assesment 1 Flashcards
Private Limited Companies
Controlled by a board of directors, financed through private shares (meaning shareholders must be invited to invest, e.g. family and friends), owners and shareholders have limited liability (meaning that if the business fails, they will only lose their initial investment)
Public Limited Companies
Controlled by a board of directors, financed through public shares (meaning shares can be bought on the stock market) and debentures (a type of long-term loan that is not backed by collateral), owners and shareholders have limited liability (meaning that if the business fails, they will only lose their initial investment)
Private Sector
Consists of businesses whose main objective is to maximise profits and are owned and controlled privately. These businesses could be Sole Traders, Partnerships, Private Limited Companies or Public Limited Companies. They can be financed in many ways, e.g. owners own money, retained profits, loans and the sale of goods and services.
Public Sector
Consists of government owned organisations whose main objective is to provide a necessary service to the community, e.g. the NHS, schools. They are financed through taxes and controlled by elected politicians.
Third Sector – Charities
Set up with the sole purpose of raising money for a social cause and to help a specific issue. They are owned by a trust and controlled by a board of trustees, as well as paid management. They are financed through donations.
Third Sector – Social Enterprises
Operates like private sector businesses, however their main objective is not to maximise profits for themselves – but for a social cause or a specific group. They can be sole traders, partnerships etc. They can be financed in many ways, e.g. a grant – which is likely to be awarded.
Maximising Profits
All businesses in the private sector aim to maximise profits, as well as social enterprises – for their cause.
Maximising Sales Revenue
To make as much money as possible from sales, this could mean selling products for cheaper and not being too concerned about gross profit – high profits can then be made in after sales services.
Provide a Quality Service
All businesses aim to provide a quality service for their customers and/or members.
- Private Sector: encourage repeat custom and good reputation
- Public Sector: satisfy community needs and avoid complaints
- Third Sector: satisfy stakeholders
Increasing Market Share
To increase the percentage of total sales the business has in the market, if the business has the biggest percentage they are known as the market leader.
Survival
All businesses want to survive – avoid going out of business.
Satisficing
Aiming for a satisfactory result, e.g. lowering expectations during tricky times.
Managerial Objectives
Managers aiming to achieve objectives which they believe will improve their status and reputation, e.g. developing new technology.
Corporate Social Responsibility (CSR)
Organisations acting in an ethical way or in a way that benefits either society or the environment, e.g. using renewable energy or sustainable materials.
Tall Structure
- Pyramid Structure
- Organisations that have a hierarchy; different levels of authority and responsibility
- Instructions and commands come from the decision makers at the top, throughout the workers down to the bottom; this is a chain of command
- Many levels of management
- They are typically large organisations with many specialise departments
