Business Theme 1

People who aren’t entrepreneurs
Are very cautious – never want to take risks

Assume that things are the way they have to be

Like to be sure of their pay cheque

Bad entrepreneurs
Ignore risks – assume that own charisma/ skill will guarantee success

Rush to bring in something new or make huge changes

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
Take calculated risks, weighing up potential risks and rewards

Launch new ideas in response to changing consumer tastes of attitudes

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

Autocratic managers: Managers who keep most of the authority to themselves, do not delegate much or share information with employees but instead tell employees what to do.

• Authoritarian – tell employees what to do and not listen much to what workers themselves have to say
• Know what they are doing and how they want it done
• One-way, top-down communication – they give orders but do not want much feedback

Democratic managers: Managers who take the views of their subordinates into account when making decisions, discusses what needs to be done and involves employees in the decision-making.

• Like to involve workers in decisions.
• Listen to employee’s ideas and ensure people contribute to the discussion.
• Communication is two-way – managers put forward an idea and employees give their opinions.
• Regular delegation of decision-making power to junior staff.
• Approached in two ways: Management by objective – leader agrees clear goals with staff, provides necessary resources and allows staff to make day-to-day decisions. Laissez-faire – let it be attitude, do not take time to ensure that junior staff know what to do or how to do it.

Paternalistic managers: Managers who believe that they know what is best for employees, tell them what to do but will explain their decision and are concerned about the social needs of employees.

• Thinks and acts like a father.
• Tries to do what is best for their staff – consultations to find out the views of the employees, but decisions are made by himself.
• Believes that employees need direction, important that they are supported and cared for.
• Interested in the security and social needs of staff – interested in how workers feel and whether they are happy in their work.

McGregor's Theory X and Y

Theory X managers tend to distrust subordinates and believe that employees do not really enjoy their work and need to be controlled – that humans have inherent dislikes of work and will avoid it if they can.

Theory Y managers believe that employees do enjoy work and that they want to contribute ideas and effort – involves employees in decisions and give them greater responsibilities.

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.

Factors affecting demand

• Price set by supplier – quality / price determines the value for money -> price affects the image for quality
• Competitors’ prices
• Fashion/ taste – consumer’s trends may change but well—run businesses respond to changing consumer attitudes and desires
• The state of the economy – if future looks bleak (high interest rates and hikes in personal taxation), they will save more and spend less, causing the economic slowdown that they had feared
• Seasonality
• Weather
• Marketing spending – amount spent on advertising

Factors affecting supply

• An decrease in costs of production, this means business can supply more at each price. Lower costs could be due to lower wages, lower raw material costs.
• An increase in the number of producers will cause an increase in supply.
• Expansion in capacity of existing firms, e.g. building a new factory.
• An increase in supply of a related good e.g. beef and leather.
• Climatic conditions are very important for agricultural products.
• Improvements in technology, e.g. computers, reducing firms costs.
• Lower taxes reduce the cost of goods.
• Increase in government subsidies will also reduce cost of goods.