. 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

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.

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

Role of an entrepreneur  Identify business opportunities  Franchising  Combine factors of production  Innovation and risk taking

Identify business opportunities  Look for a gap in the market Examples:  McDonald’s home delivery in Clydebank?¹  Virgin Galactic²  MJM³

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.

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).

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

. 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

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.

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?)

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

Stakeholder Interest  Owners want high profits, high dividends.  Managers want promotion, bonuses, job security.  Employees want better wages, better working conditions, job security.

Stakeholder Interest  Suppliers want regular orders, prompt payment.  Customers want low prices, high quality.  Banks want loans repaid on time.

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.

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).

 What does this mean?

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.

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.

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.

Now it’s your turn  Describe how five different stakeholders could influence an organisation. (5 marks)  You have 10 minutes.

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