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Business > Business Organisations > Flashcards

Business Organisations Flashcards

1
Q

types

A 
sole trader
partnership
private limited company
public limited company
co-op
state owned enterprise
franchise
alliance
transnational company
indigenous firm
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2
Q

sole trader

A

individual who sets up, owns, manages their own business

do not have limited liability

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3
Q

advantages of sole trader

A

easy to set up
keep all profits
accounts do not have to be published
make all decisions

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4
Q

disadvantages of sole trader

A 
unlimited liability - if business goes bankrupt, personally responsible, may have to forfeit personal belongings
lack of capital
lack of skills
not a separate legal entity
no continuity of existence
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5
Q

partnership

A

set up, owned and managed between 2-20 owners

combine resources and talents to make profit

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6
Q

deed of partnership

A 
how profits are shared
what each partner is expected to do
what salaries each is to be paid
rules for admitting new partners and voting rights
what happens if closes down
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7
Q

advantages of partnerships

A

easy to set up
more capital
more skills and expertise
confidential - accounts do not have to be published

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8
Q

disadvantages of partnerships

A 
unlimited liability - jointly and severally liable, may have to individually forfeit personal possessions
slow decision making
profit sharing
not separate legal entity
no continuity of existence
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9
Q

private limited company

A

owned by 1-149 owners
limited liability
name must end in ltd, cannot sell shares to general public
eg eason and son ltd

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10
Q

advantages of ltd

A 
limited liability
more capital
workload is shared
less tax
separate legal entity
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11
Q

disadvantages of ltd

A

complicated to set up - must apply for permission, pay fee to registrar of companies, receive cert of incorporation
lack of confidentiality
legal requirements
profits shared

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12
Q

articles of association

A 
internal rules and regulations of company
contains:
-share capital breakdown
-voting rights attached to each share
-procedure for calling meeting
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13
Q

limited liability

A

form of legal protection that benefits the shareholders in a company
in event of bankruptcy, a shareholder can only lose a maximum of what they invested
ie lose value of their shares but not private assets

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14
Q

memorandum of association

A

this document governs a company’s relationship with the general public
contains the name, objectives, share capital details and details of directors

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15
Q

public limited company

A

set up by at least 7 shareholders with no upper limit
run by board of directors who are elected at AGM
limited liability, PLC
raise capital by selling shares to public
eg Bank of Ireland PLC

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16
Q

advantages of PLC

A 
limited liability
more capital
less tax
high profile - attract media interest, free publicity, attract top employees
separate legal entity
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17
Q

disadvantages of PLC

A

very complicated to set up - cert of incorporation, trading cert
lack of confidentiality
legal requirements
possible takeover

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18
Q

shareholders

A

owners
invest their money
receive share of company’s profit - dividend
vote at AGM for board of directors

19
Q

board of directors

A 
voted by shareholders to run business
make all major decisions
set goals and devise strategies
report to shareholders at AGM
decide dividend they will receive
20
Q

manager director

A

run company day to day elected by BOD
make sure objectives are achieved
sets out vision, motivate employees
hires senior management + delegates duties

21
Q

auditor

A

account that must be hired by law to check to ensure accuracy of accounts
totally independent of company
writes report on accounts if fair and accurate

22
Q

co-operative

A

set up by a group (min 7) who come together and establish an enterprise with the aim of helping one another
run by a committee of management voted in by members
limited liability
application made to registrar of friendly societies, then cert of registration

23
Q

credit union (co-op)

A

group of people with common bond/interest
save together and lend to another at reasonable level of interest
common bond may be their trade union, area, employer
members borrow for variety of purposes, calculated on the outstanding balance

24
Q

advantages of co-op

A 
limited liability
democratic
incentive/motivation
separate legal entity
continuity of existence
25
Q

disadvantages of co-op

A

complicated to set up
lack of confidentiality
legal requirements
difficult to raise capital - less incentive to contribute

26
Q

state owned enterprise

A

businesses owned by irish government on behalf of the people of ireland
run by professional managers
eg RTE, An Post

27
Q

advantages of state owned enterprise

A

employment
essential services provided
develop irish economy - IDA Ireland
dividends used to improve services, pay national debt

28
Q

disadvantages state owned enterprise

A

many make a loss and receive subsidy to cover costs
less incentive to keep costs low
large loans to repay

29
Q

privatisation

A

government sells its state owned enterprises and lets private entrepreneurs run them instead
can offer its shares for sale to the general public or to one business
eg Aer Lingus

30
Q

advantages of privatisation

A

cash from sale
free from political decision making ie more profitable decision making
allows company to raise money for development and expansion
offer opportunity to make a decent return

31
Q

disadvantages privatisation

A

higher prices, poorer service, redundancies
gov lose its annual dividend
only profitable are privatised
make decisions for good of company not country

32
Q

franchises

A

business arrangement whereby the franchiser sells the right to use his/her name, idea or business to others and allows them to set up an exact replica of the business
pay large one off fee for permission
must obey certain conditions
eg McDonalds

33
Q

advantages of franchises

A

reduced risk
economies of scale
training and on-going support
advertising

34
Q

disadvantages of franchises

A

cost
restrictions
damage to image

35
Q

alliance

A

business relationship where two business agree to co-operate with each other on a single business project
remain separate legal entities
benefit from sharing costs, expertise, resources
eg Mercedes and Swatch make smart car

36
Q

advantages of alliances

A

cost effective expansion
more successful expansion
new markets
control

37
Q

disadvantages of alliances

A

disagreements

lose customers

38
Q

transnational companies

A 
company with a head office in one country and branches, business operations or factories in a number of other countries
IDA attract based on:
-low corp tax
-access to grants
-access to EU markets
-skilled workforce
-english language
39
Q

advantages of transnational companies

A 
employment
new technology
competition
tax
spin off effect
exports
40
Q

disadvantages of transnational companies

A

closures
repatriation of profits
political pressure
conflict of interest

41
Q

indigenous firms

A

businesses set up, owned and managed by irish people
main place of business is ireland
will sell their products at home and possibly export
mostly small and medium sized
eg Lily O’Briens, Supermacs

42
Q

advantages of indigenous firms

A

employment
loyalty
enterprise culture
profits

43
Q

changing trends in ownership and structure

A 
co-ops becoming PLCs
privatisation
increasing popularity of franchises
nationalisation eg AIB during recession
alliances eg bord gais and tesco
44
Q

why businesses change their organisational structure over time

A 
to raise capital
to lower risk faced by owners
increase sales and profit
acquire skills 
continuity of existence

Business (27 decks)

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