Business and stakeholder objectives/Types of business organisation 1.4 + 1.5

Question 1

sole traders

Answer 1

-most common form of business organisation
-its owned and operated by one person
-few legal requirements to set it up

Question 2

partnerships

Answer 2

• two or more people agree to jointly own a business
• share the profits made
• set up easily

Question 3

private limited companies

Answer 3

businesses owned by shareholders but they cannot sell shares to the public

Question 4

public limited companies

Answer 4

businesses owned by shareholders but they can sell shares to the public and their shares are tradeable on the Stock Exchange.

Question 5

advantages of sole traders

Answer 5

+ few legal regulations
+ he is his own boss
+ freedom to choose holidays, work hours
+ doesn’t have to share business info

Question 6

advantages of partnerships

Answer 6

+ more capital invested in the business
+ responsibilities of running the business is now shared.
+ both partners are motivated to work hard because they will both benefit from more profits.

Question 7

advantage of private limited companies

Answer 7

+ shares can be sold to a large number of people
+ all shareholders have limited liability
+ able to keep control as long as they do not sell to many shares to other people

Question 8

advantages of public limited companies

Answer 8

+ offers limited liability to shareholders
+ has separate legal identity to the owners or shareholders and it is an incorporated business
+ no restrictions on buying, selling or transfer of shares

Question 9

franchises

Question 10

joint ventures

Question 11

social enterprises

Question 12

advantages and disadvantages of franchises for the franchisor

Question 13

advantages and disadvantages of franchises for the franchisee

Question 14

advantages and disadvantages of joint ventures

Question 15

businesses objectives

Answer 15

survival, growth, profit, market share

Question 16

the importance of business objectives

Question 17

internal stakeholder groups

Answer 17

owners (sole traders, partnerships, shareholders), managers, employees

Question 18

external stakeholder groups

Answer 18

customers, suppliers, lenders/banks, government, local community

Question 19

objectives of internal stakeholder groups

Question 20

how do the different stakeholder groups objectives conflict with each other

Question 21

objectives of external stakeholder groups

Question 22

limited liability

Answer 22

liability of shareholders in a company is limited to only the amount they invested

Question 23

disadvantages of sole traders

Answer 23

• no one to discuss business matters with
• do not have the benefits of limited liability
• if sick, no once can take control of the business

Question 24

unlimited liability

Answer 24

owners of a business can be held responsible for the debts of the business they own. their liability is not limited to the investment they made In the business

Question 25

disadvantages of partnerships

Answer 25

- dont have limited liability - do not have separate legal identity - partners can disagree on business decisions

Question 26

unincorporated business

Answer 26

does not have separate legal identity. sole traders and partnerships are unincooperated businesses.

Question 27

incorporated business

Answer 27

companies that have separate legal status from their owners.

Question 28

shareholders

Answer 28

are the owners of a limited company. They buy shares which represent part-ownership of the company.

Question 29

disadvantages of private limited companies

Answer 29

- there are significant legal matters that have to be dealt with. - the shares in the company cannot be solder or transferred to anybody else without the agreement of other shareholders. - cannot offer shares to the general public

Question 30

disadvantages of public limited companies

Answer 30

- more regulations and controls - selling shares to the public is expensive - legal formalities are very complicated