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Business A Level > 3.1.2 Understanding different business forms > Flashcards

3.1.2 Understanding different business forms Flashcards

1
Q

5 what is an unincorporated business

A

there is no distinction in law between the individual owner and the business itself
There identity of the business and owner is the same

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2
Q

5 what is an incorporated business

A

the business has a legal identity that is separate from the individuals owners
organisations can own assets, owe money and enter into contracts in their own right

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3
Q

5 what is limited liability

A

a situation in which the liability of the owners of a business is limited to the fully paid up value of the share capital

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4
Q

5 what is unlimited liability

A

a situation in which the owners of a business are liable for all debts that the business may incur

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5
Q

5 what is business ownership

A

owned by private individuals
individuals risk their own money
owners reward is the profit made

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6
Q

5 what is a privatised business

A

sold to private individuals

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7
Q

5 what is a nationalised business

A

brought under national government

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7
Q

5 what are the private sectors for for-profit businesses

A

private sector = incorporated & unincorporated
incorporated = private limited & public limited
unincorporated=sole trader & partnership

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8
Q

5 what is a franchise

A

small business trading with agreement of a large firm

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9
Q

5 what are cooperatives

A

collectively owned by workers/customers
company pays cooperation tax
operates until formally wound up or liquidation

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10
Q

5 what are annual general meetings AGMs

A

a legal requirement for plcs to hold a yearly meeting when company directors invite all of shareholders to come quiz the board and vote on new resolutions

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11
Q

5 what is a sole trader

A

1 owner

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12
Q

5 benefits of a sole trader

A

easy to set up
owner is independent
minimum paperwork
respond quickly to changes
know customers
more privacy

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13
Q

5 drawbacks of a sole trader

A

unlimited liability
long hours with no cover
capital is savings
limited collateral
ends on death
limited skills

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14
Q

5 what is a partnership

A

2 people or more entering into a business agreement

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15
Q

5 advantages of a partnership

A

easier to raise capital
problems can be discussed
greater range of skills
cover for holiday or sickness

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16
Q

5 disadvantages of partnerships

A

unlimited liability
profits shared
disagreements
decisions are legally binding on all
death means their share to be repaid

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17
Q

5 what is an LTD

A

private limited company
small to medium, family run
limited liability

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18
Q

5 advantages of LTD

A

limited liability
1 director, 1 shareholder
easy to set up, raise capital
share transfers need all agreed
more privacy
death of shareholder has no effect

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19
Q

5 disadvantages of LTD

A

shares are less attractive as not sold on stock market
less flexible if expansion needed
more regulations to comply with
accounting procedures may be costly

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20
Q

5 what is a plc

A

public limited companies
limited liability
large organisations, shares sold on stock market

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21
Q

5 advantages of plc

A

limited liability
easier to raise finance from public
2 directors, 2 shareholders, different people
share value increase if success
economies of scale
positive publicity because of stock market
suppliers more willing to offer credit

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22
Q

5 disadvantages of plc

A

lots of regulations
accounts are public accessible
shareholders can sell shares
OG owner can lose control if 51% shares bought
stock exchange allows pressure from investors

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23
Q

5 what is a not-for-profit organisation

A

run according to business principles, but don’t aim to make a profit
public sector, cooperatives, pressure groups, social enterprises

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24
Q

5 what is the public sector

A

part of the economy owned and controlled by the government

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25
Q

5 what is a public sector organisation

A

provide goods and services to the public nationally and locally
owner and controlled by the government

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26
Q

5 why do NFPs exists

A

essential services not fully provided by private sector
prevent exploitation of customers
protect jobs and maintain key industries

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27
Q

5 what is privatisation

A

sales of public sector orgs to private individuals
some state run business are inefficient, with no incentive to cut cost or provide high quality
financial burden on government
selling them off raises money for government

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28
Q

5 what are the disadvantages of privatisation

A

may increase prices
cut jobs and reduce services

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29
Q

5 what are co-operatives

A

any organisation jointly run and owned by members who have equal voting rights
voluntary membership
democratic
educational facilities

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30
Q

5 what are pressure groups

A

people that attempt to influence decisions makers in politics business and society

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31
Q

5 what are social enterprises

A

a business with primarily social objectives
profits re-invested in the business or community
not driven by need to maximise profits
can be public or private

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32
Q

6 what is a stakeholder

A

groups or individuals that have an interest in a business
may be affected by or affect the business decisions or organisations

33
Q

6 what are some internal stakeholders

A

shareholders
managers
employees

34
Q

6 what are some external stakeholders

A

suppliers
government
pressure groups
pressure groups
local community
competitors
customers
financiers

35
Q

6 what is a pro-cyclical system

A

continues the trend when market is up and down
you buy when stocks are high
sell when stocks are low

36
Q

6 what is a counter-cyclical system

A

cycling against the market
buy when stocks are low
sell when stocks are high

37
Q

6 what are shareholders

A

own part of a business
dont get involved with day-to-day running
right to vote of the companies AGM
receive a share of profit, called a dividend

38
Q

6 what are shareholders interests

A

customers want lower prices, good value for money, regular food source
shareholders want to make profit, good reputation, earnings per share, assets, dividends yield, more efficiency

39
Q

6 what are shareholders main rewards

A

annual dividends of payments
rise in share value

40
Q

6 what is shareholder concept

A

shareholders are most important
employee, managers to run orgs on their behalf

41
Q

6 what is corporate social responsibility

A

all responsibilities of an organisations to stakeholders in eluding the communities and society at large
considers financial and non-financial performance of orgs

42
Q

7 what is share price

A

the price of a single share of a company
usually determined by a supply and demand for shares

43
Q

7 what is market capitalisation

A

value placed on the business by the stock market
calculated as ‘share price x number shares issues’.

44
Q

7 what is the significance of share prices

A

changes in share prices can have significant effects on a business over a long timescale
rising share prices
falling share prices

45
Q

7 influences on share prices

A

state of the economy
company performance
competition in market
proposed take overs
investor expectation/rumour response

46
Q

7 influences on share prices; state of the economy

A

if the economic conditions are good and expected to continue, investors feel confident, demand rise so price increase. opposite is true

47
Q

7 influences on share prices; company performance

A

if a company performs well and is expected to continue if share price will rise

48
Q

7 influences on share prices; competition in market

A

how well the company responds to the threat of competition in it’s market will influence how it performs overall

49
Q

7 influences on share prices; proposed take overs

A

influence other prices of shares and will reflect whether investors think the takeover will succeed

50
Q

7 influences on share prices; investor expectation/rumour response

A

when people see others selling shares they follow & sell causes an increase in supply of shares with litre demand so prices of share fall

51
Q

7 what is a takeover

A

a company offers to take control of another company by buying enough shares to ensure it has the power to influence policy, make decisions and elect directors

52
Q

7 if share prices fall…

A

consumers don’t think about it
investors may sell
business will buy a load of share to do in a hostile takeover and buy them out

53
Q

7 general changes in share prices

A

difficulties
consumers and orgs as may cut spending
reduces sales made by a wide range of business
provoke an economic recession
OPPOSITE IS TRUE

54
Q

8 what is a sole trader

A

someone who holds ownership
unlimited liability

55
Q

8 what is the stock market

A

where shares can be sold, bought and traded
only from PLC

56
Q

8 what is a partnership

A

when two or more people can enter into a business agreement
unlimited liability

57
Q

8 what are taxes

A

percentage profit paid to government
based on income to provide public seniors

58
Q

8 what is capital

A

money into the business to start with

59
Q

8 what is a franchisor

A

a business that buys one business
sells the franchise to the franchisee
costa = franchisor
holt = franchise

60
Q

8 what are dividends

A

paid to shareholders in quarterly instalments
profit

61
Q

8 what is LTD

A

private limited company
limited liability
friends or family invite to make a deal

62
Q

8 what is the public sector

A

business paid and owned by the government

63
Q

8 what is unlimited liability

A

if a business goes into debt the owner is liable to pay all of what owed

64
Q

8 what are common objectives

A

maximise profit
cashflow
diversity
increase market share
growth
social and ethical

65
Q

8 what are social goals

A

long term improvement for people and the environment in the supply chain
H&M

66
Q

8 what determines objectives

A

corporate outline
size and legal form of the business
age of the business

67
Q

8 why do objectives change

A

achieve original objectives
business has grown
competitive environment changes
market changes
technology changes

68
Q

8 purpose of aims and objectives

A

provide direction for the orgs
forms a basis for allocating resources
motivational
monitor performance
measure success

69
Q

8 what are some conflicting objectives

A

profit and growth, expansion can increase costs
providing a service and growth, smaller firms know customers better
business must decide who is its priority stakeholder

70
Q

8 stakeholder; shareholders
objective
influence

A

maximise profit to get high dividends
low influence unless high shares

71
Q

8 stakeholder; managers
objective
influence

A

promotions good high salaries
middle influence

72
Q

8 stakeholder; customers
objective
influence

A

good quality low price, value money
can vary in influence

73
Q

8 stakeholder; employees
objective
influence

A

better pay, stay employed good work
low influence

74
Q

8 stakeholder; government
objective
influence

A

high tax revenue
job creation
can be high influence

75
Q

8 stakeholder; creditors
objective
influence

A

healthy cashflow, increased sales
varies in influence

76
Q

8 stakeholder; suppliers
objective
influence

A

regular orders, increased sales
vary due to market in influence

77
Q

8 stakeholder; pressure groups
objective
influence

A

business meets their demands
low influence

78
Q

8 why do the objectives of shareholders conflict

A

shareholders want high dividends = high profit
works want high wages = low profit

79
Q

8 why can business objectives conflict

A

short term will conflict with long term
short term is survival, risk it maybe avoided
long term is growth, risk shouldn’t be taken

80
Q

8 how can business avoid conflict

A

if business is adaptable it will overcome conflict
objectives may change if circumstances change

Business A Level (4 decks)

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