1.3 Business objectives Flashcards
What sector is maintained by individuals?
Private
What sector is maintained by governments?
Public
What is the main aim of the private sector?
Make profits
What is the main aim of the public sector?
Provide goods and services
Retained profit
Profit reinvested into the business for growth
Unlimited Liability
Completely responsible for losses
Limited Liability
The money invested is only lost
What are personal businesses run by a single person called?
Sole trader/proprietor
What are businesses managed by 2 or more people called?
Partnership<br></br>
What legal document is signed for partnerships?
The partnership deed
What is a financial advantage of sole trading?
The profit is kept by the trader
What is a legal advantage of sole traders?
Very few formalities
What is a growth disadvantage of sole trading?
Limited economies of scale
Economies of Scale
The benefit of lower unit costs as the busiess grows
Two social disadvantages of partnerships
Lack of harmony, prolonged decision making
Financial disadvantage of partnerships/companies
Profits are shared
Who manages companies?
Shareholders
BOD
Board of Directors
Who selects the BOD
The shareholders to manage the business on their behalf
Private Limited Companies sell stocks to?
Friends and Family
Public Limited Companies sell stocks to?
The public through a stock exchange
Three documents for registering LLCs
Memorandum of Association, Articles of Association, Certificate of Incorporation
Memorandum of Association
A document that briefly details the company
Articles of Association
Rights, Roles and Powers of Shareholders and Annual General Meetings
Certificate of Incorporation
Certifies that the company is registered
2 Financial Advantages of LLCs
Tax Benefits and More Finance
3 Social Disadvantages of LLCs
Lack of Privacy, Communication Problems, Loss of Control
1 Social Advantages of Partnerships
Specialisation
Social Enterprises
Profit Generating Business, Focused on social objectives
What is the main aim of private social companies?
Achieve their social objectives
What is the main aim of NGOs?
Achieve social objectives
How do private social companies sustain themselves?
Through small profits
How do NGOs sustain themselves?
Donations
Who manages cooperatives?
Anonymous people
How does a cooperative’s decision making work?
Democracy; voting
