151 Role of an Entrepreneur AS Edexcel New Specification 2015 Business By Mrs Hilton for

From the specification a) Creating and setting up a business b) Running and expanding/developing a business c) Innovation within a business (intrapreneurship) d) Barriers to entrepreneurship e) Anticipating risk and uncertainty in the business Environment a) Creating and setting up a business b) Running and expanding/developing a business c) Innovation within a business (intrapreneurship) d) Barriers to entrepreneurship e) Anticipating risk and uncertainty in the business Environment

Guidance from Edexcel

Guidance from Edexcel continued

Guidance from Edexcel

Lesson Objectives To be able to discuss how a business is created and set up To be able to identify the basic elements of running, expanding and developing a business To be able to analyse innovation within a business To be able to identify barriers to entrepreneurship To be able to discuss risk and uncertainty To be able to answer sample exam questions based on the topic area

Starter If you were going to start a business – what would it sell, make or do?

CREATING AND SETTING UP A BUSINESS

Gurpal’s online phone case business Example 1 If the business grows and is successful then the owner (Gurpal) may consider moving to a shop giving them a physical presence in the market. He can run the website business from the shop and also serve customers that come through the door – doubling his revenue. This would also significantly reduce his costs. If the business grows and is successful then the owner (Gurpal) may consider moving to a shop giving them a physical presence in the market. He can run the website business from the shop and also serve customers that come through the door – doubling his revenue. This would also significantly reduce his costs.

Sole trader based from home Example 2: Dave Jones is a handyman with a van who works from home. He cuts lawns, fits showers, paints and decorates houses and carries out small domestic maintenance work.

Small growing enterprise run from home Example 3: Ebru has decided to start a cheesecake business from home. It has been successful soon she does not have enough room in her small flat to store all the boxes. She needs to put more fridges into her tiny kitchen. Example 3: Ebru has decided to start a cheesecake business from home. It has been successful soon she does not have enough room in her small flat to store all the boxes. She needs to put more fridges into her tiny kitchen.

RUNNING AND EXPANDING/DEVELOPING A BUSINESS

Developing and expanding a business An entrepreneur once settled and surviving may seek to expand their business: – Carry out marketing research to see if there is demand to justify expansion – Raise necessary finance – Introduce new products and services – Invest in new technology, better equipment to improve service – Tender for contracts – Take on more skilled staff – Pyclets shop article herehere Fraser and his Superjam, from his kitchen to international sale website here here

INNOVATION WITHIN A BUSINESS (INTRAPRENEURSHIP)

Intrapreneurship Fairly new concept An employee within a larger business who thinks like an entrepreneur – Takes risks – Solves problems – Focusses on processes to improve productivity – Drives innovation – Understands trends – Proactive in adding value – Good article herehere

BARRIERS TO ENTREPRENEURSHIP

Barriers to entrepreneurship Financial: Lack of start-up capital Lack of cheap labour Lack of investment Personal: Lack of self esteem Risk averse Fear of failure Lack of technical skills Economic: Taxation Market entry regulations Political: Unstable political landscape

ANTICIPATING RISK AND UNCERTAINTY IN THE BUSINESS ENVIRONMENT

Definition of uncertainty from the exam board Uncertainty is when businesses are unable to predict external shocks or future events.

Uncertainty Some things in your future you can predict: You will go to school You will sleep late on Saturday You will eat lunch every day this week Some things you cannot predict: X If you will win the lottery X If you will win a school prize X If you will be late to school because of a traffic jam X Who you will marry

Uncertainty in business A business cannot possibly know everything that will happen in the future But It can have a contingency plan for some eventualities

Uncertainty and spending decisions As uncertainty about future economic conditions changes over time it can affect spending decisions. If one company is taken over by another, the employees may feel more uncertain about whether next year’s pay will be higher or lower than currently. Or businesses may become more unsure about the level of next year’s orders if there is a change of government in one of their export markets. Households faced with uncertainty may save more rather than spend. Consumers may delay the purchase of a large item such as a car or house, these industries feel effects of shock and uncertainty the most Companies may decide to delay an investment decision with a “wait and see” policy to see if the project is viable

How a business may protect itself from uncertainty A business may be involved in import and export and be affected by fluctuations in the exchange rate. This could cause huge problems for the business if there are a lot of fluctuations – see diagram euro to £ changes over just 90 days foreign exchange can be bought and sold in advance – what is known as the ‘forward’ market

How a business may protect itself from uncertainty A business may worry about fluctuating interest rates and so may take out a long term loan at a FIXED rate of interest. So payments stay the same and the business knows its fixed costs each month will not change.

Sample question 1 8 marks Notice – entrepreneur not mentioned its implied in the case, you are looking for innovation and risk Knowledge 2 Application 2 Analysis 2 Evaluation 2

Answer question 1

Revision Video

Glossary Intrapreneur; an employee who works for a large business but thinks like an entrepreneur Innovation; an invention taken to market and sold Risk; The possibility of financial loss Uncertainty; something in the future which is not known, for example a world recession

Bonus video