CH 2: Entrepreneurship

Question 1

What is an Entrepreneur?

Answer 1

Decides what, how, by whom and for who products and services should be produced.

Question 2

Explain the concept of entrepreneurship

Answer 2

Process of identifying, creating or sensing opportunity where others do not see it and then Finding & combining resources to pursue the opportunity until it becomes a successful established business

Question 3

What are traits and characteristics of entrepreneurs?

Answer 3

1. Achievement motivation
2. Internal locus of control
3. Innovation & creativity
4. Risk-taking
5. Skills & industry experience

Question 4

How does the labour market flexibility impact unemployment?

Answer 4

The less flexible the labour market (more legislation) the higher the unemployment rate generally is.

Question 5

What are the 5 SMME categories?

Answer 5

1. Survival enterprise
2. Micro enterprise
3. Very small enterprise
4. Small enterprise
5. Medium enterprise

Question 6

What is the 6 steps of the entrepreneurial process?

Answer 6

1. Personal abilities and skills
2. Access to resources
3. Realistic and objective assessment of opportunity.
4. Feasibility study
5. Business plan
6. Launch and manage new business.

Question 7

What are the advantages of purchasing an existing business?

Answer 7

1. Customers familiar with business location
2. Established customer base
3. Obtain experienced employees
4. Planning based on known historical data
5. Inventory and equipment already exist and in place.
6. Financing may be available from owner.

Question 8

What are the disadvantages of purchasing an existing business?

Answer 8

1. Location may be undesirable.
2. Image of business may be difficult to change
3. Employees inherited rather than chosen
4. Potential liability for past business contracts.
5. Current inventory and equipment may potentially be obsolete
6. Financing could drain cash flow.

Question 9

What is the maximum turnover and employees a business can have as a SMME

Answer 9

R64 million

200 employees