1.2 Types of Business Entities

Question 1

What is public sector?

Answer 1

Public sector refers to parts of the economy run by the government such as transport and education

Question 2

What is private sector?

Answer 2

Private sector refers to parts of the economy that are not run by the government. Private sector companies are usually for-profit

Question 3

What are the 4 types of profit-based organisations?

Answer 3

-Sole trader
-Partnership
-Privately held companies
-Publicly held companies

Question 4

What is a sole trader?

Answer 4

A sole trader is an individual who runs their business alone

Question 5

State 2 features of a sole trader

Answer 5

-Full control of business
-Usually limited finance

Question 6

What are ADV & DIS of sole traders?

Answer 6

ADV:
-Complete control over the business
-Flexible working hours
DIS:
-Lack of continuity
-Limited capital

Question 7

What are partnerships?

Answer 7

Partnerships are businesses that are owned by 2 or more people who make joint decisions

Question 8

State 2 features of a partnership

Answer 8

-Partners make joint decisions
-Partners have unlimited liability

Question 9

What are ADV & DIS of partnerships?

Answer 9

ADV:
-Various skills & knowledge
-More capital
DIS:
-Profits have to be shared
-All partners have unlimited liability

Question 10

What are companies?

Answer 10

Companies are businesses that are incorporated meaning that they have their own legal identity. Companies can have an unlimited number of shareholders

Question 11

State 2 features of a company

Answer 11

-Shareholders own but not necessarily run the business
-Generally, greater finance is available

Question 12

What are ADV & DIS of companies?

Answer 12

ADV:
-Increased stability, if shareholders die business can continue
DIS:
-Time & money consuming to fulfil legal requirements

Question 13

State 2 features of a privately held company

Answer 13

-Privately held companies can only sell shares privately
-They do not have to show financial records to the public

Question 14

State 3 features of a publicly held company

Answer 14

-Publicly held have to publish shares on a public place such as on the stock exchange or online
-They have to show financial records to the public
-They do not have control over who buys their shares

Question 15

What does social enterprise mean?

Answer 15

Social enterprise refers to a business that has a social purpose

Question 16

State 2 features of a social enterprise

Answer 16

-Social enterprises have a clear public mission
-Social enterprises are mostly not for profit, if yes it is to support theior public mission

Question 17

What does social purpose mean?

Answer 17

Social purpose means that a business aims to improve human, social or environmental well-being

Question 18

What is a for-profit social enteriprise?

Answer 18

A for-profit social enterprise is a business that has the aim to make profits but its priority is to fulfill their social purpose

Question 19

What are the 3 types of for-profit social enterprises?

Answer 19

-Private sector companies
-Public sector companies
-Cooperatives

Question 20

What is a cooperative?

Answer 20

A cooperative is a business that is owned and operated by its many members who share profits

Question 21

State 2 features of a cooperative

Answer 21

-It is a type of corporation
-Membership is usually open and voluntary

Question 22

What are ADV & DIS of for-profit social enterprises?

Answer 22

ADV:
-Workers are motivated
-Stakeholder community benefits from it
DIS:
-Decision making is time consuming
-Capital may be insufficient for growth

Question 23

What are non-profit social enterprises?

Answer 23

Non-profit social enterprises are businesses that do not aim to make profits and their only goal is to fulfill their social purpose

Question 24

What are the types of non-profit social enterprises?

Answer 24

-Non governmental organisations (NGOs)
-Charities

Question 25

What are NGOs?

Answer 25

NGO’s are businesses that have a social purpose that is socially desirable such as Greenspace

Question 26

What are charities?

Answer 26

-Charities are a specific form of NGOs that have an aim to help those in need
-Charities do not have to pay taxes

Question 27

What are ADV & DIS of non-profit social enterprises?

Answer 27

ADV:
-Help people
-Motivate others to help
DIS:
-They are reliant on funding
-Passion can lead to loss of support