Edexcel Business Studies AS Unit 1 Revision notes

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Characteristics of Successful Entrepreneurs
Enterprise and Entrepreneurs
Introduction
Enterprise: The combination of attitudes and skills that helps an individual turn an idea into reality.
Entrepreneur: Someone who makes a business idea happen, either through their own effort, or by
organising others to do the work
o Courage and initiative ­ to act quickly when an opportunity is present
o Understanding of the market ­ know what customers want and see how well current customers are
serving them
o Determination ­ to see through things even if there are difficulties
o Passion ­ to achieve something and not just to make money
o Persuasive abilities ­ persuade others in in the production process (e.g. supplying of goods on credit)
o Ability to cope with risk
Risk-taking
Consider what they think will happen and what will happen different
Foresee other possibilities so that plans can be made
Compares all the risks with the possible rewards and makes a considered decision
Characteristics of entrepreneurs
People who aren't entrepreneurs
o Are very cautious ­ never want to take risks
o Assume that things are the way they have to be
o Like to be sure of their pay cheque
Bad entrepreneurs
o Ignore risks ­ assume that own charisma/ skill will guarantee success
o Rush to bring in something new or make huge changes
o Trust that things will go as planned, spend freely at the start as they are sure that money will start
flowing in tomorrow
Good entrepreneurs
o Take calculated risks, weighing up potential risks and rewards
o Launch new ideas in response to changing consumer tastes of attitudes
o Accept that the early days of a new business may be tough, so try to minimise spending
Motives for becoming an entrepreneur
Looking for a challenge
To prove oneself
To gain greater satisfaction
To gain control over working life
Spotted an opportunity
Building on experience as employee
Made redundant
To make money
Couldn't find a job
Government support for enterprise
Only 2% of business get funding through grants given by government
Main expenditure: Business Link network ­ offers free advice to those starting up plus a free consultation
with an expert nominated by Business Link
o Quality of advice is variable
In 2010: Replaced Business Link network with online-only advice service to cut expenditure
Wants to continue the long-standing policy to encourage an "enterprise culture" ­ create a spirit among
young people that being enterprising is cool

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More people starting their own business -> Economy will develop dynamically
Issues for analysis
Are real entrepreneurs born or made? ­ Can skills be learnt?
Do entrepreneurs tend to be school underachievers whose success comes from their reaction against school
failure?
Does the government do enough to help entrepreneurs? (Funding, regulations, etc.)
o Most new entrepreneurs use their own savings and plenty of their own time
Leadership and Management Styles
Introduction
Leadership: Inspiring staff to achieve demanding goals.…read more

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Too much charisma is dangerous ­ too much influence and may make wrong decisions
What is the best style of leadership?
Depends on the situation
o Crisis ­ autocratic managers
o Stable ­ democratic managers
Depends on personalities of the managers and workers
Depends on abilities/skills of the managers and workers
Depends on the nature of the task
Depends on the time constraints
Depends on the degree of risk
o A manager's style should therefore change according to the particular situation and the people
involved…read more

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Identifying a Business Opportunity
Building Demand and Managing Supply
Introduction
Demand: A measure of the level of interest customers have in buying a product backed by the ability to pay
Supply: The quantity of a product that producers are able to deliver within a specific time period
What makes a market?
Market means all the buyers and all the sellers across the country
o Cash markets: where people make purchases with cash e.g.…read more

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Daily sales variations, seasonal sales variations, etc.…read more

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Evaluating a Business Opportunity
Market Research
Introduction
Gathering of information about consumers, competitors and distributors within a firm's target market
A way of identifying consumers' buying habits and attitudes to current and future products
Data may be numerical (quantitative) or psychological (qualitative)
Conducting start-up market research through secondary research
Discovering marketing fundamental
o Size of market ­ the value of the sales made annually by all the firms within a market
o Future potential of market ­ measured by the annual rate of growth
o…read more

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Quantitative research
Asking of pre-set questions on a large sample of people to provide statistically valid data
o Sampling ­ ensuring research results are typical of the whole population even though only a sample
has been interviewed
Sampling method: The approach chosen to select the right people to be part of the research
sample ­ how to choose the right people for an interview and how large a number to
interview
Random sample ­ involves selecting respondents to ensure that everyone in the
population has…read more

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Intelligent analysis of research findings
Issues for analysis
Key role of market research in market orientation ­ basing decisions on the consumer rather than the needs
or opinions of producers
o Act on evidence obtained from research, not feelings
o However, innovations may be created through creativity and hunch, not evidence (e.g. Apple iPad)
Requires a questioning approach to data ­ e.g.…read more

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Actions of competitors
The decrease in price of a competitor -> Increase in demand for competitor -> Decrease in
demand for own goods and services
o The firm's own marketing activities
Advertisement -> Increase sales of own goods and services -> Decrease in demand for
competitor goods and services
o Seasonal factors
Variation is caused by patterns of customer behaviour
Understanding and accurate prediction of seasonal variations in demand -> Firms can plan for
coping with these changes
Market size and trends
Market size is…read more

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Spotting a good business idea is based on a good understanding of consumers tastes and the needs of the
retail trade
o Observation
o Brain-storming: where 2 or more people are encourages to come up without anyone criticising their
ideas
o Thinking ahead: considering future opportunities that will arise if weather changes
o Ideas from personal or business experience
o Innovation: new ideas brought to the market
Spotting an opportunity
Society changes constantly, with different attitudes or fads marking out the generations.…read more

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