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IB Business > 1.2 > Flashcards

1.2 Flashcards

1
Q

Public sector

A

owned and controlled by the government

usually don’t aim to make profit

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2
Q

Private sector

A

organisations owned and controlled by individuals/group of individuals. Includes gov education, police, health care, …

aim to make profit

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3
Q

Examples of for-profit organisations

A
  • sole trader
  • partnerships
  • cooperations/companies
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4
Q

Sole trader

A

for-profit business owned by a single individual. In unincorporated, owner has the same legal identity as the business

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5
Q

advantages and disadvantages of sole trader

A

Advantages:

  • Easy to setup
  • lower startup costs
  • keep all profit
  • make all decisions
  • privacy

Disadvantages:

  • unlimited liability (however can prevent from making careless decisions)
  • Lack of finance
  • High workload
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6
Q

Partnerships

A

For profit business owned by two or more individuals

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7
Q

Advantages and disadvantages of partnerships

A

Advantages:

  • financial support
  • shared workload and expertise

Disadvantages:

  • unlimited liability
  • Decision making conflicts
  • share profit
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8
Q

Silent partner

A

A partner that contributes funds and receives some benefits from profits but does not contribute in running of the business

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9
Q

Deed of partnership

A

contract which outlines how the partnership will be managed

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10
Q

Unlimited liability

A

Owner does not have separation from the business and is responsible for the debts of the firm. Can lose their own belongings if unable to repay debts.

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11
Q

Corporations/companies

A

For profit organisation owned by shareholders who enjoy limited liability. Board of directors are elected by shareholders to run the company on their behalf.
Private limited Companies: cant raise capital from general public
Public Limited companies: can sell shares in public, but must release financial documents in public as well

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12
Q

Shareholder

A

individual/other business that have invested money to provide capital for a company

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13
Q

Flotation and IPO

A

Flotation: when a business first sells its shares to the public, in a process called initial public offering (IPO)

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14
Q

Advantages and disadvantages of being a company (incorporated)

A

Advantages

  • Can raise finance by selling shares
  • limited liability
  • economies of scale (e.g. easier to borrow)

Disadvantages:

  • Diseconomies of scale (e.g. communication issues)
  • ownership diluted
  • public limited company must release financial information
  • attracts greater media coverage (if negative then can tarnish brand image)
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15
Q

Cooperative

A

For profit organisation owned by its members who come together to work towards a common interest. Run democratically

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16
Q

Advantages and disadvantages of cooperatives

A

Advantages:

  • democratic = motivated + better decisions
  • public support
  • can help raise finance
  • can help pool resources together

Disadvantages:

  • Cant raise finance via stock exchange
  • inefficient as managers and employees normally have low pay
  • don’t have control over decisions
17
Q

Microfinance providers

A

Make financial services available to usually unemployed or low-income earners who would otherwise struggle to gain external finance

18
Q

Advantages and disadvantages of microfinance providers

A

Advantages

  • creates jobs
  • helps ppl in poverty

Disadvantages:

  • unethical to make profit from poor
  • only provide limited finance
19
Q

Public private partnerships

A

When public sector works together with the private sector to jointly provide certain goods and services.

20
Q

Advantages and disadvantages of PPP

A

Advantages:

  • gov can benefit from expertise of private sector
  • private partner can provide financing

Disadvantages:
- expensive to setup

21
Q

non-profit social enterprises

A
  • profit not main goal

- surplus revenue used to achieve goals rather than in dividends

22
Q

NGOs

A
  • private sector, aim to benefit others in society/environment
  • operational NGOs: involved in relief-based community projects, established from a given objective
  • Advocacy NGOs: take aggressive approach to promote/defend a cause
23
Q

Charities

A
  • provide voluntary support to benefit the public, don’t aim for profit
  • surplus revenue reinvested to charity
24
Q

Advantages and disadvantages of charity

A

Advantages:

  • social benefits for community
  • tax advantages
  • limited liability
  • public recognition and trust (easier to get donations)
  • grants
  • can focus on mission rather than profit

Disadvantages:

  • lack of profit (demotivating)
  • limited sources of finance (donations)

IB Business (5 decks)

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