Theme 1.5 Entrepreneurs and Leaders

Question 1

4 advantages of a partnership?

Answer 1

More capital invested
Can share ideas
More partners add more skills
Financial information is private

Question 2

4 disadvantages of a partnership?

Answer 2

Unlimited liability
Disagreements
Profit is shared
Slower decision making

Question 3

Incorporated meaning?

Answer 3

The business shad a seperate legal identity from the owner, which is why they have limited liability

Question 4

4 advantages of a private limited company?

Answer 4

Limited liability
Incorporated - shareholders can’t be sued
No chance of takeover without shareholder agreement
Continuity

Question 5

4 disadvantages of an LTD?

Answer 5

Harder to raise capital as can only sell to friends and family
Have to pay dividends
More expensive to set up
Must publish accounts every year

Question 6

4 advantages of a public limited company?

Answer 6

Easy to raise capital
Benefit from EOS
Easier to raise finance from banks as seen as less risk
Can employ specialist staff

Question 7

4 disadvantages of a PLC?

Answer 7

Expensive to set up

Anyone can buy shares (untrustworthy)

Harder to deal with customers on a personal level due to the size

Owners do not control the day to day decisions in the business

Question 8

4 advantages of a sole trader?

Answer 8

Flexible working hours
Keep 100% of profits
Make all decisions
Able to work in an area they have an interest in

Question 9

4 disadvantages of a sole trader?

Answer 9

Stress
Limited investment/capital/skills
Increased workload (long working hours)
Lack of continuity

Question 10

What is a deed of partnership? (4)

Answer 10

A document/contract setting out:

Name and roles of each partner

Info on the way the business operates

How much 💰 each partner has contributed to the business

How profits and losses will be shared amongst partners

Question 11

What if there is no deed of partnership?

Answer 11

The profit is equally shared amongst partners no matter how much they have invested

Question 12

What are social enterprises?

Answer 12

Businesses that trade for a social or environmental purpose (not for profit organisations)
Over 131,000 in the UK

Question 13

3 things that a business must be to be a social enterprise?

Answer 13

Have a clear mission set out in its documents

Reinvest or donate at least half of its profits towards their mission

Be transparent in the way they operate and the impact they have

Question 14

What is a franchisor?

Answer 14

A business with an established brand, property and systems. They grant a license to franchise to use their name, owns the overall brand

Question 15

What is a franchisee?

Answer 15

A person/business that pays an initial fee and ongoing profits to a franchisor for the right to do business under their names and systems

Question 16

3 advantages of franchising for franchisee?

Answer 16

Franchisee doesn’t have to establish their own brand and reputation

Buying into an established business which will significantly lower risk

Assistance from franchisor when setting up e.g. training, marketing etc

Question 17

2 disadvantages of being a franchisee?

Answer 17

Very expensive for franchisee to buy and then also give away the profits (33%) to the franchisor (royalty)

Don’t have full control

Question 18

4 skills required to be an entrepeneur?

Answer 18

Communication
Problem solving
Teamworking
Numeracy skills

Question 19

2 financial motives?

Answer 19

Profit maximisation (to make as much profit as possible

Profit satisficing (to make enough profit to be satisfied)

Question 20

3 non financial motives?

Answer 20

Ethical stance (to be morally correct)

Social entrepreneurship (motivated by supporting a cause rather than making a profit, which will then be used to further support the cause)

Independence (Be your own boss)

Question 21

3 reasons why entrepreneurs find it difficult to become a leader?

Answer 21

Reluctant to hand over control/delegate e.g. entrepeneurs are emotionally and financially attached to their success of the business

Loss of autonomy in decision-making e.g. learning to listen and accept others opinions

Learning to trust others and not feel a need to constantly oversee everything

Question 22

What is an opportunity cost?

Answer 22

The benefit lost of the next best alternative when making a choice. As all resources are scarce, businesses must make choices in order to allocate these resources
e.g. if i buy a Fanta, i have lost the benefit of the alternative Pepsi

Question 23

What is a trade off?

Answer 23

giving up one thing to gain another, often due to limited resources or competing priorities, requiring businesses to make choices and prioritize effectively

Question 24

What is a franchise?

Answer 24

When one business (franchisor) gives another business (franchisee) permission to trade using the franchisors name and selling their goods/services

Question 25

3 advantages of franchising for the franchisor?

Answer 25

Economies of scale as more supplies are needed Rapid expansion Cheap investment

Question 26

2 drawbacks of franchising for the franchisor?

Answer 26

A failed franchise is a court case waiting to happen Loss of control e.g. hard to manage from a central point

Question 27

What is a life-style business?

Answer 27

When entrepreneurs run a business to suit and meet the needs of ther own life styles e.g. parents working, supporting hobbies

Question 28

What is the process of becoming a PLC called?

Answer 28

floatation

Question 29

What must a PLC have before they can trade?

Answer 29

A minimum of 2 shareholders and have issued at least £50k of shares to the public

Question 30

2 financial business objectives?

Answer 30

Survival Profit maximisation

Question 31

4 non-financial business objectives?

Answer 31

Sales maximisation Market share Customer satisfaction Social - to behave in a way which benefits society

Question 32

What is a mission statement of a company?

Answer 32

A brief written statement of the purpose of a company

Question 33

3 reasons why businesses set objectives?

Answer 33

Motivate employees Create reward systems Measure and review performance

Question 34

4 reasons why people set up their own business?

Answer 34

Be own boss Work-life balance Making money Social responsibility

Question 35

3 purposes of a business plan?

Answer 35

To secure external funding e.g. banks, investors To provide realistic expectations of what can be achieved To identify problems that they might face

Question 36

3 things that the entrepreneur needs to do when the business grows?

Answer 36

Use experts e.g. an accountant Move to bigger premises Expand product range

Question 37

3 reasons why people dont want to be an entrepreneur?

Answer 37

Limited skills Lack confidence Lack of access to finance

Question 38

Why can PLCs employ specialised workers?

Answer 38

they have greater financial resources and a larger scale of operations, which lets them: -Offer higher salaries and better benefits, attracting skilled professionals. -Invest in advanced tools and training, making the job more appealing to experts. -Have a strong brand and reputation, which draws in top talent. -Provide more career growth opportunities, which is important for specialised workers

Question 39

5 roles of an entrepreneur?

Answer 39

Creating and setting up a business Running and expanding a business Innovation within an business (intrapreneurship) - new ideas from employees/managers Barriers/challenges to entrepreneurship - Funding, Unwilling to take risks etc Anticipating risk and uncertainty

Question 40

4 characteristics of an entrepreneur?

Answer 40

Initiative Risk taker Understanding the market Commitment