CAMS Level I

Principles of Entrepreneurship and Management flashcards

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Complete Flashcard Reference

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What is an entrepreneur?

A person who identifies a business opportunity, assembles the capital, labour and other resources needed to act on it, and bears the risk of the venture in exchange for the profit, or loss, it produces.

What are the steps for testing a business idea?

1. Define the problem and the customer it is meant to solve it for. 2. Build a minimum viable version of the product or service. 3. Present it to a small sample of real prospective customers. 4. Collect and analyse their feedback. 5. Refine the idea, or abandon it if the evidence does not support it. 6. Repeat until the idea is validated or clearly ruled out.

What is the basic difference between debt and equity finance?

Debt must be repaid with interest whether or not the business succeeds, but the lender takes no share of ownership. Equity need not be repaid and carries no interest, but the investor takes a share of ownership and of future profits, and often a say in decisions.

What does a franchisee gain, and what does it give up?

Gains: a proven format, brand recognition, training and often supply arrangements, which is why franchise failure rates tend to be lower than for independent start-ups. Gives up: an initial fee and continuing royalties, and freedom, since it must follow the franchisor's rules on products, pricing and presentation.

What are the four functions of management, and why do they form a cycle?

Planning, organising, leading and controlling. Controlling measures results against the plan and corrects deviations, and what it finds feeds back into the next round of planning.

What are the seven elements of the marketing mix for a service business?

The original four Ps: product, price, place and promotion. Added for a service: people, processes and physical evidence.

Which statutory requirements does a small Kenyan business commonly need before it trades?

Business name or company registration with the Business Registration Service. A single business permit from the county government. Food or health related permits where the business handles food or affects public health. A fire safety certificate after inspection by the county fire department.

What is Herzberg's distinction between what prevents dissatisfaction and what motivates?

Pay, working conditions and job security prevent dissatisfaction when adequate, but do not on their own produce effort. Achievement, recognition, responsibility and the chance to grow are what motivate.

Which two readers does a business plan serve, and what does each look for?

The owner, who uses it to test whether the business can work and to guide decisions once it starts. The lender or investor, who reads it for evidence that the owner understands the market, the costs and the cash flow.

What is the difference between a job description and a job specification?

A job description sets out the duties a role involves. A job specification sets out the qualifications and attributes needed to perform it.

What is intrapreneurship?