1 - Types of Businesses Flashcards
Understand different types of businesses and their objectives
What does PLC stand for?
Public Limited Company
What is an example of a state / Goverment owned businesses ?
The NHS
Public Schools
Prisons
What is a Sole Trader ?
A business that is owned and run by a single individual
What is an Ltd?
Private Limited Company
What is the primary sector?
Primary sector produces the raw materials for industries e.g. Farm, coal mine and forestry.
What is the secondary sector?
Secondary sector is the manufacturing and assembly process. This involves converting raw materials into components e.g. Building houses, bridges and roads.
What is a Partnership ?
Two or more people trading together as an organisation
What is an example of a Sole trader?
Fish & Chip shop
Window Cleaner
Mechanic
Electrician
What is a business that is owned by one person who has employees ?
Sole Trader
What is a business that is shared between two or more people ?
Partnership
What is an example of a partnership ?
Warner Brothers
Ben and Jerry’s
etc.
What is the tertiary sector?
Tertiary sector refers to commercial services that support the production and distribution process e.g. Transport, teaching and health care.
What kind of liability does a PLC have?
Limited Liability
What kind of liability does an Ltd have?
Limited Liability
Give one key feature of an Ltd
Owned by Shareholders Run by board of directors Funded by retained profits and shares Limited Liability Invites people to purchase shares Financial information is hidden from the public
What is the aim of a charitable / no profitable organisation ?
To make as much profit so it can be givin to charities . It is mainly formed with volunteers , not getting paid.
What is the goal of a community interest company ?
To improve the local community . It is a non profitable organisation.
What is a business aim?
A summary of what the business wants to achieve in the future.
Is there liability for a charitable , governmental and community interests organisation ?
N ⭕️ , there is no one owner to set liability on
What is meant by the term ‘Recession’?
A period of economic decline where demand and output fall.
What is the private sector?
The private sector is usually composed of organisations that are privately owned and not apart of the government. These include corporations and partnerships (profit and non-profit). Examples include retail stores (Tesco) and local businesses.
What is meant by ‘economies of scale’?
Cost advantages gained when the size of a business increases. For example, suppliers may offer discounts to those placing larger orders.
What is meant by the term ‘break-even’?
When a businesses outputs are equal to the amount of inputs. The business has made neither a loss or a profit.
What is the public sector?
The public sector is usually composed of organisations owned and operated by the government. Examples of this can include the NHS and emergency services.
What is the third sector?
Third sector organisations are owned and run voluntarily by trustees. These organisations are not run to make profit but to benefit the community. They operate with donations and gifts, any profits are reinvested. Examples include charity shops.
What is the liability of a sole trader ?
A Sole trader has unlimited liability meaning they’re responsible for the debt of the company.
What is the liability of a partnership ?
A partnership has unlimited liability.
Give one key feature of a PLC
Can offer their shares to the public
At least two shareholders
Financial information available to the public
What is a Unique Selling Point (USP)?
A specific factor that makes a business stand out from its competitors.
How can a business build a good reputation?
Producing good quality products, providing excellent customer service and acting in an ethical and socially responsible manner.
How can a business increase its revenue?
Introducing new products/services, expanding the number of stores or attract customers from competitors.
Benefits of reducing costs?
Pass cost saving on to customers via lower prices, this will improve competitiveness and the ability to earn higher profits.
Methods to increase profit margins
Reducing costs, increasing prices, prevent theft in stores
Name 2 advantages of a Sole trader
- Sole traders are entirely responsible for their own decisions about the company.
- Sole Traders don’t have to split any profit.
Name 2 disadvantages of a Sole trader
- Sole traders do not have another co-owner to discuss ideas and business opportunity’s with.
- A lack of finance may restrict the business
Name 2 advantages of a partnership
- There is more capital available to contribute with more owners
- Partners may have different areas of expertise which will benefit the business
Name 2 disadvantages of a Partnership
- All profits are shared
- If the partners disagree then arguments could affect the service of the business.
