1.5 Entrepreneurs And Leaders Flashcards

Question

If a firms product is price inelastic what should they do to achieve revenue maximisation?

Answer 1

Raise prices

Answer 2

Lower prices

Answer 3

The percentage of total sales a company holds in a particular market

Answer 4

By producing and selling better quality products than its competitors

Answer 5

A company’s ability to produce and deliver its products at the lowest possible cost This objective is crucial for companies that operate in highly competitive markets, as low costs enable them to compete with low prices

Answer 6

A company’s commitment to providing a healthy and safe working environment for its employees

Answer 7

By offering competitive wages, comprehensive benefit packages and promoting a healthy work-life balance

Answer 8

A business may aim to achieve customer satisfaction by delivering high-quality products, providing excellent customer service and offering attractive pricing

Answer 9

Social objectives refer to a company's commitment to addressing social or environmental issues This objective is increasingly important for businesses that aim to operate sustainably and build a positive reputation E.g. Superdry aims to reduce its environmental impact by using sustainable materials and minimising waste, while also promoting fair labour practices and contributing to social causes in the communities where it operates

Answer 10

If the business is sued the owners cannot lose their own possessions

Answer 11

- sole trader - partnership - private limited company - public limited company - franchise - social, lifestyle and online

Answer 12

A business that has a single owner (although they may still hire employees)

Answer 13

Advantages: - easy and inexpensive to set up - owner has complete control over the business - all profits belong to the owner - simple tax arrangements Disadvantages: - the sole trader is responsible for any debts the business incurs - limited access to finance and capital - limited skill set of the single business owner

Answer 14

Where two or more people join together to form a business E.g. lawyers and accountants

Answer 15

Advantages: - easy to set up and inexpensive - shared responsibilities and decision-making - more skills and knowledge are available - increased access to finance and capital Disadvantages: - partners have unlimited liability meaning if the business fails their personal assets are at risk - potential for disputes between partners - profits are often shared equally, regardless of the contribution - difficult to transfer ownership

Answer 16

The ownership of the business is broken down into a specific number of shares - these shares can be sold by the owner, usually to friends and family or to venture capitalists (specialist investors in small to medium-sized businesses that have significant potential for growth) Decision-making often rests with the person appointed to run the company, often called the Managing Director or CEO

Answer 17

Advantages: - limited liability, meaning the owners are not personally responsible for the company’s debts - access to greater finance and capital - easier to transfer ownership - can have a professional image and reputation Disadvantages: - more expensive and time consuming to set up - more complex legal requirements + regulations than sole traders - annual financial reporting and auditing are required - shareholders have little control over the company as the founder usually imposes their agenda

Answer 18

A business model where an individual (franchisee) buys the rights to operate a business model, branding, and support from a larger company (franchisor) in exchange for an initial lump sum, plus ongoing fees. The franchisee operates the business under the franchisor's established system and receives training, marketing support, and ongoing assistance. E.g include Domino's Pizza, KFC, Burger King

Answer 19

A business that has the primary purpose to create social or environmental impact (in addition to generating profits) Profits are usually reinvested back into the business or used to create positive social change or address an environmental issue E.g. Warby Parker is an eyewear company that donates a pair of glasses to someone in need for every pair of glasses sold

Answer 20

Lifestyle businesses are typically small, owner-operated businesses that prioritise a specific lifestyle or personal interest of the owner over profits or growth These businesses are often run from home or in a location that allows the owner to maintain a particular lifestyle or work-life balance E.g a yoga instructor, personal training, business coaching

Answer 21

Low overhead costs Can operate from anywhere with internet connection Still required to have a legal structure such as a sole traders or private limited company E.g. e-commerce stores, online courses

Answer 22

Occurs when a business becomes a public limited company, businesses do this to raise capital by selling shares to the public on a stock exchange E.g. the London Stock Exchange

Answer 23

Access to capital: significant amounts of capital can be raised very quickly, this is often a more cost effective way to raise capital than borrowing. Shared risks: risks are spread among a larger group of shareholders, this reduces the financial risk to anyindividual Increased liquidity: a company’s shares become more liquid (can be bought and sold more easily) on a public stock exchange, This can increase the value of the company's shares and make it easier for shareholders to buy/sell shares Extended decision-making: The company will have a board of directors made up of independent directors and representatives from major shareholders This can extend the decision-making process and bring in additional expertise/perspectives that can help the company grow and expand Greater public profile: Becoming a PLC can raise a company's public profile and increase its visibility with customers, suppliers, and potential investors This increased visibility can help the company attract new business and grow its customer base

Answer 24

The value of the next best alternative forgone. E.g. When a business decides to allocate all of its resources to producing electric vehicles, it may be unable to produce petrol vehicles. The petrol vehicles represent the loss of the next best alternative (the opportunity cost)

Answer 25

Due to the problem of scarcity

Answer 26

When 2 things cannot be fully achieved, therefore having more of one thing may mean having less of another

Answer 27

Product: choosing to spend money upgrading an existing product may result in the loss of the next best alternative, which could be research + development of a new product. Customer sales: A firm selling organic avocados are offered a supply contract by a supermarket that wants to buy all of their stock each month, but at a low price. The firm decides not to accept the contract as the opportunity cost (loss of prestigious customer) is worth less than the lost revenue to existing customers Market research: Foregoing market research may help the business to get its product to market quicker However, the trade-off is that the product may not have the features/qualities desired by the market Business ownership: Choosing to operate as a partnership will mean that a business loses the benefits of operating as a private limited company Promotional methods: Businesses have a limited amount of money to spend on promoting their products. Choosing to sponsor an elite athlete means that the business may have to give up other forms of promotion, such as radio advertising Pricing strategy: If a business decides to use a competitive pricing strategy (where prices are set based on competitor prices, it loses the opportunity to price skim (initially set prices as high as possible and gradually lower them over time)

Answer 28

The need to delegate (give tasks to others): Entrepreneurs need to learn to delegate tasks and responsibilities to others This can be difficult for entrepreneurs who are used to having control over every aspect of their business. Trust and verify: As a leader, it's important to trust your team members to do their jobs effectively It's also important to verify that tasks are being completed correctly and on time Finding the right balance between trusting your team and verifying their work can be a challenge Learn to listen: Entrepreneurs are often driven by their ideas and visions As a leader, it's important to listen to the ideas and perspectives of others Having an open mind: Leaders need to be open to new ideas and willing to adapt to changing circumstances Being less reactive: Entrepreneurs are often used to taking quick action and making decisions on the fly As a leader, it's important to take a more strategic and measured approach to decision-making Developing emotional intelligence: Leaders need to be able to understand and manage their own emotions, as well as the emotions of their team members Many entrepreneurs are used to being driven by passion and enthusiasm rather than emotional intelligence and empathy

1.5 Entrepreneurs And Leaders Flashcards

(52 cards)