Chapter 3 Flashcards
Entrepreneur
is a person who organizes, operates and takes risks for a new business venture
Business plan
The objectives and details of the operations, finance and owners of a new business.
Capital employed
The total value of capital used in a business
Internal growth
The business expands its existing operations, e.g. a retailer opening more shops.
Internal growth
The business expands its existing operations, e.g. a retailer opening more shops.
External growth
The business expands by merging with or taking over another business.
Takeover
A business buys out the owners of another business.
Merger
The owners of businesses agree to join their firms together to form one business.
Horizontal integration
The business integrates with another in the same industry at the same stage of
production - such as two fashion snoos
Vertical integration
The business integrates with another in the same industry but at a different stage of
production
- towards suppliers is backward vertical integration and towards the market/
customer is forward vertical integration.
Conglomerate
integration
The business integrates with another but in a different industry (also known as
diversification) - such as an insurance company merging with a food-processing business.
Characteristics of a successful entrepreneur
Hard working
Risk taker
Creative
Self-confident
Effective communicator
Creative
Optimistic
innovative
independent
A business plan includes
- Products and services that you will sell
- Costs of your business
- Location of the business
- What do I need to operate my business
How a business plan can assist an entrepreneur?
- Apply for bank loans
- Plan business to reduce risk of failure
Governments support businesses because:
New businesses creates jobs (reduce unemployment)
Increased competition (Businesses competing with each other means prices may be lowered)
Business may grow larger and contribute to the country
