business Flashcards
What distinguishes organizations in the private sector?
Owned and controlled by private individuals and businesses, primarily aimed at generating profit.
List the objectives of the Private Sector.
- Survival and growth
- Profit maximization
- Sales maximization and increasing market share
- Personal power, wealth, and prestige for the owners/managers
- Social and ethical responsibilities
What defines organizations in the public sector?
Owned and controlled by the government, providing essential goods and services.
List the objectives of the Public Sector.
- Provision of services beneficial to the population
- Break-even wherever possible
- Maintain essential services
- Regulate markets
- Redistribute income
- Stabilize the economy
What are some reasons for the existence of the public sector?
- Ensure access to basic services
- Avoid wasteful competition
- Protect citizens and businesses
- Create employment opportunities
- Stabilize the economy
What is a Sole Trader?
An individual who owns and controls their personal business, responsible for its success or failure.
List the advantages of Sole Traders.
- Few legal formalities
- Profit taking
- Being your own boss
- Privacy
- Quicker decision making
- Personalized service to customers
List the disadvantages of Sole Traders.
- Unlimited liability
- Limited sources of finance
- High risks
- High workload and stress
- Limited economies of scale
- Lack of continuity
What is a Partnership?
A for-profit business owned by two or more people, with a maximum of 20 partners.
What is the deed of partnership?
A contract signed by partners outlining contributions, roles, profit division, and conditions for new partners.
List the advantages of Partnerships.
- Financial strength
- Specification and division of labor
- Financial privacy
- Cost-effectiveness
List the disadvantages of Partnerships.
- Unlimited liability
- Lack of continuity
- Prolonged decision making
- Lack of harmony
What defines privately held companies?
Businesses owned by shareholders that cannot raise public share capital.
What is the difference between privately held and publicly held companies?
Publicly held companies can advertise and sell shares to the general public.
What is flotation in the context of publicly held companies?
The process when a publicly held company first sells parts of its business to external investors, known as an initial public offering (IPO).
List the advantages of limited liability companies.
- Raising finance
- Limited liability
- Continuity
- Economies of scale
- Productivity
- Tax benefits
List the disadvantages of limited liability companies.
- Communication problems
- Added complexities
- Disclosure of information
- Bureaucracy
- Compliance cost
- Loss of control
What documents must limited liability companies sign before trading?
- Memorandum of Association
- Article of Association
What is a Franchise?
A business model where a person buys a license to trade using another firm’s name and trademarks.
List the benefits for the franchiser.
- Rapid growth
- National or international presence
- Growth without operational worries
- Increased chance of franchisee success
List the drawbacks for the franchiser.
- Huge risk to brand image
- Difficulty in controlling franchisee operations
- Can be expensive
What are social enterprises?
Revenue-generating businesses with social objectives at their core.
List the main goals of social enterprises.
- Achieve social objectives
- Earn revenue in excess of costs
What are cooperatives?
For-profit social enterprises owned and run by their members.
List the types of cooperatives.
- Consumer cooperatives
- Worker cooperatives
- Producer cooperatives
What defines microfinance providers?
Financial services that provide opportunities to small entrepreneurs with low credit/income.
What are non-profit social enterprises?
Businesses run commercially but without profit as the main goal, using surplus revenues for social goals.
What is the difference between NGOs and Charities?
NGOs are broader, while Charities are more operational and focus on philanthropic goals.
List the ways NGOs and Charities generate funding.
- Donations
- Grants
- Fundraising
- Membership fees
- Sponsorship
- Merchandise
- Investment income
What is a natural monopoly?
Occurs when a single company is the only provider of a good or service, as it’s cheaper or more efficient.
