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IBBusinessDPBusiness ManagementHLRevision Notes1. Introduction to Business Management1.1 What is a Business?Entrepreneurship

Entrepreneurship (DP IB Business Management)

Revision Note

Lisa Eades

Written by: Lisa Eades

Reviewed by: Steve Vorster

DP Business Management: HLDP Business Management: SL

The Role of Entrepreneurship in a Business

  • Businesses are usually started by an entrepreneur

  • An entrepreneur is a person who is willing and able to create a new business idea or invention and takes risks in pursuing success

  • Successful entrepreneurs can identify and pursue opportunities, create value for customers and build thriving businesses

What do Entrepreneurs do?

What do they do?

 Explanation

They organise resources

  • An entrepreneur must be able to gather and coordinate the resources necessary to start and operate a business

    • E.g. When Michael Dell started his computer company from his garage, he had to organise resources such as space, computers, software tools, and employees, and manage the finances

They make business decisions

  • Entrepreneurs must be able to make decisions that will determine the success or failure of their business

    • E.g. A restaurant owner may need to decide what type of food to serve, where to locate the restaurant, and what prices to charge. These decisions require a combination of market research, creativity, and business skill

  • Making the wrong decisions can lead to wasted resources, lost opportunities, and ultimately business failure

They take risks

  • Entrepreneurship involves taking risks - financial, personal, or professional

    • E.g. An entrepreneur may invest their life savings into a new venture or quit a secure job to start their own business

  • They may also take risks by introducing new products or entering new markets

  • These risks can pay off with great rewards, but they can also lead to failure and financial loss

  • There are many examples of successful entrepreneurs who have been brought in to run or expand an existing business

  • These individuals bring a unique entrepreneurial spirit into the business which helps to drive it forward and expand

Examples of entrepreneurial CEOs

  • Howard Schultz was hired by Starbucks in 1982 as Director of Retail Operations and Marketing. He later left to start his own coffee company but returned to Starbucks in 1987 as CEO. Under his leadership, Starbucks expanded globally and became one of the most recognised brands in the world

  • Marissa Mayer was brought in to lead Yahoo! in 2012 as CEO. She implemented several initiatives to revitalise the struggling company, including acquisitions, product improvements, and a renewed focus on mobile

Examiner Tips and Tricks

Starting up and running a business isn't just a financial risk - it's hard work that often personally challenges even the most resilient individuals. It takes a special kind of person to become an entrepreneur.

Many entrepreneurs have to be prepared to take on a wide range of roles, at least initially, and will probably have to work very long hours. The need to earn a living whilst building a business is also likely to be a constant concern. Being responsible for every decision and picking themselves up after failure will be challenging.

Intrapreneurship

  • Intrapreneurship refers to the practice of promoting entrepreneurial thinking and behaviour within an existing business

    • It involves empowering employees to think and act like entrepreneurs

    • The business encourages them to take risks, innovate, and develop new ideas and projects that may benefit the business

  • Intrapreneurship allows businesses to tap into the creative potential of their employees and generate new products/services or processes that can drive growth and competitive advantage

  • This helps to create a culture that generates a sense of ownership and engagement among employees which increases motivation and helps to retain top talent

  • To promote intrapreneurship businesses may provide resources to employees or offer incentives/rewards for successful projects

Examples of Intrapreneurship in Business

Example

Explanation

Google

  • In 2004, Google introduced Gmail, a free email service that quickly gained popularity due to its large storage capacity and intuitive interface

  • Gmail was developed by a team of Google employees as part of the company's "20% time" policy, which allows employees to spend 20% of their work time on personal projects

  • Gmail became a huge success and is now one of the most widely used email services in the world

Sony Playstation

  • In the early 1990s, a group of engineers at Sony proposed the idea of creating a video game console to compete with Nintendo and Sega

  • The proposal was initially rejected by senior management. The engineers persisted and a senior executive supported them

  • Sony PlayStation was launched in 1994 and quickly became one of the most popular gaming consoles of all time

3M

  • 3M's "15% rule" is a policy that allows employees to spend up to 15% of their work time pursuing projects outside of their normal job

  • Post-It Notes were developed by two employees, Spencer Silver and Art Fry

  • Post-It Notes were initially marketed as a solution for bookmarking pages in books, but they quickly became popular for all sorts of purposes

  • Today they generate billions of dollars in annual revenue for 3M

Examiner Tips and Tricks

Intrapreneurship requires encouragement to grow within a business - it doesn't 'just happen'.

  • Senior management needs to lead by example, be prepared to delegate and provide support for employees through mentoring or teamworking opportunities, for example

  • Innovation and problem-solving should be rewarded either financially or with other appropriate incentives

  • Key decision makers need to ensure that employees have the resources to allow them to unleash their innovative ideas

Overall a business culture that encourages intrapreneurship is essential - and this, in itself, isn't easy to create!

Characteristics & Skills Required by Entrepreneurs

  • Entrepreneurs require a unique set of characteristics and skills

The skills and characteristics required by entrepreneurs
The skills and characteristics required by entrepreneurs

  • Perhaps one of the most valuable skills of an entrepreneur is the ability to communicate persuasively

    • Persuade potential financial backers of the merits of their idea

    • Persuade people to join them in creating the product/service

    • Persuade customers of the value of their product/service

  • All of the skills work together to create and drive an innovative idea towards success

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    Author
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    Lisa Eades

    Author: Lisa Eades

    Expertise: Business Content Creator

    Lisa has taught A Level, GCSE, BTEC and IBDP Business for over 20 years and is a senior Examiner for Edexcel. Lisa has been a successful Head of Department in Kent and has offered private Business tuition to students across the UK. Lisa loves to create imaginative and accessible resources which engage learners and build their passion for the subject.

    Steve Vorster

    Author: Steve Vorster

    Expertise: Economics & Business Subject Lead

    Steve has taught A Level, GCSE, IGCSE Business and Economics - as well as IBDP Economics and Business Management. He is an IBDP Examiner and IGCSE textbook author. His students regularly achieve 90-100% in their final exams. Steve has been the Assistant Head of Sixth Form for a school in Devon, and Head of Economics at the world's largest International school in Singapore. He loves to create resources which speed up student learning and are easily accessible by all.