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. Learning Intentions: Introduction to entrepreneurs and entrepreneurship You should be able to: Identify, describe and be able to give real-life examples of entrepreneurs. Define entrepreneurship
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Entrepreneur A person who takes an idea and through ability and vision turns it into a good or service. He/she combines the four factors of production. Richard Branson is Britain’s most famous entrepreneur.
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Scottish entrepreneurs Sir Tom Hunter Ann Gloag and Brian Souter Tom Farmer Duncan Bannantyne Michelle Mone How did they make their money? Click for clip
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Role of an entrepreneur Identify business opportunities Franchising Combine factors of production Innovation and risk taking
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Identify business opportunities Look for a gap in the market Examples: McDonald’s home delivery in Clydebank?¹ Virgin Galactic² MJM³
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Entrepreneurs and franchising In order to minimise risks, many young entrepreneurs have taken to using franchises as a means of starting up a business. It is important to remember the benefits of the franchising model as it reduces risk.
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Combining factors of production The entrepreneur brings together land, labour and capital. Let’s look at Richard Branson at Virgin: He would buy or rent the floorspace for factories or shops (land) He would hire the staff (labour) He would buy machinery/equipment (capital).
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Innovation and risk taking Entrepreneurs do not invent, they innovate. Henry Ford did not invent the automobile but through different innovations such as the assembly line and mass production he helped popularise car use and make it affordable for customers. Risks involved are usually to do with uncertainty and money. No-one knows for sure if a new venture will be successful. The entrepreneur could go bust…like John DeLorean.¹
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. Learning Intentions: To introduce stakeholders within and outwith business organisations. You should be able to: describe what a stakeholder is identify stakeholders, both internal and external describe stakeholders interests and influences
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Stakeholders Stakeholders are people with a key interest in a business. Stakeholders affect businesses by exerting influence over decisions. Their influence depends on the degree of their involvement or relative interest in a company.
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The three Is… When answering questions about stakeholders think of the three Is: Identify (who are they?) Interest (why do they want the firm to succeed?) Influence (how can they affect the firm’s future?)
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Identifying stakeholders for all business types Internal Owners/shareholders Employees/workers Management External Customers Banks/lenders Investors National/Local government Suppliers Donors (for charities) Taxpayers Society/Local Community
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Stakeholder Interest Owners want high profits, high dividends. Managers want promotion, bonuses, job security. Employees want better wages, better working conditions, job security.
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Stakeholder Interest Suppliers want regular orders, prompt payment. Customers want low prices, high quality. Banks want loans repaid on time.
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Stakeholder influence Owners put capital in, vote at AGM (change board of directors). Managers hire/fire employees, create policy and rules, make decisions. Employees go on strike, increase/decrease productivity, provide good/bad customer service.
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Stakeholder influence Suppliers raise/lower prices, change delivery times, change credit terms. Customers can choose to buy or not to buy products, affect ‘word of mouth’ and reputation. Banks grant or deny loans, change interest rates, change repayment details (end date).
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What does this mean?
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Command word practice Describe Give a thorough description of whatever you are being specifically asked about. It is vital that you describe the correct point not just the theory point.
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Exam question Describe how five different stakeholders could influence an organisation. (5 marks) In this question you have to describe not the stakeholder but their influence on the business.
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One to get you started... The bank is a stakeholder and they could influence the business by granting a loan – this would mean the business could carry out their chosen objective to expand. The influence – carrying out the objective is clear in this answer.
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Now it’s your turn Describe how five different stakeholders could influence an organisation. (5 marks) You have 10 minutes.
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Peer-assessment solution The following stakeholders have various influences on a business such as: Manager – makes decisions on the future plans of the organisation helping to expand or improve the business Worker – can produce a quality product or service by working hard and increase productivity shareholder/owners – purchase more shares increasing the available capital for the business Customer – buys the product or service increasing sales and in turn profits Local community – petition the organisation to make a change to environmental policies improving the emissions from a business Government – alters legislation and can keep businesses on track with laws and implementing ideas eg minimum wage act Bank – approves a loan improving the businesses finances and allowing it to expand Suppliers – alter the price of supplies either higher or lower, this causes a knock on effect for the businesses customers
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