Entrepreneurial Risk
Explain entrepreneurial risk when setting up a business, including lost wages, personal savings, loans, assets, uncertainty and the consequences of failure.
- Syllabus
- First assessment 2019
- Course
- Business XBS11/YBS11
- Level
- AS
Exam points
- Explain financial risk through lost wages, invested savings, loans and possible loss of personal assets.
1.3.5.1e - Entrepreneurial risk and uncertainty question 1
[Maximum number: 2]
Sources for use with Section A
Extract A
Alibaba Group
The Alibaba Group was established in 1999. The business was inspired and led by entrepreneur Jack Ma, a former English teacher from China. Jack Ma and 17 other people invested in the business. From the beginning, the business focused on using technology to enable small businesses to grow and compete more effectively in the global economy. Its mission is ‘to make it easy to do business anywhere’. Jack Ma is now a billionaire.
The Alibaba Group’s first website allowed small Chinese exporters and entrepreneurs to sell internationally. The Alibaba Group has grown into a global leader in online and mobile commerce. It is a world recognised brand and the fastest growing e-commerce business, employing thousands of people. The Alibaba Group has expanded and now has many websites. Its three main websites are Alibaba, Taobao and Tmall. Alibaba is for business-to-business sales (B2B). Taobao is consumer-to-consumer sales (C2C), similar to eBay, though it does not charge a selling fee like competitors such as eBay. Tmall is for business-to-consumer sales (B2C), similar to Amazon. Transactions on its websites totalled $248 bn in 2018, which was more than eBay and Amazon combined.
The Alibaba Group has a programme called the ‘Tech For Change Initiative’ that aims to support female education through free online training and free access to computing resources. It aims to help one million women become computer developers by 2030. The Alibaba Group donates funding for healthcare for the underprivileged and for wildlife protection.
Extract B
Leadership of Jack Ma
Jack Ma, a Chinese entrepreneur and founder of the Alibaba Group, built a large team around him that trust his decision making. He is known for his paternalistic style of leadership. He believes in taking responsibility for the actions of the group.
In an interview, Jack Ma mentioned how his paternalistic leadership helped him to succeed. He said he gave his team the confidence to follow his commands as he took the responsibility for anything that went wrong. He also said that his job is to make sure his team is happy, because when the team is happy, they can make customers happy.
Explain one risk Jack Ma may have taken when setting up the Alibaba Group.
Knowledge 1, Application 2, Analysis 1
Knowledge
1 mark for identifying a risk taken by an entrepreneur
- Financial risk (1).
Application
Up to 2 marks for answers contextualised to Jack Ma, e.g.
- Jack worked as a teacher prior to creating the Alibaba Group and
so gave up wages from his regular job (1).
- Jack invested in the business and is likely to have used his
savings or taken out a loan (1).
Analysis
1 mark for reason/cause/consequence for Jack Ma
- It may have led to Jack losing his possessions/assets if the
business had failed (1).
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