Enterprise and Leaders Flashcards
What are business objectives?
Target set up for a business in the short or medium term
What is survival?
When a business aims to gain customers, establish a name and build a reputation. The business will also aim to make sufficient profits to reach a break even point
What is profit maximisation?
When a business aims to manage costs and boost productivity within employees to ensure sales and profits are high
What is sales maximisation?
When mangers of a business set targets for sales figures and offer a bonus to staff who help achieve these targets
What is market share?
When a business aims to improve the percentage of the market that it has
What is cost efficiency?
When a business aims to lower the average costs through economies of scale
e.g. paying employees minimum wage
What is employee welfare?
When a business aims to have good relationships with their workforce
What is customer satisfaction?
When a business aims to monitor customer service levels and focuses on quality
What are social objectives?
When a business aims to have social responsibility
e.g. reducing impact on the environment, fair wages within developing countries
What is an entrepreneur?
A person who sees an opportunity which others do not fully recognise
What are the roles of an entrepreneur?
-Creating and setting up a business
-Expanding and developing a business
-Innovation
-Anticipating risk and uncertainty in a business
What are the issues with setting up a business?
-Having the initiative to exploit a business opportunity
-Calculate the risks involved in a business
-Raising the finance to invest in the set up of a business
What are the issues with expanding a business?
-Carry out market research to see if there is a demand
-Raise necessary finance
-Introduce new products and services
-Invest in new technology
What is intrapreneurship?
An employee within a larger business who thinks like an entrepreneur
-this helps the business grow and develop
-this is important in dynamic markets
What does intrapreneurship involve?
-Take risks
-Solves problems
-Understands trends
-Knows how to add value
What does it mean to deal with uncertainty?
A situation in which there is a degree of risk, the consequences are not known and are unclear
What are the qualities of an entrepreneur?
-Determined
-Competitive
-Confident
-Innovative
Why do people want to be an entrepreneur?
-Want to make more money
-Want to be self employed
-Want control
What is a sole trader?
A business owned by one person with unlimited liability
-they can employ people but they are not involved in running the business
What are the advantages and disadvantages of a sole trader?
-Be your own boss
-Profits don’t have to be shared
-Easy to run and easy to set up
However:
-Difficult to raise capital
-No one to share responsibility with
-Unlimited liability
What is a partnership?
A business owned by 2-20 people with unlimited liability
What are the advantages and disadvantages of a partnership?
-Shared decision making
-Increased amount of capital in the business
-Owners can specialise in different parts of the business
However:
-Unlimited liability
-Disputes about how to share profits
-Partnership ends if a partner leaves or dies
What is a private limited company?
A business owned by shareholders with limited liability
-shares cannot be bought by the public
What are the advantages and disadvantages of an LTD?
-Limited liability
-Able to raise capital by selling more shares
-Business has a separate legal status which allows continuity
However:
-Shares are not traded on the stock exchange
-Accounts can be seen by other businesses
What is a public limited company?
A business owned by shareholders who purchase shares on the stock exchange with limited liability
What are the advantages and disadvantages of PLC?
-Limited liability
-Greater ability to raise finance
However:
-Threat of hostile takeover
-Shareholders will expect higher dividends
What is stock market flotation?
Involves selling a percentage of the company on the stock exchange for the first time
-a costly way to raise new capital
What is a franchise?
A small business which buys the rights to sell and use the goods and services of a large well-established company
What is a franchisee?
The small business owner who is buying the rights of a larger company
-there is usually an initial set up fee
-a % of the sales turnover is paid annually to the franchisor
What is a franchisor?
The large business who are selling the rights to their business
What are the advantages of a franchise?
-Tried and tested idea
-Reduced risk of business failure
-Advertising and promotion is paid by the franchisor
-Training and advice is given from the franchisor
-Logos and brand name is already established
What are the disadvantages of a franchise?
-Large initial set up costs
-Franchise doesn’t have complete control
-Profit may be less than the initial payment
-Loses must be paid by the franchise
-Must pay royalties annually
What is a social enterprise?
A business that trades for a social and/or environmental purpose
What is a lifestyle business?
Setting up a business with the aim of providing a great quality of life for the owner
What is an online business?
A business which operates on the internet through a website or app
What are the advantages and disadvantages of an online business?
-Cheap to set up
-Wider range of customers
-Collect more data about customers
-Can stock a wider range of items
However:
-Greater competition
-Less impulse purchases
-Less trust than a physical store
What is a trade off?
When a business has more of one thing which potentially results in having less of another
What is an opportunity cost?
The value of the option not taken when a business makes a decision
-it compares the choices made against what you have given up by making that choice
What is the importance of a trade off?
-Must understand the consequences of each action
-Decisions are clearer to make if trade offs and opportunity costs are looked at
-Allows a business to make the best use of their money, staff, time and resources
What are the four barriers of becoming a leader?
-Personal
-Educational
-Administrative
-Financial
What skills are required to go from an entrepreneur to a leader?
-Learning to delegate
-Trusting others
-Listening to others
-Having an opened mind
-Be less reactive
-Develop emotional intelligent
