Unit 2 Main Notes PDF

BUSINESS UNIT 22 BUSINESS UNIT Unit 2 -role of entrepreneur -reasons for entrepreneurship -intrapreneurship -benefits of intrapreneurship -characteristics of entrepreneur -skills of entrepreneur -SWOT analysis -importance of enterprise Entrepreneur -someone who spots an opportunity in a gap in the...

BUSINESS UNIT 22 BUSINESS UNIT Unit 2 -role of entrepreneur -reasons for entrepreneurship -intrapreneurship -benefits of intrapreneurship -characteristics of entrepreneur -skills of entrepreneur -SWOT analysis -importance of enterprise Entrepreneur -someone who spots an opportunity in a gap in the market and uses initiative to create a new product/service in the hope of making a profit whilst taking the financial and personal risk -entrepreneurs are proactive by anticipating what is needed and doing something about it rather than being reactive and waiting for things to happen before responding -spots opportunity in market gap -aim of making profit -proactive rather than reactive -personal and financial risk -takes initiative -eg Richard Branson of Virgin Group, Pat McDonagh of Supermacs -business enterprise eg diversification into new products -personal enterprise eg enrolling in a night class -social enterprise eg fundraising for charity -government enterprise eg rationalisation of government departments (eliminate structural and functional duplications and overlaps of state departments) Reasons for Entrepreneurship 1. Increase Income (employees are often limited in earnings potential due to a set wage/salary, entrepreneurs have the potential to maximise income and keep profits) 1 2. Independence (entrepreneurs do not have to answer to anyone and are their own boss, can make their own decisions and create their own paths rather than employees whose actions are dictated by their employer) 3 Gap in Market (employees may spot a product/service opportunity but may be dismissed or can not directly gain from the idea profits, setting up ones own business gains total control) 4. Inspired (new found age of pro-entrepreneurship in current media eg Diary of a CEO) 5. Government Support (Local Enterprise Offices offer financial and educational support to new local business with under 10 employees, Enterprise Ireland offers grants, mentorship, programmes and training to High Potential Start-Ups) 6. Ambition (employees may feel they have reached a plateau in their current career, self-actualisation desires and ambition for growth forges entrepreneurship) (Unit 3 Notes) 7. Redundancy (employee might have been let go with very few job prospects, no other option but to create a business to earn a living) Intrapreneurship -an intrapreneur is someone who is enterprising within an organisation, displaying entrepreneurial qualities of innovation and initiative in coming up with new ideas/products/services and business methods or improves existing goods/services or business methods -intrapreneurs don’t risk their own money -reward may be promotion or a salary increase -intrapreneurship is an attempt to harness the entrepreneurial spirit of staff in an organisation -organizations that encourage and reward enterprise are more likely to identify new products, new markets and new ways to reduce waste and improve efficiency -eg Cadbury Time Out Bar was created by factory line employees -eg machinery salesman suggested a way of improving company's machines to streamline production and reduce wastage which boosted the company's productivity and reduced costs 2 Intrapreneurship Benefits 1. New Products/Services/Markets (intrapreneurship results in new products/services being developed, new product development is very important to ensure the continued viability of all businesses) 2. Business Growth (staff loyalty and innovation contributes to the growth and success of the business resulting in many new procedures/products/services being introduced into the business) 3. Increased Productivity/Profitability (various ideas introduced result in greater productivity in the business, many new ideas and cost cutting measures introduced result in greater profitability in the business eg on-line booking system will result in lower administration costs, as customers complete their own bookings on line, increasing the profit margins for the firm) 4. Improved Corporate Image (intrapreneurship improves the corporate image for recruiting purposes, most important business resource is talent, a focus on intrapreneurship improves the corporate image and makes it easier to attract and keep top talent) 5. Greater Morale (nurturing of in-house talent where staff are offered the opportunity to be intrapreneurial means they are generally more productive, happier and more fulfilled in their work, there is greater motivation and improved industrial relations which saves time and money in the business) Methods for Promoting Intrapreneurship -financial rewards for effort and creativity -providing resources to help employees pursue ideas eg finance, time -teamwork encourages creativity eg weekly team brainstorming sessions -formation of a research and development (R&D) department Characteristics v Skills -characteristics are special attributes or traits which a person has -people are born with characteristics, they are innate and integral part of one’s nature -a skill is an ability or facility which people have acquired through learning and practice 3 -whilst it is thought that some people are naturally talented at some skills, skills can also be learned and adopted over time, repetition and practice Characteristics of Entrepreneurs 1. Innovative (entrepreneurs are innovative and show initiative and creativity in their approach to business situations, are constantly looking for new ideas and ways of improving what they do, think outside the box to develop new products or new versions of existing products) 2. Risk Taking (being an entrepreneur involves taking both personal and financial risk in pursuit of a business idea, successful entrepreneurs are prepared to take risks and live with the chance of failing, they are realistic risk takers, they are not risk averse) 3. Resilient (entrepreneurs are not put off by failure, they have a strong sense of self- belief and conviction about their own business ideas, they believe in what they are doing and that the venture will be successful, they believe in their idea, without this confidence they would not be able to take the necessary risks) 4. Reality Perception (entrepreneurs are realistic in their expectations, they recognize their own limitations and seek advice and help when needed, they are able to judge what they can achieve and not to get carried away with over optimistic plans which will fail, they have good judgement and will only attempt what is achievable, they see things for what they are and not what they would like them to be) 5. Proactive (entrepreneurs are proactive, they are constantly anticipating what is needed and doing something about it rather than being reactive and waiting for things to happen before responding) 6. Customer Focused (entrepreneurs are very aware of customers’ needs and are willing to change their business model to meet those needs) 7. Flexibility (entrepreneurs are adaptable and able to cope with change, they are willing to change their plans when needed, or to choose an alternative route when things do not work out as expected) 4 Skills of Entrepreneurs 1. Planning and Goal Setting (entrepreneurs set short term and long term goals or objectives, plans must be drawn up to achieve these objectives, when entrepreneurs are planning they usually carry out a SWOT analysis) 2. Time Management Skills (entrepreneurs make effective use of time, carrying out tasks as quickly as possible in the time available, it involves prioritising tasks in order of importance and delegating tasks rather than micro-managing everything to maximise time efficiency) 3. Risk Management (a planned approach towards gathering as much information as possible about uncertain situations, minimizing risks and eliminating them where possible, once a risk is identified, it can then be managed correctly eg risk of fire minimised by taking out fire insurance) 4. Human Relations (enterprising people must be able to communicate and interact effectively with others, entrepreneurs must develop excellent human relations, networking and persuasion skills, must recognise the importance of a wide range of stakeholder contacts to provide guidance and support or actualise business opportunities) 5. Decision Making (entrepreneurs must be decisive, they must learn to analyse information and situations, think logically and make quick and clear decisions, they have to be able to evaluate alternatives and consequences of each possible choice and choose a definite course of action and stick with their decision) 6. Delegation (giving responsibility to subordinates to carry out certain tasks and giving them the authority to make decisions relevant to it, avoiding micromanaging as one person cannot do everything in business) 7. Problem Solving Skills (having the ability to decide how to resolve the different problems that may arise) SWOT Analysis -an analysis of the internal strengths and weaknesses and the external opportunities and threats facing a business -a tool commonly used to plan future activities to maximise their positive impact on an individual or organization 5 -manager uses the information from the SWOT analysis to set realistic goals for the business and to come up with strategies to achieve these goals -strengths and weaknesses are internal factors -opportunities and threats are external factors -strengths are internal attributes and resources, aspects of a business which it is good at and can be developed into a competitive advantage, any advantages it has over competitors eg strong brand name, loyal customer base, good market share, talented skilled workforce, manufacturing efficiency, strong financing -weaknesses are internal aspects of a business which are underdeveloped and could damage the success of the business or work against a successful outcome of the business, what the business is not so good at, any limitations on the activities the business can undertake, any advantages competitors have that the business lacks eg poor credit control, poor industrial relations, obsolete technologies, weak management, outdated facilities, inadequate R&D, low profit margins -opportunities are external factors which a business could use to its advantage, factors outside the business which have the ability to benefit the business eg falling exchange rate, high consumer demand, strong economy, competitor weaknesses, new market expansion opportunities -threats are factors that could jeopardise the business and could have negative impact on a business eg government regulations, shortage of raw materials, changing market tastes, increased competition, failing economy, global pandemic Enterprise in Action -enterprising people can be found in all walks of life showing their initiative and using their skills either to create work for themselves or serve their communities in some way -found in home, school, local community, government and business -enterprising skills can be applied by people to their various works eg Tidy Towns volunteer shows human relations skills by persuading public members to join their efforts 6 Enterprise at Home -an enterprising family concerned about the environment could use solar power instead of conventional fossil fuels as an energy source -effective waste management programme using separate garbage bins for glass, organic matter and paper would make recycling possible -preparing a household budget -growing organic vegetables in garden to provide own food Enterprise at School -students could generate school funds by organising an art and craft exhibition. - school mini-companies eg a tuck shop -student exchanges abroad -school play production Enterprise in Local Community -enterprise in the community can cover a vast range of activities started by people in order to satisfy various cultural, sporting, humanitarian, environmental or employment creation activities -neighbourhood watch and community alert schemes -sports clubs -local charity work -setting up a youth club Enterprise in Existing Business - expanding the business or diversifying -finding new markets -increasing the range of products -diversification of products/markets -exporting -recycling 7 Enterprise in Government -government department employees and politicians can show intrapreneurship by coming up with new ideas for the benefit of the State -back to work schemes eg Vocational Training Opportunities Scheme where unemployed people are helped to continue their education and training -developing schemes to encourage people to invest in new businesses or save money -encouraging entrepreneurship in schools through vocational training programmes eg LCVP -smoking ban to promote health -national lottery (revenue from the sales of lotto tickets and scratch cards have provided millions of euro of extra money to be spent on projects such as improved healthcare) -new taxes -national campaigns eg Wild Atlantic Way Importance of Business Enterprise -improved efficiency (enables an existing business to become more efficient, can result in cost savings, various ideas introduced result in greater productivity in the business, many new ideas and cost cutting measures introduced result in greater profitability in the business eg on-line booking system will result in lower administration costs, as customers complete their own bookings on line, increasing the profit margins for the firm) -competitive advantage (can provide existing businesses with a competitive advantage eg developing new products) -future viability (intrapreneurship from employees can help a business to increase its sales and profits) -spin off effects (entrepreneurs make profits, employees earn wages from it, thus they have buying power with money to spend with, businesses spring up to take advantage of this spending power) 8 -grants for creation of new businesses (taxes the government takes from entrepreneurs and employees can be used to provide grants to help more people to set up their own businesses) -new products/services/markets (intrapreneurship results in new products/services being developed, new product development is very important to ensure the continued viability of all businesses) -business growth (staff loyalty and innovation contributes to the growth and success of the business resulting in many new procedures/products/services being introduced into the business) -improved corporate image (intrapreneurship improves the corporate image for recruiting purposes, most important business resource is talent, a focus on intrapreneurship improves the corporate image and makes it easier to attract and keep top talent) -greater morale (nurturing of in-house talent where staff are offered the opportunity to be intrapreneurial means they are generally more productive, happier and more fulfilled in their work, there is greater motivation and improved industrial relations which saves time and money in the business) Importance of Community Enterprise -employment creation (enterprise creates jobs for local people, wages employees receive gives them a higher standard of living than being on the social welfare system -tax revenue (government receives taxes from the new businesses and pays out less social welfare, government can spend this money by improving health services, roads etc) -infrastructure in area improves (shops open because people have money to spend due to new wages and increased spending power, new houses are built, roads are improved to make it easier to do business) -spin off effects (entrepreneurs make profits, employees earn wages from it, thus they have buying power with money to spend with, businesses spring up to take advantage of this spending power) 9