enterprise, business growth and size

Question 1

define entrepreneur

Answer 1

a person who organises, operates and takes the risk for a new business venture

Question 2

what is the definition of a business plan

Answer 2

a document containing the business obj and important details about the owners of the new business

Question 3

what should be included in the business plan (7)

Answer 3

description of the business
products and service 
the market 
business location and how it will reach customers 
organisation structure and management 
financial information 
business strategy

Question 4

why do governments supports business start ups(5)

Answer 4

reduce unemployment
increase competition- give customers more choice and compete with already established businesses
increase output - economy benefits from increased output of goods and services
benefit society- entrepreneurs may create social enterprises which offer benefits to society other than jobs and profit
can grow further -

Question 5

how do governments support business start up (5)

Answer 5

business idea and help- gives advice by experiences business ppl
premises- enterprise zones proved low cost premises for them
finance - loans for small business at low interest rate or grants of business starts up on depressed area of high unemployment
labour- train employees and help increases productivity
research- encourage uni to make research facilities available to new business entrepreneurs

Question 6

what are the 7 ways to measure business size?

Answer 6

number of people employed, value of output , value of sales and value of capital employed, number of outlets, value of business and market share

Question 7

who would want to compare the size of business

Answer 7

investors, governments, competitors, workers, banks

Question 8

describe number of ppl employed and its limitation

Answer 8

easy to calculate and compare
some firms use more machines
capital intensive
is 2 part-timers counted as 1 or 2 employees?

Question 9

describe the value of output and its limitations

Answer 9

common in manufacturing industries

high level of output does not mean business is large

Question 10

describe value of sales and its limitations

Answer 10

compare size of retailing business esp if selling similar products
misleading if business sells diff products

Question 11

what is the meaning of capital employed

Answer 11

the total value of capital used in the business

Question 12

describe value of capital employed

Answer 12

total value of capital invested into the business

labour intensive methods with low capital employed could give low level of outputs

Question 13

describe market share and its limitation

Answer 13

provides useful compares against same industry
cant compare with diff industry
if market is small a bus with large share doesn’t mean large business

Question 14

what are the 2 ways in which a business can grow

Answer 14

internal growth and external growth

Question 15

define internal growth and its benefits

Answer 15

when a business expands its existing operations
opening in new area, moving market abroad hiring more employees
easier to manage but is slower
paid using profits of owners
staffed by existing resources

Question 16

why do owners wants to expand their business (4)

Answer 16

possibility of higher profits for the owners
more status and prestige for the owners and managers- higher salaries
lower ave cost
larger share in market

Question 17

describe the number of outlets and its limitation

Answer 17

does not show monetary value- may nOt be equal to the amount of products sold

Question 18

describe value of business

Answer 18

price another business is willing to pay

inaccurate cuz bus may be bought for more than it’s worth

Question 19

describe external growth

Answer 19

a business takes over or merges with another business

Question 20

meaning of takeover or acquisition

Answer 20

when 1 business buys out the owners of another business which then becomes part of the predator business

Question 21

what is the definition of merger

Answer 21

when the owners of 2 businesses agree to join their business tgt to make 1 business

Question 22

3 examples of external growth

Answer 22

horizontal, vertical and conglomerate

Question 23

what is horizontal integration

Answer 23

when 2 business merges with or takes over another one in the same industry at the same stage of prodcution

Question 24

benefits of horizontal integration (3)

Answer 24

reduces numbers of competitors in the industry
opportunities if economic of scales
bigger total market share

Question 25

define vertical integration

Answer 25

when one business takes over another one in the same industry but at a different stage of production

Question 26

what is forward vertical integration and its benefits (3)

Answer 26

when a business integrates with another business in a later stage of production gives assured outlet for its products profits margin made by the retailers now absorbed by the expanded business could prevent retailer from selling competing brands of products manufacture now obtain info at customer needs

Question 27

what is backward vertical integration and its benefits

Answer 27

when a business takes over another businesses which is at an earlier stage of production assured supply of important component profit margin of supplier not absorbed by expanding business could prevent supplier from supplying to other manufactures cost of components and suppliers for manufacturers cld be controlled

Question 28

what is conglomerate integration and its benefits (2)

Answer 28

when one business merges with or takes over a business in a completely different industry . also known as diversification able to spread risk taken by business transfer ideas

Question 29

what are the 4 problems resulting from expansion and how do you overcome them

Answer 29

hard to control- operate the business in small units -decentralisation poor communication - decentralisation, use latest it equipment short in finance- expand slowly, ensure long term finance is available difficult that expected- just communicate well

Question 30

why do business remains small (3)

Answer 30

industry they work in- a lot of competition, want that close bond to customers and rlly specialised market size is small owners dont want stress idk they just felt like it

Question 31

what causes business failure (4)

Answer 31

lack of management skills- lack experiments or bad decisions changes in business environment - fail to plan for changes , replace with technology poor finance management- shortage of cash means they cannot workers, gov ect cant be paid over- expansion -

Question 32

why are new business at greater risk of failing (3)

Answer 32

lack of finance/ resources poor planning and inadequate research lack skills

Question 33

what is an advantage of having a business plan

Answer 33

guidance of business reduce risk of failure support from bank loan