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Business > 1.5 - Entrepreneurs and Leaders > Flashcards

1.5 - Entrepreneurs and Leaders Flashcards

(48 cards)

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1
Q

Opportunity costs

A

Choosing between different alternatives, the opportunity cost is the benefit lost from the next best alternative to the one that as been chosen

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2
Q

Entrepreneur role

A
  • Innovation
  • Organizers
  • Make decisions
  • Risk takers
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3
Q

How do entrepreneurs find business ideas?

A
  • Experience
  • Personal
  • Skills
  • Lifestyle choices
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4
Q

Entrepreneur

A

An individual who sets up and runs a business taking on the financial risk

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5
Q

Intrapreneur

A

Employees who have entrepreneurial skills, w/out having to risk their own money, to find and develop initiatives that will have financial benefits for their employer

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6
Q

Barriers to entrepreneurship

A
  • Lack of finance
  • Lack of skills
  • Becoming an employer
  • Legal
  • Lack of ideas
  • Fear of failure
  • Environment
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7
Q

Entrepreneur characteristics

A
  • Initiative
  • Perseverance
  • Commit
  • Judgement
  • Being a self-starter
  • Self-determination
  • Self-confidence
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8
Q

Entrepreneurial skills

A
  • Organizing
  • Communication
  • Managing people
  • Financial management
  • Decision-making
  • Negotiating
  • IT skills
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9
Q

Why would people decide to set up a business?

A

Financial motives and non-financial

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10
Q

Entrepreneurship

A

The activity of setting up a business, taking on risks, normally in the hope of making a profit

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11
Q

Risk

A

Something an entrepreneur can essentially plan for.
Probabilities of outcomes are known or at least understood or considered

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12
Q

Financial motives

A
  • Profit maximization (try to make as much profit as possible in a given period of time, more willing to make bigger risks)
  • Profit satisfying –> aim to make enough profit to maintain their interest in the business
  • Lifestyle –> allow to pursue other areas of life
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13
Q

Non-financial motives

A
  • Ethical stance –> to support their moral belief they possess
  • Social enterprise –> trade with the aim of improving human and environmental well-being
  • Independence –> be their own boss
  • Home working
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14
Q

Article of association

A

A doc that provides details of the internal running of a limited company

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15
Q

Certificate of incorporation

A

A document that declares a business is allowed to trade as a limited company

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16
Q

Co-operative

A

A business organization owned by its members, who have equal voting rights

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17
Q

Deed of partnership

A

A binding legal doc that states the formal right of partners

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18
Q

Franchise

A

A b model in which a b (franchisor) allows another operator (franchisee) to trade under their name

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19
Q

Limited liability

A

A legal status which means that a b owner is only liable for the original amount of money invested

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20
Q

Limited partnership

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A

A partnership where some members contribute capital and enjoy a share of the profit, but to not participate in the running of the b. At least one must have unlimited

21
Q

Memorandum of association

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A

A doc that sets out the constitution and states key external details about a limited comp

22
Q

Mutual organisation

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A

A b owned by its members which are customers not stakeholders

23
Q

Partnership

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A

A type of business ownership owned by two or
more people

24
Q

Primary sector

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A

Prod involving extraction of raw materials from the earth

25
Secondary sector
Production involving the conversion of raw materials into finished and semi-finished goods
26
Social enterprise
A business that has aims/objectives which benefits society and is not for profit/its profits are reinvested into the business/community
26
Sleeping partner
Contributes capital and enjoys a share of the profit but takes no active role in running the business
27
Sole trader/sole proprietor
A business that that is owned by one person who has unlimited liability
28
Tertiary sector
Production of service in the economy
29
Unlimited liability
On legal status which means the owners of a b is personally liable for all debts of a business
30
Advantages of sole traders
- Owner keeps all profit - Owner has complete control - Set-up is simple with no legal req - Flexible and can adapt to change quickly - Offer a personal service as it is small - May qualify for gov help
31
Disadvantages of sole traders
- Unlimited liability - Struggle to raise finance --> lenders may see them as too risky to offer credit (unlimited) - Independence may be a burden, e.g. ill - Owners and employees work very long hours - Too small to exploit eos - No continuity if owner passes
32
Advantages of a partnersip
- Easy to set up and run, w/ no legal formalities - Specialize in areas of expertise - Share burden - More owners raise more capital - Does not have to publish financial information
33
Disadvantages of a partnership
- Unlimited liability - Share profits - May disagree, fall out etc, slow decision make - One partners decision legally binding on all other partners - Limited growth potential
33
Advantages of private limited companies?
- Shareholders have limited liabilities - More capital can be raised by issuing shares - Control over b can't be lost to outsiders - Owners have tax +ve - may pay less tax - Consider to have a higher status than other b like sole traders
34
Disadvantages of PLC
- Publish financial info - Set up costs have to be met - Profits shared between more members - Takes time to transfer shares to new owners - Can't raise large amounts of money
35
Franchising
A type of business where a business operator (franchisor) allows others (franchisee) to trade under its name (for a fee)
36
Different forms of social enterprise
- Co-op - Workers co-op - Mutual organizations - Charities
37
Charities
Rely on donations. Exist to raise money for various causes and draw attention to the needs of disadvantaged groups in society
38
Private equity company
A b usually owned by private individuals backed by financial institutions
39
Public limited companies
A comp owned by shareholders where the shares can be traded openly on the stock market
40
Stock market
A market for 2nd-hand shares
41
What happens during stock market flotation?
- Occur when company goes public - Comp shares offered to public for first time
42
Disadvantages of public limited companies
- Set-up costs can be very $$ - Possible for an outsiders to take control - Members of the public can inspect all comp account - Hard to deal with customers at a personal level - Inflexible very large
43
Trade-off
Compromise between 2 diff alternatives, between paying dividend to shareholders and re-investing profits in the b
44
Why does an entrepreneur need to share ownership when becoming a leader?
- Capital to fund expansions - Obtain funding
45
Difficulty in developing from an entrepreneur to a leader?
- Adapt mindset - Stress - Share ownership and control - Trust - Lack of leadership qual
46
How can entrepreneurs overcome the difficulties to becoming a leader?
- Delegation and trust - Earn respect - Maturity and experience - Education - Lower stress

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