L6 Business Theme 1.5 Entrepreneurs & Leaders

Front 1

Profit maximisation

Back 1

* A business objective to produce at the level of output where surplus of sales revenue over total costs is at its highest
* Profit = SR-TC
* This will keep investors happy and fund growth

Front 2

Profit Satisficing

Back 2

* A business objective to produce at a level of output where the sales revenue over total costs is at a satisfactory level that will allow the business owner to maintain a comfortable standard of living
* Other objectives, such as life;

Front 3

Intrapreneurship

Back 3

The act of behaving like an entrepreneur whilst working within a large organisation

Front 4

Barriers to entrepreneurship

Back 4

Factors preventing enterprise and making it difficult for entrepreneurs to thrive such as excessive regulation or a lack of law protecting intellectual property.

Front 5

Corporate objective

Back 5

A well-defined and realistic goal set by a company that often influences internal strategic decisions

Front 6

Mission statement

Back 6

A formal summary of the aims & values of a company, organisation or individual

Front 7

Shareholder value

Back 7

The value delivered to shareholders because of management's ability to grow earnings, dividends and share price

Front 8

Strategy

Back 8

A plan of action designed to achieve a long-term or overall aim

Front 9

Incorporation

Back 9

The process of legally declaring a corporate entity as separate from its owners

Front 10

Franchise

Back 10

* Process where a business (franchisor) gives anther business (franchisee) permission to trade using the franchisor's name and selling the franchisor's goods or services
* Franchisee pays franchisor a fee and a share of profit
* Can be seen as a less risky option for business start-ups but can mean additional costs and loss of independence.

Front 11

Franchisee

Back 11

One who purchases a franchise and then runs

that location of the purchased business. He or she is responsible for certain decisions, ,but many other decisions (such as the look, name, and products)are already determined by the franchisor and must be kept the same

Front 12

Limited liability

Back 12

* An investor's liability / financial commitment is limited to total amount invested or promised in share capital
* An investor's personal belongings beyond this venture are protected
* Private and public limited companies have limited liability

Front 13

Sole Trader

Back 13

* An individual who owns & runs their own business
* A sole trader has unlimited liability & is therefore responsible for all debts of the company
* A sole trader is unincorporated - i.e. the sole trader & the business have the same legal identity

Front 14

Unlimited liability

Back 14

* The owners of a business are responsible for the total amount of debt of the business
* The owner may lose their personal belongings if the value of these is needed to cover the debts of the business

Front 15

Registrar of Companies

Back 15

In Britain, a government official based at Companies House whose job is to keep detailed records about limited companies

Front 16

Public Corporation

Back 16

A company whose shares are traded freely on a stock exchange so that any member of the public old enough to purchase shares can buy or sell them

Front 17

Public limited company

Back 17

* An incorporated business that is able to sell shares on the stock exchange
* Shareholders in the business have limited liability
* The business must have a minimum of £50,000 in share capital and 'plc' after its name

Front 18

Private limited company

Back 18

* An incorporated business that is owned by shareholders who tend to be family & friends of the entrepreneur
* Shareholders in the business have limited liability
* The company must have 'Ltd' after its name

Front 19

Partnership

Back 19

* A business structure when two or more people join together to set up a business
* Each partner will contribute towards start-up costs and be involved in decision-making
* Each partner would normally have unlimited liability

Front 20

Social Enterprise

Back 20

* A business whose motives are not financial gains but to provide a service or benefit to society
* Profits made are generally reinvested into meeting the objective of benefitting society
* Social enterprises form a part of what is now referred to as the third sector

Front 21

Opportunity Cost

Back 21

* The cost of one course of action in terms of the next best alternative foregone
* In business (or life) every time one decision is made an alternative decision has been dismissed
* The opportunity of setting up a business might be the security of paid employment

Front 22

Entrepreneur

Back 22

A business person or innovator who sees

opportunity, works to exploit it and takes

the risk, to make a profit or grow a business.