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Business Theme 1 > entrepeneurs and leaders > Flashcards

entrepeneurs and leaders Flashcards

1
Q

what is a business?

A

An organisation that exists to provide goods and services on a commercial basis to customers

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2
Q

What’s a good?

A

A physical product like a car

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3
Q

What is a service?

A

They are in tangible products, like insurance or cleaning

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4
Q

what are four benefits of business to society

A
  1. Create employment and develops human capital.
  2. drives innovation through research and development of new products
  3. Pay taxes on profit earned and collect taxes for government.
  4. Create wealth providing returns on investment.
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5
Q

What is enterprise?

A

The skills and abilities to take risks to meet the needs and wants of customers and create profits

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6
Q

what is an entrepreneur?

A

A person who organises operates and assumes the risk of a business venture

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7
Q

What are the importances of business ideas to entrepreneurship? (6)

A

-solves the problem
-Offers a better and cheaper way
-Simple and practicable
-Can be delivered quickly
-Have a clear focus
-Anticipate trends and exploit growing markets

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8
Q

what is a start-up?

A

A new business enterprise formed one or more entrepreneurs

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9
Q

what are the roles of entrepreneurs?

A

-spot business opportunities
-Takes calculated risks in order to gain possible future returns
-Act as a catalyst for the creation and growth of new business enterprises

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10
Q

Where do business ideas stem from?

A

-experience(insight into what works, and what doesn’t)
-Personal experience(day-to-day activities, and interest also bad experiences)
-Observations(watching what happens to customers and looking for poor customer service)

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11
Q

What is intrapreneurship?

A

Involves people with a business, creating or discovering new business opportunities which leads to the creation of new parts of the business or even new businesses

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12
Q

what are some ways to encourage intrapreneurship in a business?

A

-Give employees ownership of projects
-train employees in innovation
-Give employees time outside the confines of their job description

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13
Q

what are the barriers to entrepreneurship?

A

-Lack of Support and finance(can be overcome by giving percentage of ownership
-Lack of viable business ideas
-Gender equality-women are still under represented as entrepreneurs in the UK

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14
Q

what is risk?

A

-probability that things will not go as well as planned, and the chance that money invested in the business will be lost
-There is a possibility that the entrepreneur will be personally liable for the debts, a business incurs

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15
Q

how can entrepreneurs deal with risk

A

-take calculated risk, rather than gamble. They can find the breakeven by forecasting.
-Spread risk by diversifying
-Looking for high returns to take accounts of risks
-Keep going despite adversity-persistence is key quality

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16
Q

What are the rewards for enterprise

A

-Profits made by business
-Capital gains made by selling business
-Self-esteem
-Personal development
-Sense of control
-Satisfaction from building something

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17
Q

what are characteristics entrepreneurs need?(6)

A

-passionate+visionary
-energetic, driven and resilient
-self starting and decisive
-calculated risk taker
-focused
-results orientated

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18
Q

what is profit maximisation

A

-the desire to earn substantial rewards as a strong motivator
-builds a valuable business in long term

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19
Q

what is profit

A

revenue - expenses cost

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20
Q

what is profit satisficing

A

-a sufficient profit to enable a satisfactory standard of living
-take fewer risks
-associated with “lifestyle” business

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21
Q

what are non financial incentives of businesses

A

-more control over work life
-need for flexible working
-frustration with unfulfilled potential
-satisfaction of building something

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22
Q

what is a social enterprise

A

-trade in goods/services for a social purpose
eg/ fink street food matches every meal and gives it to a soup kitchen

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23
Q

what are 4 downsides to being an entrepreneur

A

-occasional loneliness and isolation
-can’t blame others if things go wrong
-strain on family and social life
-no sick days

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24
Q

to are business objectives?

A

-The specific intended outcomes of business strategy
-The targets which the business adopts in order to achieve its primary aims

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25
Q

how does the hierarchy of objectives work?

A

The objectives cascade down from the mission, getting progressively more specific

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26
Q

What is a mission?

A

Qualitative statement of the business aim

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27
Q

What is an aim?

A

A long-term plan for which business objectives derived from

28
Q

What is an objective?

A

A time assigned target, derived from the goals and set in advance of strategy

29
Q

How can objectives be used?

A

-to implement the mission
-To provide a target
-To motivate employees

30
Q

What are corporate objectives stated in terms of?

A

-profit (value, margin)
-return of investment
-Cash flow
-Growth (profit, revenues)
-Corporate image and reputation

31
Q

What is an example of a function objective for improved customer satisfaction

A

eg/achieve a 90% level of high customer service

32
Q

why is survival a priority for new businesses?

A

-they have no customers
-they are competing against existing competitors
-Have more expenses
-Have a lack of capital/finance, so the focus is on efficiency
-Can’t improve local economy
-Can’t make profit

33
Q

what is the survival objective Also a comment objective for?

A

-Established, but loss making businesses
-firms struggling to handle a shock in the external environment
-Businesses hit by competitive pressures or by loss of a major customer

34
Q

what does a cost efficiency objective aim to achieve?

A

-The most cost-effective way of delivering goods and services to the required level of quality

35
Q

what are the benefits of cost efficiency?

A

-Lower unit costs
-Higher gross profit margin
-Higher operating profits
-Improved cash flow
-Higher return on investment

36
Q

what objectives are often set in order to support profit objectives

A

-Cost and revenue objectives

37
Q

what are employee welfare objectives?

A

-employee related objectives tend to be functional in nature
-good service businesses place great emphasis on employee objectives, such as staff retention and quality of customer service

38
Q

What is customer satisfaction objectives?

A

when customers as at the heart of what successful businesses strive for

39
Q

What is an unincorporated business?

A

-The owner is the business, there’s no legal difference
-The owner has unlimited liability for business actions
-most operate as sole traders

40
Q

What is an incorporated business?

A

-legal difference between the owners and business
-Owners have limited liability
-Most operate as private, limited companies

41
Q

What’s unlimited liability?

A

The business owners, personally responsible for the debts and liability of the business

42
Q

what’s a sole trader

A

-A single person ownership
-Can employ people
-Personally owns all business assets and are personally responsible for all business debts

43
Q

What are the advantages of a sole trader?

A

-Quick and easy set up, can change from a sole ownership to a private company
-simple to run-the owner has complete control over decision-making
-Minimal paperwork
-Easy to close or shutdown

44
Q

what are the disadvantages of a sole trader

A

-Full personal liability “ unlimited liability”
-Harder to raise finance-limited funds of their own and security against which to raise loans
-Everything is down to the owner
-Can pay a higher tax rate than a company

45
Q

what’s a partnership?

A

2 to 20 people
-Legal agreement set out how partnership has run and covers areas such as:
— how profits are to be shared
— what the partners have to invest into the business
— how decisions are taken
— what happens if a partner wants to leave or dies

46
Q

what are the advantages of a partnership?

A

-Simple to set up
-Minimal paperwork, once partnership agreement set up
-Business benefits from the experience and effort of more than one owner
-Partners can provide more skill
-greater potential to raise finance

47
Q

what are the disadvantages of a partnership?

A

-Unlimited liability
-Poor decision from one partner damages, the interest of the other
-Harder to raise finance than a company
-Partners bound to honour decisions of others
-complicated to sell or close

48
Q

what is a company?

A

a legal entity
-The owners of the company are shareholders

49
Q

what is the importance of limited liability?

A

-Shareholders are protected and can only lose the value of their investment

50
Q

what does limited liability not protect against?

A

-Wrongful/fraudulent trading
-when personal guarantees have been given by directors

51
Q

traits of a limited company?

A

-separate legal entity to founders
-Owns things for itself such as assets
-Can sue or be sued

52
Q

who are companies owned by?

A

their shareholders

53
Q

who are companies run by?

A

-directors in the interests of shareholders

54
Q

what are shareholders?

A

They own a share of the company, but don’t own the assets of a company
-are not liable for the debts of a company

55
Q

What’s the most common form of limited company?

A

Private limited company

56
Q

What is a private limited company?

A

shares of company and not traded publicly on a stock exchange

57
Q

what is a public limited company?

A

Larger value of share capital invested, and its shares may be traded publicly
-substantially more share holders
-greater regulation in terms of public disclosure of financial and other information

58
Q

what are the advantages of limited company?

A

-Limited liability-protect shareholders
-Easier to raise finance(through sale of shares and also easier to raise debt)
-Stable form structure(business continues to exist, even when shareholders change)

59
Q

What are the disadvantages of limited company?

A

-greater admin cost
-Public disclosure of company information
-directors legal duties

60
Q

what is the public sector company?

A

A company owned or controlled by government, such as RBS or National rail

61
Q

what is a public sector organisation?

A

-Provide goods or services which are owned or operated by public bodies
-Funded by central and local government, but may still levy charges for some services
eg/ NHS

62
Q

What resources are typically scarce in a business?

A

finance
Time
Capacity
Skills and capabilities

63
Q

What is opportunity cost?

A

Measure the cost of a choice made in terms of the next best, alternative foregone or sacrificed one

64
Q

What is a trade-off?

A

arises were having more of one thing, potentially results in having less of another

65
Q

what are two examples of trade-offs

A

-Less market research could result in less successful new product launches
-Choosing lower risk investments mean you gain lower reward

Business Theme 1 (6 decks)

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