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IB Business Management SL > 1.2 Types of organisations > Flashcards

1.2 Types of organisations Flashcards

1
Q

Defi of public sector

A

Organisations accountable to and controlled by the government

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2
Q

Defi of private sector

A

Businesses owned and controlled by individuals or groups

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3
Q

Defi of privatisation

A

The sale of public sector organisations to the private sector

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4
Q

Defi of mixed economy

A

Economic resources owned by both private and public sectors

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5
Q

Defi of free-market economy

A

Economic resources owned mainly by private sector with little state intervention

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6
Q

Defi of command economy

A

Economic resources owned, planned & controlled by the state

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7
Q

Why does the government want to control goods & services? [4]

A

To ensure adequate supplies of essential goods & services
Prevents private monopolies
Maintain employment
Maintain environmental standards

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8
Q

Defi of entrepreneur

A

Someone who takes the financial risk of starting & managing a new venture

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9
Q

Defi of intrapreneur

A

Someone within a large corporation who acts like an entrepreneur

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10
Q

Reasons for starting a biz [4]

A

Loss of job
Desire for independence
Clear existence of biz opportunity
Desire to make more money than current job

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11
Q

Problems faced by new biz

A 
Competition
Building a new customer base
Lack of record-keeping to chase debtors
Lack of working capital
Poor management skills
Changes in biz environment
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12
Q

Name the 4 types of profit-based organisations

A

Sole trader
Partnership
Private limited
Public limited

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13
Q

Defi of limited liability

A

The only liability a shareholder has if the company fails is the amount invested in the company, not the total wealth of the shareholder

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14
Q

Advantages of sole trader

A

Easy to set up, no legal formalities
Complete control
Keep all the profits
Able to choose times and patterns of working

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15
Q

Disadvantages of sole trader

A 
Unlimited liability
Intense competition
Inability to specialise
Difficult to raise additional capital
Long hours necessary to break-even
Lack of continuity
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16
Q

Defi of sole trader

A

A biz in which one person provides the permanent finance, and in return, has full control of the business and is able to keep all the profits

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17
Q

Defi of partnership

A

A biz formed by 2 or more persons to carry on a business together, with shared capital investment & shared responsiblitiies

18
Q

Advantages of partnership

A 
Can specialise
Shared decision-making
Additional capital by each partner
Business losses shared
Fewer legal formalities
19
Q

Disadvantages of partnership

A 
Unlimited liability
Shared profits
No continuity
Hard to raise additional capital
Lose the independence of decision-making
20
Q

Defi of private limited company

A

A small-to-medium sized biz owned by shareholders who are often members of the same family. Shares cannot be sold to general public

21
Q

Advantages of private limited company

A 
Limited liabilty of shareholders
Separate legal personality
Continuity of business
Original owner often able to retain control
Raise capital from selling shares
22
Q

Disadvantages of private limited

A

Legal formalities involved, high legal cost
Capital raised not a lot
Difficult for shareholders to sell shares
End-of-year accounts must be made available for public inspection, less secrecy

23
Q

Defi of public limited company

A

A large biz with the legal right to sell shares to general public. Share price is quoted on national stock exchange.

24
Q

Advantages of public limited

A 
Limited liability
Continuity
Ease of buying & selling of shares
Access to substantial capital sources
Raise huge amounts of capital
25
Q

Disadvantages of public limited

A

Legal formalities
Cost of business consultants & financial advisors
Share prices subject to fluctuation beyond control
Required to disclose financial information to public
Risk of takeover
Directors influenced by short-term objectives of major investors

26
Q

Defi of shareholder

A

A person or institution owning shares in a limited company

27
Q

Defi of shares

A

A certificate confirming part ownership of a company and entitling the shareholder to dividends and certain shareholder rights

28
Q

Defi of public corporation

A

A biz enterprise owned and controlled by the state

29
Q

Advantages of public corporation

A

Social objectives rather than profit objectives
Loss-making services might still be kept operating
Finance raised mainly from government

30
Q

Disadvantages of public corporation [2]

A

Tendency towards inefficiency due to lack of profit targets & subsidies from government
Government may interfere in biz decisions due to political reasons

31
Q

What is a non-profit organisation

A

An organisation that has aims other than making and distributing profits, usually governed by a voluntary board

32
Q

What is a non-governmental organisation

A

A legally constituted body with no participation or representation of any governments

33
Q

Defi of pressure groups

A

NPOs that aim to change the behaviour and decisions of either organisations or governments

34
Q

Defi of social enterprises

A

A biz with mainly social objectives that reinvests most of its profits into benefiting society rather than maximising returns to owners

35
Q

What is the triple-bottom line?

A

The 3 objectives of social enterprises - economic, social, environmental

36
Q

Defi of co-operatives

A

Biz owned and run by and for their members

37
Q

Advantages of co-operatives

A

Incentives to work
Decision-making power
Social benefits
Public support

38
Q

Disadvantages of co-ops

A

Lower salaries and bonuses
Limited sources of finance
Slower decision-making
Limited promotional opportunities

39
Q

Defi of microfinance providers

A

For-profit social enterprise that offers financial services to low income populations

40
Q

Advantages of microfinance providers

A

Accessibility
Job creation
Social wellbeing

41
Q

Disadvantages of microfinance providers

A

Immoral
Limited finance
Limited eligibility

42
Q

Defi of public-private partnerships

A

Involvement of the private sector in public sector projects aimed at benefiting the public

IB Business Management SL (12 decks)

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