business A292 Flashcards
advantages of a sole trader
easy to set up and straight forward
little start up capital needed
owner has full control of business
Disadvantages of being a multinational company
- jobs created are often unskilled
- people sometimes work long hours for low wages
- workers are treated unfairly
- high cost of transporting goods
Disadvantages of public co-operations
- May have to pay money back to the government
- could be disagreements
- decision making takes a long time
Public co-operations
- have limited liability
- are in public sector of economy
what is a deed of partnership
this is a legal document that a partnerships signs to stop any problems from taking place in the business
-this is optional but recommended
What are the 3 main types of co-operatives
- worker co-operatives
- producer co-operative
- consumer co-operative
Why does the share price change in a PLC
-because there usually are changes in supply and demand (more people want to buy or sell shares)
this is because the economy maybe doing well
disadvantages of a sole trader
owner has unlimited liability
might be shortage of capital
shortage of skills
What are the main objectives of social enterprises
- help bring benefits to people in the community
- to help or provide a service for the community
- not always trying to make a profit
- need to raise money to cover costs
how is a PLC set up
a board of directors run the business on behalf of the shareholders
board of directors
all PLCs and LTDs must have a board of directors
they have a general meeting every year
managing director is responsible for the overall running of the company
What are co-operations
They are owned and controlled/operated by members who work in the business
-these are groups if people who get together and sell something
what is a stakeholder
a stakeholder is anyone with an interest in a business.
they are individuals, groups or organisations who are affected by the activity of the business
What is an advantage of being a footloose business
-you can locate anywhere cheap as this will help improve profits
Cost of location
- very important to consider
- price of land and premises varies
- amount of work needed for site is important
- if land is expensive then you have to charge high prices for your products
- cost of location can be paid through price of goods
types of stakeholders
owners- who are interested in profit
managers- concerned about their salary
customers- who want the business to produce good quality products at a good price
What are consumer co-operatives
-they buy products on behalf of members and make sure they are sold at right prices
a share of a profit is called …
dividends
What are worker co-operatives
A group of workers who come together and produce a good or service
- they work very hard and do their very best
What are the main considerations of footloose companies
- do they access to skilled staff
- do they have easy access to supplies and transport links
what is a sleeping partner
a person who has invested money into a business and will get a share of the profit but is not involved in business running or activity
PLCS have ……. liability
limited
Why is choosing a business location important
It can make the difference between success and failure
Advantages of being a multinational company
- create employment for locals
- give host countries access to foreign technology and working methods
- export goods to foreign countries
What does a franchisee do
they have to pay a proportion of their profits to the franchisor regularly
advantages of LTDs
limited liability
can sell shares to raise capital
the business can be sold and continued
example of this is warburtons
Advantages of public co-operations
- government funded
- workers are motivated to work hard
- workers know all about the business so can make good decisions
Examples of social enterprises
- Jaimie oliver 15
-local boys football team
Coaches for the disabled people
advantages of partnerships
-more capital invested
-more skills in business
-if some one is off ill the business wouldn’t face any problems
financial info is private
types of shareholders in a PLC
- private individuals usually own a small %of PLCs (minority shareholders)
- major shareholders are usually banks and investment companies (institutional investors)
What may the franchisor do
they may provide training
- managing expertise
- and national marketing campaigns
royalty
Is a payment paid to the franchisor based on sales revenue of the franchise
a share is …
a percentage ownership in a business
What is a franchise
buying an existing business from a franchisor
Access to availability of raw materials
- costs of transporting raw materials to a factory for processing can be very high
- businesses who are supplied with raw materials choose to locate neat the supplier so it is cheaper
franchisee
the name given to a person or business buying a franchise
What are producer co-operatives
A group of producers share costs and help each other sell products
- share expensive materials and machinery
advantages if being a PLC
-limited liability- can only lose what you have invested
-can raise large sums if finance by selling shares
-
Examples of public co-operations
Bbc
What is a public limited company
- an incorporated business that can sell and trade shares freely on the stock exchange
- MUST have issued a share capital more than ‘£50,000
- will part of its profits to shareholders in the form of dividends
what is both common is private limited companies and public limited companies
- owned by share holders
- incorporated business
- owners have separate legal identity to the business
- limited liability
What do public co-operations do
- they provide a range of goods and services
- owned and controlled by government
- this has declined over years
partnerships
- is a business owned by two or more people
- doctor and dentist, solicitor
- not a lot of paper work to set up
- easy and cheap
franchisor
the name given to the person of the business who offers to trade in the businesses trading methods, products and logos
Availability of labour -workers
- labour is widely available in rural areas as there is a high level of unemployment
- you can easily train someone for a low level job
- in more advanced areas there may be a short supply of skilled workers
- some people may need to be trained which will cost a lot of money
disadvantages if being a PLC
-it is complicated and expensive to set up
-general public is allowed to see financial info info business
-the shareholders will want a dividend so will want to business to perform well
ownership can change as voting takes place each year
-shareholders have very little say in how the business is run
disadvantages of partnerships
- unlimited liability
- profit is shared
- disagreements
- shortage of capital as as there may be a shortage of partners leading to a shortage of profit
disadvantages of LTDs
must make some financial info public
cannot sell shares to general public
possible lack of capital
shareholders will except a share of profits
Climate and geography
- some areas of the country are suited to a particular type of business
- large steel businesses need to be on flat land and so do farmers
disadvantages of buying a franchise
large amount of initial capital may be required
- loses have to be paid by the franchisee
- all supplies must be purchased from the franchisor at the price they determine
how is capital raised in a PLC
through selling shares on the stock market max £50,000
What are multinational companies
- very large companies
- may have a head office on one country but manufacturing facilities in other countries
- operate in many countries around the world
- shares be sold on local stock exchange
Government help
- they give granta to people to help them set up a business where there is very high unemployment rates
- they help give training to improve skills of people
Transport and infrastructure
- some areas of the country are better served by motorways and roads
- the easier you have access to a business it will have a big impact
- this is important to consider because you don’t want to travel a long way so you will want to be near the business
What does footloose mean
- a business that does not need to be located near customers as they don’t physically visit the premises
- if a business is located anywhere it is called footloose
- they can locate anywhere
- can be in low cost areas
what is a private limited company
an incorporated business where shares have been sold privately to friends and family
- have a board of directors
- limited liability
in a private limited company what happenes if the business fails
the shareholders will not be responsible for any debts
they will only lose what they have invsested
shareholder
they are people who have a share of the profit of the business
partnerships have ……… liability
-unlimited
Disadvantages of public co-operations
- Could be disagreements
- decision making could take a long time -you could lose out as competition always comes out
- members may not have experience to run business
what is a sole trader
a business owned and controlled by one person
- business is unincorporated - it does not have a separate legal identity to its owners
- examples: plumber, builder, window cleaner
Private limited companies and public limited companies are both in what sector
Private sector
incorporation
the process a business goes through to become a company - the business gains its own legal identity
Nearness to customers -market
- need to be near markets they serve
- affects service industries as people don’t want to travel a long where
- supermarkets are near to centres of population
- people want to be near the business so it is easy for them to get there
advantages buying a franchise
a tried and tested business idea
- your business maybe very well known
- logos and products are usally already established
- national advertising and promotion must be paid by franchisor
- you get training and advice on how to run the business
- less risk of failure
Advantage of public co-operations
-Funded by government
-workers are motivated and work hard
- workers know all about the business so can make good decisions
-
Social enterprises are
Organisations with social objectives aimed at stakeholders such as members, customers and communities
franchises are
a type of marketing arrangement
advantages of multinational companies
- create employment for locals
- give host countries access to foreign technology and working methods
what is horizontal integration
it occurs between businesses in the same industry at the same stage of production (taking over )
give an advantage of horizontal integration
allows economies of large-scale production to be achieved
give 2 disadvantages of horizontal integration
- reduced choice for customers
- may lead to a monopoly ( when a business takes over the other businesses in the same sector)
why is monopoly a bad thing for customers
- it may not be near your house
- it may not be a place where you like to go to
what is backward vertical integration
when a business takes over or merges with a supplier
give a disadvantage of backward/ vertical integration
-control over supply of components or raw materials
give a disadvantage of backward/ vertical integration
-may lead to a reduction in the variety of goods available for consumers or other businesses
what is forwards vertical integration
-when a business takes over or merges with another business which provides an outlet for the goods and services produced
whats an advantage of forwards vertical integration (2)
- control over sales outlets
- possibly improve job security for workers
give a disadvantage of forwards vertical integration
-may lead to higher prices and/or reduced choice
what is diversification
when a business takes over or merges a completely different business
give an advantage of diversification
-spreads risk
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