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A LevelBusinessCambridge (CIE)Revision Notes1. Business and Its EnvironmentEnterpriseEntrepreneurship and Intrapreneurship

Entrepreneurship and Intrapreneurship (Cambridge (CIE) A Level Business): Revision Note

Exam code: 9609

Lisa Eades

Written by: Lisa Eades

Reviewed by: Steve Vorster

Updated on

The role of entrepreneurs

  • 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 

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

    • 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

  • Entrepreneurs fulfil important roles in business

    • Organising resources, including finance, facilities, people and equipment

    • Making decisions, both at the start and throughout the life of a business

    • Taking risks to maximise returns and maintain a competitive advantage 

What do entrepreneurs do?

They organise resources

They make business decisions

They take risks

  • Gather and coordinate the resources necessary to start and operate a business

    • E.g. Michael Dell started his computer company in his garage, organising resources such as space, computers, software tools and employees

  • Make initial decisions that determine the success or failure of a business

    • E.g. A restaurant owner decides the  type of food to serve, restaurant location, and what prices to charge

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

  • Take  financial, personal, professional or conceptual risks

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

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

The role of intrapreneurs

  • An intrapreneur is an individual tasked with creating or improving innovative products or processes within an already-established business

    • Intrapreneurship 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

      • Businesses can 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

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

  • Intrapreneurs fulfil important roles in business that compliment those of the entrepreneur:

    • Innovation, including using resources in the most effective way, developing new ideas and processes and identifying new techniques

    • Organising operations by making day-to-day decisions that drive a business forward

    • Persuade business owners to take calculated risks and follow new paths

What do intrapreneurs do?

They innovate

They organise operations

They persuade

  • Find the best uses of existing resources, identify new ideas and techniques and implement innovative processes

    • E.g. An intrapreneur may identify ways to reduce waste in the production process

  • Make ongoing decisions to ensure the business achieves its objectives

    • E.g. An intrapreneur may promote workers in whom they see potential or restructure teams to improve efficiency

  • Convince business owners to develop and introduce new products enter new markets and implement new ways of working

    • E.g. An intrapreneur may persuade a business owner to launch a new product in a new market

Qualities of entrepreneurs and intrapreneurs

  • Entrepreneurs and Intrapreneurs require a unique set of characteristics and skills

1-5-2-characteristics-and-skills-required-by-entrepreneurs

  • Successful entrepreneurs and intrapreneurs tend to be very persuasive in their communication and decisive in their decision-making

    • Convincing lenders, investors and customers to support their business is central to achieving financial success

  • Developing new solutions to solve existing or emerging problems is a key intrapreneurial role that helps a business stand out from rivals and achieve success

    • During the 2020 COVID-19 pandemic, many businesses used their creativity to switch production techniques to cater for what the market wanted

    • E.g Harrogate Gin switched from producing gin to hand sanitiser

  • Starting a business is often the sole responsibility of a single entrepreneur, who will need to be able to solve problems with limited support

    • E.g. The owner of Gymshark, Ben Francis, started off the company by buying a sewing machine and making gym clothes in his parents garage with a few school friends

      • This led to the growth of a multi million pound company employing hundreds of people

Barriers to entrepreneurship

  • Making the decision to set up and run a business is rarely easy

  • Entrepreneurs face a series of barriers that they must overcome if they are to make a success of an enterprise 

Barriers to entrepreneurship

Barrier

Explanation

Lack of finance

  • Entrepreneurs may not be able to afford to invest their own money into a business

  • Lenders may be reluctant to approve loans due to the lack of a trading record or an unconvincing business plan

  • They may also be unaware of grants or other available financial support for new businesses

Lack of customers

  • There is no guarantee that an unknown new business will appeal to customers

  • Failure to attract customers to buy its products means that a business is unlikely to survive

Finding a suitable location

  • The best locations are often too expensive for new businesses

  • Many entrepreneurs run their businesses from their own home initially to minimise operating costs

Lack of opportunities

  • Entrepreneurs need to have a good idea that has the potential to generate a profit

  • They also need time, experience and sufficient evidence to support their decision to take the risk in pursuing it

Existing competition

  • Well-known businesses that offer a similar product or service may already exist

  • Competitors are likely to have greater market knowledge and an existing customer base as well as the financial resources to invest in promotional activity

Examiner Tips and Tricks

A good way to explain the difference between entrepreneurs and intrapreneurs is to consider them in the context of risks and rewards.

Entrepreneurs risk their own money, reputation, time, and resources but get to keep financial rewards for themselves, should they wish. Intrapreneurs take risks on behalf of a business, and the business for which they work receives the rewards.

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    Author
    Reviewer
    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

    Reviewer: 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.