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Unit Title: Understanding Entrepreneurship

Unit Reference Number: L/504/4408


Guided Learning Hours: 100
Level: Level 4
Number of Credits: 12
Unit purpose and aim(s):
This unit aims to give learners a sound understanding of:
the concepts of enterprise and entrepreneurship, how entrepreneurs contribute to the
economy
the characteristics and skills of entrepreneurs
barriers faced by entrepreneurs
entrepreneurial motivations and influences
innovation and creativity
political and economic issues including business support processes

Learning Outcome 1
The learner will: Understand the concepts of entrepreneurship and enterprise, and the
characteristics that differentiate the various types of entrepreneurs and
business owners, and the importance of entrepreneurs and SMEs to the
economy.

Assessment Criteria
The learner can:

Indicative Content

1.1 Define and explain the


terms: entrepreneurship,
entrepreneurs, enterprise
and owner-managers.

1.1.1 Define and explain the meanings of entrepreneurship


and enterprise and the various forms these can take.

1.2 Explain and discuss


the importance of
entrepreneurship and
small businesses to the
economy.

1.2.1 Explain the role and characteristics of micro, small and


medium sized businesses in the economy in terms of relative
size, turnover, numbers of employees, value of turnover, role
in national economies, etc., using the EU (or alternative)
definitions of these businesses.

1.1.2 Identify the differences between entrepreneurs, serial


entrepreneurs, intrapreneurs, and owner managers growth
objectives, ability to identify opportunities, attitude to
innovation and risk, strategic vision.

1.2.2 Explain the importance of business start-ups and small


firms to the economy sources of innovative products and
services, generating new employment opportunities, wealth
creation and revenue from taxation of profits.

1.3 Identify and explain the


key differences between
small businesses and
large corporations.

1.3.1 Explain the differences and relevance of those


differences between small and large firms in terms of:
structure & management
organisational culture
financial complexity and access to funding
skills requirements
attitude to staff training and development
the ability to manage red-tape and legal compliance
the ability of small firms to be flexible and respond

rapidly to market demand.

Learning Outcome 2
The learner will: Understand characteristics and motivations that influence the way
entrepreneurs operate, and the specific skills they use to succeed.
Assessment Criteria
The learner can:

Indicative Content

2.1 Identify the range of


skills typically exhibited by
successful entrepreneurs.

2.1.1 Describe the combination of entrepreneurship skills that


typify entrepreneurs or differentiate them from other business
managers opportunity spotting, developing networks, strategic
vision, product commercialisation, ability to harness resources,
tenacity, etc.
2.1.2 Describe several examples of successful international
entrepreneurs to illustrate how the skills are employed, for
example: Richard Branson (Virgin), Bill Gates (Microsoft),
James Dyson (Dyson), Anita Roddick (Bodyshop), Michael Dell
(Dell), Alan Sugar (Amstrad), Duncan Bannatyne (Dragons
Den), Mo Ibrahim (Celtel), Wale Tinubu (Oando PLC).

2.2 Explain and discuss


key arguments and
interpretations relating to
entrepreneurial personality
and characteristics.

2.2.1 The key arguments:


Are entrepreneurial skills inborn in certain people? (The
Made or Born Argument)
Can entrepreneurship be taught or learned? Is it a
transferable management skill?
Does growing up in an entrepreneurial environment
influence the potential to be entrepreneurial?
2.2.2 Characteristic traits of owner-managers:
the need for achievement
the need for independence
the locus of control (believe you can exercise control
over your environment)
ability to live with uncertainty and take measured risks.
2.2.3 Characteristic traits of entrepreneurs:
opportunistic
innovative
self-confident
proactive and self-motivated
visionary with flair
willingness to take far greater risks and live with greater
uncertainty.
2.2.4 Entrepreneurial motives:
Push (necessity-based) motives vs. pull (opportunitybased) motives.
Personal / life style motives desire to prove personal
ability or achievement / make a mark / create personal
wealth / gain social recognition or prestige / create a
legacy for family future / competitive instincts.

2.3 Explain and discuss


the concept of the need for
family support to ensure
survival of a new business.

Desire to develop and grow a strong and profitable


business or business empire.
Desire to minimise unbalanced risk / dislike of imposed
authority / desire to prove oneself.

2.3.1 Explain Family Support argument


The pros and cons of the argument that the strategic
objectives of the business and the objectives of the
family (or families) associated with the business must
be aligned if the business is to succeed.

Learning Outcome 3
The learner will: Understand the various barriers faced by entrepreneurs when starting a new
business or when growing an existing small business.

Assessment Criteria
The learner can:

Indicative Content

3.1 Identify and explain the


barriers to business startup.

3.1.1 Describe and explain the various barriers that


entrepreneurs may experience when starting a new business,
including:
Barriers relating to the entrepreneurs own skills,
knowledge and abilities, competence and confidence
to successfully establish a new business.
Sales and marketing problems including issues of
researching and understanding markets.
Financial problems including identifying and accessing
appropriate forms of finance for start-up, and the need
for possible security against borrowing.
Resource implications for the business, including both
staff and physical resources.
Identifying essential issues of statutory and legal
compliance, or registrations needed to operate the
business.
3.1.2 Describe and explain the options an entrepreneur might
have to overcome these barriers.

3.2 Identify and explain the


barriers to growing an
existing small business.

3.2.1 Describe and explain the various barriers that


entrepreneurs may experience when expanding a small
business, including:
Barriers relating to the entrepreneurs own financial
position, renewed exposure to financial risk, or the
need to give up some personal control in order to
delegate to and trust new functional managers.
Barriers to market entry including the size of the
market, problems of market penetration, numbers and
relative strength of competitors, and costs of
achieving market share.
Financial problems including identifying and accessing
appropriate forms of finance to fund each stage of the

3.3 Identify and explain the


importance of creating an
innovative or enterprising
culture to support small
business growth.

growth, especially for innovative / high-tech


businesses.
Resource implications for the business, including
expansion of both staff and physical resources.
Organisational issues relating to the impact that
growth strategies may have on the existing staff and
the culture within the business.

3.3.1 Explain the meaning and the key features of enterprise


cultures and how an organisation can benefit from creating
such a culture.
3.3.2 Describe the ways in which an entrepreneur might seek
to create an enterprising culture within a business, including:
Encouraging suggestions from staff for new ideas or
innovations.
Allowing time and resources for staff to work on new
ideas.
Creating a positive, supportive and blame-free
environment in which staff feel valued.
Accepting failure as an acceptable risk, as a normal
part of the process and without any blame.
Building innovation targets into the staff appraisal
process.
Acknowledging or rewarding successful ideas.

Learning Outcome 4
The learner will: Understand the entrepreneurial motivations and influences that will affect the
ways in which a small business might develop and grow.

Assessment Criteria
The learner can:

Indicative Content

4.1 Define the traditional


concept of the business
life-cycle and its inherent
weaknesses in explaining
how businesses develop.

4.1.1 Explain the five-stage linear business life-cycle model and


why it is unsatisfactory in the context of options for growth and
development of small businesses.
4.1.2 Describe and explain the various growth and development
options that a small firm might follow, including:
Failure to survive the start-up stage, and voluntary or
involuntary closure.
Achievement of break-even and profitable trading levels
and continuation as a lifestyle business without
subsequent growth.
Continuation as a family business via succession
planning.
Achievement of break-even and profitable trading levels
and continuation to grow to maturity & decline.
Achievement of break-even and profitable trading levels
and continuation to grow further.
Trade sale / merger / acquisition by another company,
or a pre-defined exit strategy.

Stock market flotation.


Continued expansion and success.

4.2 Explain and discuss


how the entrepreneurs
own objectives and
motivations will change at
each stage of business
development.

4.2.1 Explain how the personal objectives, business priorities


and decision-making processes of entrepreneurs change as
they progress from start-up, to relative stability, and subsequent
growth.

4.3 Explain and discuss


the importance of
succession planning in
small firms.

4.3.1 Explain the purpose and process of succession planning


in business, and in particular in family firms.

4.4 Explain and discuss


the importance of exit
strategies for
entrepreneurs.

4.4.1 Explain what is meant by exit strategies and why it may be


important for an entrepreneur to identify exit options in the early
stages of planning a new business.

4.2.2 Explain the importance of strategic thinking to the


development of growth strategies in small firms as a factor
that differentiates growth-firms from lifestyle businesses.

4.3.2 Explain and describe the problems that can occur relating
to succession planning in small firms.

4.4.2 Describe some of the exit strategy options available to


entrepreneurs (or investors in small firms), including:
trade sale to another company
sale of the company equity to an external investor to
facilitate future growth
sale to a management buy-out
closure of the business and sale of assets.

Learning Outcome 5
The learner will: Understand the concepts of innovation and creativity, their importance to the
economy, and the roles that both play in entrepreneurship and business
development.

Assessment Criteria
The learner can:

Indicative Content

5.1 Define and explain the


terms innovation and
creativity.

5.1.1 Define the meaning of innovation and creativity and


explain how they interrelate.
5.1.2 Describe the different aspects of innovation that
comprise the innovation spectrum and explain the importance
of breakthrough innovations in creating competitive advantage
for businesses.

5.2 Explain and discuss


the importance of
encouraging technological
innovation and high-growth

5.2.1 Explain the importance of high-tech and high-growth


firms as contributors to economic wealth and the creation of
new employment opportunities.

potential enterprises.

5.2.2. Explain the different requirements that high-growth and


high-tech enterprises have compared with conventional
lifestyle businesses specialist management teams, support
for research and development, staged funding for growth.
5.2.3 Explain why high-tech businesses often need to access
several stages of funding in order to grow e.g.
research & development funds
proof-of-concept funding
pre-market product development and patenting
market launch
seed funding for growth
venture capital for expansion etc.
5.2.4 Explain how business incubation and support
programmes can improve the potential for high-growth and
high-tech start-ups to succeed and grow.

5.3 Explain the importance


of protecting intellectual
property for innovations.

5.3.1 Describe the main types of property rights protection:


patents
patent licensing
copyrights
trade marks
brand names
industrial & commercial secrets.
5.3.2 Explain some of the limitations of IPR protection and
why some entrepreneurs adopt a straight to market strategy:
Concern that competitors may copy a patent
application.
Expensive, time consuming and requires specialist
legal expertise.
Even 20 years protection may be insufficient to
generate a satisfactory return on research and
development costs.
Patents (and copyrights etc) are only meaningful if
they can be successfully defended.

Learning Outcome 6
The learner will: Understand the political and economic issues facing entrepreneurs and
government support agencies, and identify the range of business support
processes that governments may offer to encourage and support
entrepreneurial development.

Assessment Criteria
The learner can:

Indicative Content

6.1 Define and explain the


political and economic
factors that can influence
the success of small
enterprises.

6.1.1 Describe and explain some of the political and economic


issues that impact on the operations of small businesses:
The conflicting need for regulatory controls and the
disproportionate impact this has on the resources of
small firms.

6.2 Explain and discuss


ways in which new and
early stage enterprises can
be encouraged and
supported.

The tendency of governments to regard small


enterprises as the solution to economic downturns,
whilst simultaneously cutting back on support services
for those businesses when it is most needed.
The lack of continuity of business support caused by
changes in national and regional government.
The lack of coherent funding support e.g. for start-up
grants, market research, and skills training.
The lack of affordable finance and loans for small
firms due to the reluctance of commercial banks to
lend to them.

6.2.1 Identify and explain ways in which governments can


create the right environment and fiscal conditions to
encourage the development and growth of new enterprises.
Availability of business support expertise.
Access to loans and investment funding.
Enterprise friendly taxation policies.
Tax incentives to encourage risk-investment.
Start-up loans and grants for innovation development.
Encouraging collaboration with academic research.
Encouraging development partnerships with larger
businesses.
Supporting international market access and export
trade development.

6.2.2. Identify and explain the main types of business support


agencies used by small firms, e.g:
Chambers of Commerce.
Local Enterprise agencies and partnerships.
Economic development agencies (public or private
sector).
Inward Investment Agencies.
International Trade Agencies and overseas
embassies.
Export Documentation and Export Credit services.
Private commercial banks.

6.3 Define and explain the


issues relating to
individuals and small
enterprises that operate in
the grey economy.

6.3.1 Describe the potential attractions and pitfalls of operating


illegal part-time or full-time business activities without being
registered as a business avoidance of paying taxes or
complying with legal regulations etc.
6.3.2 Describe and explain the problems faced by
governments with illegal or unregistered individuals and small
firms operating in the grey economy lack of regulation and
control, risk of unsafe or dangerous practices, loss of taxation
to the economy, no recompense for unsatisfied customers,
etc.

Assessment:

Assessment of this unit will be by a three hour examination.


Recommended Reading:
-

rd

Burns, P., Entrepreneurship and Small Business, 3 ed. (2011), Palgrave Macmillan,
Basingstoke (Core Text)
Butler, D., Enterprise Planning and Development, (2006), Elsevier, Oxford
ABE Study Manual, Business Start-up and Entrepreneurship (2013)

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