<1.3 ENTERPRISE/GROWTH/SIZE>

1.3.1 ENTERPRISE/ENTREPRENEURSHIP

--[CHARACTERISTICS]--

--YOUTUBE TASK--

Watch the 'Dragon's Den' episode HERE and identify 'in context' how this entrepreneur exhibited each of the CHARACTERISTICS OF A SUCCESSFUL ENTREPRENEUR as detailed above.

--POSTER TASK--

Create a POSTER like the STEVE JOBS one above using an ENTREPRENUERER OF YOUR CHOICE.

--[PAST PAPER PRACTICE TASK]--

Copy the question below onto your Unit 1 google doc and write two 6/6 answers based on the markscheme and notes below.

--[BUSINESS PLANS]--

--DEFINITION--

'A BUSINESS PLAN' refers to a WRITTEN STATEMENT containing the important details about the aims, objectives, operations, finance and owners of a business.
It usually consists of the following SECTIONS:

--WHY IS IT IMPORTANT?--

Helps the entrepreneur KNOW IF THE IDEA IS VIABLE: a good business plan will include a market analysis and forecasted sales, revenue and costs to determine if and when the idea will be profitable.
Helps the entrepreneur SECURE FINANCE (FUNDING): a good business plan helps convince banks or potential investors about the profitability of the business so they will offer them finance.
Helps the entrepreneur SET TARGETS: a good business plan helps the entrepreneur to set achievable targets for growth over time. e.g breakeven in year 3.
Helps the entrepreneur MONITOR PROGRESS: a good business plan will have ‘projected’ sales, revenue targets over time, so it can be used to continuously monitor whether these targets are being achieved, and take appropriate action if they are not

--'SHARK TANK' TASK--

'Shark Tank' is a US TV show in which entrepreneurs pitch their business ideas to 5 investors in order to SECURE FINANCE. Watch the episode below with subtitles and screenshot the following parts of their business plan.

Who they are/background?
What they are selling?
Who is there target market?
Location
What present customers say (Market research)
How long in operation?
Forecasted sales/growth rate
Expansion plans

--TASK--

Read the business plan below and explain why each a potential investor/or bank manager would be particularly interested in the following sections:
- - - - Market research results
      - Experience of the owners
      - Forecasted profits

--TASK--

Now create your own business plan using the template above for a business you would like to operate in this school (Target customers are TES students)

--PAST PAPER 6-MARKER TASK--

Create model answers from these questions:

--[GOV'T SUPPORT]--

--WHY GOVERNMENTS SUPPORT START-UPS--

Most governments provide various funds to small businesses for a combination of the following reasons:

To REDUCE UNEMPLOYMENT
To INCREASE COMPETITION in UNCOMPETITIVE SECTORS
To INCREASE OUTPUT in IMPORTANT STRATEGIC INDUSTRIES
To CREATE EXTERNAL BENEFITS from SOCIAL ENTERPRISES

--1.3.2 BUSINESS SIZE--

--[MEASURING METHODS + LIMITATIONS]--

--THINK ABOUT IT!--

Is LIVERPOOL a BIGGER CLUB than MANCHESTER UTD?

--METHOD: BY PEOPLE EMPLOYED--

WALMART employs many more people than APPLE, so are they bigger?

--METHOD: BY VALUE OF OUTPUT--

GUCCI report higher sales value than PRIMARK, so are they bigger?

--METHOD: BY CAPITAL EMPLOYED--

CAPITAL EMPLOYED in this context, refers to the $value of all PHYSICAL ASSETS such as factories, machinery etc... that a firm owns.
Toyota has a lot more physical capital than Microsoft so is it a bigger?

--METHOD: BY PROFIT--

TESLA reports higher profits than McDonalds, so are they bigger?

--TASK--

Copy this table and complete the final column.

--1.3.3 GROW OR REMAIN SMALL?--

--GROWTH & EXPANSION--

--HOW TO GROW & EXPAND--

--INTERNALLY--

INTERNAL GROWTH refers to expansion that is achieved through the USE OF YOUR OWN RESOURCES such as by using your own retained profits or shareholder funds to grow the scale of the business eg, by opening up a new branch.

--EXTERNALLY--

EXTERNAL GROWTH refers to expansion that is achieved through the USE OF A SEPARATE FIRM'S RESOURCES., such as via a TAKEOVER OR a MERGER.
To explore these in more depth scroll down.

MERGERS/AQUISITIONS

A MERGER occurs when individual businesses DECIDE TO JOIN THEIR RESOURCES TOGETHER to create a new business entity.
On the other hand, AN ACQUISITION occurs when a LARGER, financially stronger FIRM TAKES OVER A SMALLER ONE with the aim of increasing efficiency and competitiveness.

TAKEOVER

A TAKEOVER is an acquisition which is CONTESTED. The managers and owners of the ‘victim’ business originally had no intention of losing control of the firm. However, publicity issued by the predator business about the reasons for the takeover bid combined with a high share price offer is often effective in encouraging sufficient shareholders to sell their shares (51% of shares are required).

--TYPES OF INTEGRATION--

--HORIZONTAL INTEGRATION--

HORIZONTAL INTEGRATION refers to a method of EXTERNAL GROWTH which involves a business integrating with another firm in THE SAME INDUSTRY and at the SAME STAGE OF PRODUCTION.

--FORWARD VERTICAL INTEGRATION--

FORWARD VERTICAL INTEGRATION refers to a method of EXTERNAL GROWTH which involves a business integrating with another firm in THE SAME INDUSTRY but at a STAGE OF PRODUCTION CLOSER TO THE FINAL CUSTOMER.

--BACKWARD VERTICAL INTEGRATION--

BACKWARD VERTICAL INTEGRATION refers to a method of EXTERNAL GROWTH which involves a business integrating with another firm in THE SAME INDUSTRY but at a STAGE OF PRODUCTION CLOSER TO THE SUPPLIERS.

--CONGLOMERATE INTEGRATION--

CONGLOMERATE INTEGRATION refers to a method of EXTERNAL GROWTH which involves a business integrating with another firm in A DIFFERENT INDUSTRY.

--TASK--

Using the examples above as a guide, create your own slideshow to illustrate an example of each type of merger.

--PROBLEMS WITH GROWTH--

--GROWING PAINS--

A larger company may cause WORKERS to FEEL LESS IMPORTANT and isolated leading to STAFF DEMOTIVATION.
A larger company, especially a ‘multinational’ may encounter LANGUAGE COMMUNCATION PROBLEMS for managers
A larger company, that has grown via a MERGER or TAKEOVER may encounter WORK CULTURE PROBLEMS.
A larger company, MEANS MORE SHAREHOLDERS are needed to finance the growth can lead to MORE DISPUTES.
A larger company, requires larger market demand but if the MARKET DEMAND IS ALREADY SATISFIED (‘saturated’) there will be no new customers
A larger company, REQUIRES MORE WORKERS but if there is a shortage of skilled labour, then the COSTS of training, recruitment GO UP, especially if you need to start ‘headhunting’ talent.
A larger company, also NEEDS MORE RAW MATERIALS which can lead to a SHORTAGE which holds up production as well as DRIVES UP THEIR PRICES as you need to compete with other companies for the limited resources.