Unit 1: Chapter 3 Flashcards
Enterprise, Growth and Size
What is an entrepeneur?
a person that starts a business, they plan, organise and manage the business. Doing so they take a big financial risk.
What are key characteristics of a successful entrepeneur?
risk taking, responsibility, leadership, confident, innovative, independent etc.
What are the benefits of being an entrepeneur?
- take majority of profit
- self made pride
- lots of control
- fame/wealth
- passion
What are the disadvantages of being an entrepeneur?
costly, risky, need capital (money), opportunity costs
What is a business plan?
a document containing business objectives and details abut the operation, finance and owners of the business
What is the role of a business plan?
to help get finance/investors and increase chance of success by reducing risks
Why do governments support business startups?
brings tourism, creates jobs, increase competition, increase output, social benefit, increase economy
How do businesses support business startups?
grants, financial aid, low interest loans, provide facilities, promotion, free training schemes, support sessions
What is interest?
the cost of borrowing
How do we measure business size?
number of employees, value of output/revenue, value of sales, value of capital employed, market share
Why might owners want to grow their businesses?
high profits, more brand awareness, lowering of average costs, larger market share
How do businesses grow?
vertical integration and horizontal integration
What is vertical integration?
growing between the types of sectors
What is horizontal integration?
growing within the sector you are already in
What is internal growth?
expanding within your business, eg. opening new stores.
What is external growth?
merging with another company upon mutual agreement or a takeover
What is conglomerate integration?
moving into another industry. also known as diversification.
What are the problems linked to business growth?
diseconomies of scale
What are newer businesses at greater risk of failure?
lack of finance, poor planning, lack of business experience
