1.5 - Entrepreneurs & Leaders

Question 1

Define Opportunity Cost

Answer 1

Opportunity cost is the loss of the next best alternative forgone when making a decision

e.g. investing in advertising leads to opportunity cost of having less money to invest in quality control

Question 2

Define trade off

Answer 2

Situation where we don’t have to sacrifice one thing for another, might be able to have alittle of both. Can achieve more of one by giving up some of an alternative.
A trade-off occurs when two things cannot be fully achieved

Having more of one thing may mean having less of another

E.g. improving quality to improve reputation has trade off of increased quality control costs

Question 3

Give 4 ways that entrepreneurs can reduce risk

Answer 3

• Business plan
• Market research (market orientation)
• Training staff
• Diversification (Ansoff)

Question 4

What is the role of an entrepreneur

Answer 4

• Creating and setting up a business (e.g. spot gap in the market)
• Running and expanding/developing a business
• Innovation within a business (intrapreneurship)
• Anticipating risk and uncertainty in the business environment (key in dynamic market)
• Barriers to entrepreneurship

Question 5

What is intrapreneurship

Answer 5

A system within a company or organization that allows employees to act like entrepreneurs. E.g. taking initiative to develop innovative products or services.

Question 6

Give difficulties in transitioning from an entrepreneur to a leader

Answer 6

• Need to learn to delegate, trust employees, verify work is completed
• Learn to listen, make strategic & considered descisions, have open mind, emotional inteligence - promote new ideas - encourage innovation

Question 7

Give 8 business objectives on spec

Answer 7

Survival
b) Profit maximisation
c) Other objectives:
* sales maximisation
* market share
* cost efficiency
* employee welfare
* customer satisfaction
* social objectives

Question 8

Give charicteristics and skills required by an entrepreneur

Answer 8

Skills: Communication (motivate employees, obtain finance), teamworking, problem solving, organisation, maths, IT
Charicteristics: Creative (innovative ideas, fill gaps in the market), initiative (1MA), resilient, risk taker, confident (motivating), hard working

Question 9

Entreprenurial motives (Reasons why people set up businesses)

Answer 9

Reasons why people set up businesses:
* financial motives: profit maximisation and profit satisficing
* non-financial motives: ethical stance, social entrepreneurship, independence and home working

Question 10

Define enterprise

Answer 10

The actions of an entreprenuer who shows innitative by taking risk by setting up a firm after spotting gap in the market, generating new ideas

Question 11

Do LTDs pay tax on dividends in UK?

Answer 11

no

Question 12

Define strategic descision making

Answer 12

Strategic decision-making is the process of making high-impact choices that align an organization’s actions with its long-term vision.