People in Business Flashcards
Chapter 1 (40 cards)
Explain Stakeholders
Stakeholders are the people who are affected by how a business is run.
Name nine possible stakeholders in a business.
Entrepreneur Investor Employer Employee Interest Group Manager Producer Consumer Service Provider
Explain entrepreneur (SEEE)
A person who spots an opportunity (gap in the market) and takes the initiative to set up a business to make a profit from that opportunity.
Financial risk- If business fails loses money invested in business
Personal Risk- Loses self confidence if business fails
Example- Mary Ann O Brien created Lily O Briens Chocolates
Define an investor as a stakeholder of a business with an example
A person who gives money (capital) to the entrepreneur that they need to set up and run the business in exchange for a return on investment.
Types- Debt Capital and Equity Finance
Example- Bank Loan or LEO Grant.
Mary Ann O Brien received a loan from AIB to start up Lily O Brien’s chocolates.
Explain the difference between Debt Capital and Equity Finance.
Debt Capital is a method of investment which the entrepreneur is given capital by the investor to be paid back with interest. Ex: A Bank Loan. AIB and Lily O Briens Chocolates
Equity Finance is a method of investment whereas the investor provides capital for the business in exchange for shares in the business and receives dividends. Ex: Anita Roddick at the body shop sold shares to open a new shop.
Explain Employer (SEEE) Summary
Person who hires others to work for them. An entrepreneur may become an employer when the business grows and they cannot complete all tasks alone. The employer rewards the employee for their work. Rewards include: financial and/or non-financial (more holidays etc)
Example: Aer Lingus employs pilots.
Explain Employee (SEEE)
Person who works for an employer in return for a wage. They carry out essential tasks needed to make the business a success which the employer cannot or will not do. Ex: Pilots at Aer Lingus
Employers can also give the employer ideas to make the business even more successful. An Intrapreneur. Ex: Microsoft XBox
Explain Producer with example
A business that makes finished products to sell to customers. Manufacturers who take raw materials and use manufacturing process to turn them into finished products.
Ex: Tayto turn potatoes into crisps. Cadburys take milk and other ingredients to make chocolate
Explain Consumer with example
A person who buys goods or services from the entrepreneur for their own personal use. The customer provides the entrepreneur with a market for the product and therefore a profit.
EX: When a parent pays for childcare they are a consumer.
Explain the role of a manager in a business (SEEE)
A manager’s job is to run the business and make sure it achieves it’s objectives. The manager uses the resources of the business (people, money, equipment) in the best way possible so that the business is a success. A successful manager will lead and motivate their team of employees. They should communicate effectively with them.
Example: CEO of Ryanair Michael O’ Leary
Explain the term service provider with an example
A business that offers a large range of helpful supports to an entrepreneur. Service Providers do not make products instead they do helpful things.
Example: A solicitor provides the entrepreneur with legal advice if they are sued and will defend them in court.
Explain an Interest group and name and example
An organisation of people who come together and campaign for a common goal by pressuring those who make decisions. By joining forces they have more power, money and talents so are more likely to be listened to by decision makers.
Example: Trade Union/ Greenpeace (environmental interest group)
Name four types of relationships between stakeholders
Co-operative
Competitive
Dependent
Dynamic
Explain Co-operative relationship with an example
Means the parties in the business have the same objective so they work together to achieve their goal. This is a win-win situation as working together produces better than working alone.
Ex: Employer and Investor. Employer provides honest information about how the business is doing and in return the investor cooperates by giving more capital.
Explain competitive relationship with an example
Means that one party in the business wants to be more successful than the other. This is a win-lose situation as only one can win. Often the parties fight against each other and become rivals.
Example: Two employees that want a promotion- both trying to work hard and impress their boss.
Example: Walkers and Tayto are competitors as they compete lowering prices to get more customers
Explain Dynamic relationship with an example
Relationship between stakeholders is constantly changing. Sometimes it is competitive and sometimes it is cooperative.
Example: Competing businesses in a town might work together to hold a town festival once a year to bring more people to the area, boosting sales for all businesses ex: Rose of Tralee
Explain Dependent relationship with an example
Parties need each other in order to be successful. They cannot achieve their goals on their own, the rely on the other party to provide them with what they need so they can be a success.
Example: Consumers and Producers need each other. Consumer need producers to make products and producers need consumers to buy the products.
Explain the term contract
A contract is a legally binding agreement between two or more people in which each promises to do something for the other. The agreement is enforceable by law. If party breaks the agreement a judge can order compensation to be paid or force the party to fulfil ther part of the contract.
Give an example of a legally binding contract
Mary had a contract to sell her house to John for x amount. John changes his mind but Mary could take him to court over the contract
Name eight components of a valid contract.
Offer Acceptance Consideration Intention to Contract Capacity to Contract Consent to Contract Legality of form Legality of purpose.
Explain offer with an example
Offer is made when one person asks another to enter into a contract. For the offer to be valid the terms should by communicated clearly in writing or spoken with out any conditions attached.
Example: When you buy groceries you offer to buy them by placing them on the conveyer belt.
Explain indication to treat with an example
An indication that the seller would like to receive offers for its product. The customer asks to buy the goods at the price shown. The customer makes the offer. The seller can accept or reject the offer.
Example: Ad/Price tag/Goods on a shelf
Explain acceptance with an example
Acceptance means that the other person agrees to all of the terms of the offer without and conditions. They can accept the offer by speaking, writing or by conduct.
Example: Cashier scanning your groceries (by conduct)
Explain consideration
Consideration is the payment that one person gives to the other party as part of the agreement. There must be consideration and it must be real and valuable. The agreement cannot be for free for it to be a valid contract.
Example: Consumer presents cashier with money to pay for groceries
