Chapter 1: People In Business Flashcards
Define stakeholder.
Stakeholders are people who are affected by how a business is run.
Name 9 stakeholders.
- Entrepreneur
- Investor
- Employer
- Employee
- Interest Group
- Manager
- Supplier
- Consumer
- Service Provider
Explain Entrepreneur.
Spots an opportunity, gap/niche in the market and takes the initiative to set up a business to make a profit from that opportunity. Takes personal and financial risks to do this. E.g. Mark Zuckerberg
Define Investor.
A person who gives money (capital) to the entrepreneur that they need to set up and run the business in exchange for a return on their investment. E.g. Dragons Den
Explain the difference between debt capital and equity finance.
Debt Capital-return on the investment plus interest.
Equity Finance-return on the investment through shares.
Define Employer.
Hires others to work for them. An entrepreneur may become an employer when they cannot complete all tasks alone. The employer rewards employees for their work. Rewards can be financial (salary) or non-financial (more holidays). E.g. Aer Lingus employs pilots.
Define employee. And an intrapreneur.
Person who works for the entrepreneur in return for a wage. They carry out essential tasks needed to make the business a success which the employer cannot or will not do. E.g. Pilots at Aer Lingus.
Employees can also give their employers ideas to make the business more successful. E.g. Microsoft employees coming up with the xbox
Define Supplier.
A business that makes raw materials and sells to the business who will then turn them into finished products and sell to consumers E.g. Tayto buys potatoes for crisps.
Define Consumer.
A person who buys goods or services from the entrepreneur for their own personal use. The customer provides the entrepreneur with a market for their product and therefore a profit. E.g. A mother paying for childcare.
Define manager
A manager’s job is to the run the business and make sure it achieves its’ objectives. The manager uses the resources of the business (people, money, equipment) effectively so that the business is a success. A good manager is able to lead and motivate employees and communicate effectively with all shareholders. E.g. Michael O’Leary CEO of Ryanair.
Define Service Provider.
A business that offers a wide range of helpful supports to an entrepreneur. Service providers do not make products instead they do helpful things. E.g. A solicitor
Define Interest Group.
An organisation of people who come together and campaign for a common goal by lobbying decision makers. By joining forces they have more money, power and talented people and are more likely to be listened to. E.g. Greenpeace
Explain cooperative relationship with an example?
Stakeholders have the same objective so they work together to achieve their common goal. This is a win-win situation as working together produces better than working alone. E.g. employer and investor. Employer provides honest information about how the business is doing and the investor cooperates by giving more capital.
Explain competitive relationship with an example?
One party in the business wants to be more successful than the other. Mutually exclusive objectives. This is a win-lose situation as only one can win. Often the parties fight against each other and are rivals. E.g. Employers want max profit, employees want max wage.
Explain dymanic relationship with an example?
Relationships between stakeholders that are constantly changing. Sometimes is a competitive relationship, sometimes cooperative. E.g. Restaurants in a town compete all year but come together to host a town festival that will benefit all of them.
Explain dependent relationship with an example.
Parties need each other to be successful. They cannot achieve their goals on their own, they rely on the other party to provide what they need to be successful. E.g. Consumers and Producers need each other. Consumers need producers to make products and Producers meed consumers to buy the products.
Explain the term contract and give an example of a legally binding contract.
A contract is legally binding agreement between two or more people in which each promises to do something for the other. The agreement is enforceable by law. If a party breaks the agreement a judge can order compensation to be paid or force the party to fulfil their part of the contract. E.g. A written contract to sell a house
Name the eight components of a valid contract.
Offer Acceptance Consideration Intention to Contract Capacity to Contract Consent to Contract Legality of Form Legality of Purpose
Define Offer.
An offer is made when one person asks another to enter into a contract. For the offer to be valid the terms should be communicated clearly in writing or spoken or conduct with all conditions attached. E.g. When you buy groceries you offer to buy them by placing them on the conveyor belt.
Define Invitation to Treat.
An indication that the seller would like to receive offers for this product. E.g. A price tag
Define acceptance.
Acceptance means that the other person agrees to all of the terms of the offer. They can accept the offer by speaking, writing or conduct. E.g. Cashier scans groceries (conduct)
Define Consideration.
Is the payment that one party gives to the other party as part of the agreement. It must be real and valuable. The agreement cannot be for free or it is not a valid contract. E.g. Money given for groceries.
Define intention to contract.
Intention to contract means both parties mean to enter a legally binding contract and understand that they will end up in court if they break the contract. E.g. Agreements between family members are not intended contracts. Agreements between businesses are always intended contracts.
Define Capacity to Contract. List four examples
Means that a person has the legal right to make a legally binding contract. If a contract is entered by someone not eligible it is not a legal contract. E.g. People under 18, People who are mentally incapacitated (drugs/drunk), diplomats who have immunity or company directors acting beyond their legal powers (ultra vires).
