1. Describe what an entrepreneur is, using examples to illustrate why Peter Cruddas is a good example of an entrepreneur. ANS : An entrepreneur is a person who organizes and manages a business undertaking, assuming the risk for the sake of profit. An entrepreneur needs to be good at risk taking, organization and innovation. This case study focuses on the entrepreneur Peter Cruddas, who set up his own business CMC Markets in the early 1990s with just £10,000 of capital. Peter was able to spot a gap in the financial services market by using the latest technology at that time – the internet.
Peter took the risk, got in first and quickly took the lead. He built a new online platform which was a great innovation at the time. His innovation led to a better way of managing client’s needs as dealers in financial markets needed several different accounts, all with different types of software, which was inefficient and unproductive, a problem that Peter’s services solved. Thus in Peter Cruddas is a good example of an entrepreneur who has made a lot of progress by encompassing innovative ideas, organizing them well and taking the risk to go ahead with them.
2. Explain the main traits of an entrepreneur and show which of these Peter Cruddas demonstrated in setting up and establishing CMC Markets.
ANS : The main traits that an entrepreneur must have are : 1) he should not be afraid to take risks. 2) he should be innovative in his ideas and approach so as to take smarter and more informed decisions and risks. 3) he should have the ability and the capriciousness to organize these ideas and innovations in form of a profitable business, taking advantages of all the opportunities and financial windows at his disposal.
Peter Cruddas, who set up his own business CMC Markets in the early 1990s with just £10,000 of capital, took a great risk, starting out. But he used his abilities to organize and innovate, setting up very creative and efficient online platforms to take his business to a higher level. He demonstrated the most capricious attitude about the execution of his ideas and that paid off. CMC Markets is now a global company and Peter Cruddas is the wealthiest businessman in the city of London. CMC has 18 offices around the world, employs 1,250 people and has around 250,000 clients. The business continues to grow rapidly. In 2008 CMC carried out 21 million trades (buying and selling). 98% of these trades were online.
3. Analyse how CMC Markets got the balance right between rewards and risks in its Innovations.
ANS: Often in business there is a positive relationship between risk and reward. In simple terms, the greater the risk you take the more potential there is for high profits. Peter took on an enormous risk when he left his secure job to set up his own business. He took another risk in using his own capital in his new venture. However, Peter lowered the risk by conducting market research. He talked to potential customers to see if they were willing to subscribe to his service and how much they were willing to pay. The key factors that helped CMC balance rewards and risks are: Take risks – but spread them. CMC offers many types of financial trading opportunities in addition to foreign exchange.
• Make sure to have a regular income coming in.
• Work hard.
• Keep control of the business.
• Have as wide a customer base as possible.
• Keep introducing and pushing through new ideas.
• Think laterally – new and non-conventional ideas.
4. To what extent does a new enterprise depend upon the skills of the entrepreneur? Justify your decision.
ANS: The skills of an entrepreneur are very vital to the functioning of the enterprise. No enterprise can be a success if it’s head and the person with the most responsibility and decision making power, lacks in certain vital skills. Not only should the entrepreneur be insightful, innovative and brave at taking risks, but he must be a good manager, hire the right people for the right jobs and provide a good working environment and motivation to it’s employees to ensure a smooth functioning. Also, an entrepreneur needs to make quick and fast decisions and be very smart about the marketing of his company.
He should be good at dealing with clients too. These things are very vital to the working of any company and the person who runs it must be skilled at them. The business greatly depends on the innovative, brave and organized attitude of the entrepreneur.