
effective.
• Requires assistance from entrepreneurs
to bring it to market.
Definition of Creativity:
• The mental ability to imagine new,
unique and unusual ideas.
• Seeing what no-one else sees.
• Thinking what no-one else has thought
of before.
• Creativity results in an invention and
innovation being discovered.
Explain the link between invention, innovation, creativity and entrepreneurship, using specific examples
• The all have different roles, but all share
the same goal “To create value for
people”, by interacting with one another
to produce the best product they can.
• Creativity and Entrepreneurship – both
influence and persuade others.
• Inventions and Innovations – require
creativity.
• All four are needed to have a successful
innovation and to find solutions to
problems that can change the world.
EG: (The telephone invented by
Alexander Graham Bell) - his creativity
led to a unique idea which led to an
innovative feature and the invention of
the telephone being brought to users
through the entrepreneurship of Bell.
Identify different types of innovation including:
Product Innovations: The development and marketing of a new or redesigned product or service eg (product invention, quality improvement to an existing product).
Process Innovations: The implementation of new or significantly improved production or delivery method.
Organisational Innovations: The implementation of new organisational methods in business practices, workplace organisation and external relations.
Marketing Innovations: The implementation of new marketing methods involving changes in product design or packaging, placement, promotion or pricing.
Explain ways in which Intellectual Property can be protected including:
It Protects Intellectual Property – (Branding and Business Share)
Copyright: A document granting exclusive rights to publish and sell literary, musical or artistic work.
Trademarks: A sign that distinguishes goods and services from those of their competitors. EG
(words,logos or a combination of both). A registered symbol
Patents: A document granting legal protection for an inventors sole rights to an invention.
Definition of Stakeholders:
• A person, group or organisation that has an interest in an organisation or business.
Explain what a Stakeholder is, using examples
- Stakeholders can be affected by the actions of an organisation
- Stakeholders can affect a business positively or negatively
- Stakeholders include shareholders, employees, customers, suppliers etc, as they all rely on the business for different reasons such as employment, good and services, profits etc.
Identify different groups of Stakeholders and their potential interests including:
- Shareholders/owners: Individual that legally owns a share or stock in an organisation (also called stakeholder). Their rights include: voting and participating in shareholder meetings, sharing in the profits (dividends), receiving financial statements and approval of major changes.
- Employees: are stakeholders who without the company would not have jobs.
- Customers: are stakeholders who rely on the company to provide goods and services.
- Suppliers: are stakeholders who rely on the company to provide revenue for their supplies.
- Local Community: are stakeholders who want support from local businesses to improve the surrounding environment.
- Government: are stakeholders who want your business to do well, so they receive taxes.
- Competitors: are stakeholders who want healthy competition.
- Pressure Groups: are stakeholders who want your business to have a positive impact on the environment.
Explain the differences between a Shareholder and a Stakeholder
- Shareholders are stockholders in a business, but stakeholders are not always shareholders.
- A shareholder owns part of a company through stock and ownership, but a stakeholder is not an owner,
- just interested in the companies’ performance for their own benefit (eg a supplier).