Business revision assessment 1.4

Question 1

What is a limited liability company?

Answer 1

A limited liability company is a corporate structure whereby the members of the company are not personally reliable for the company’s debts or liability.

Question 2

What is the benefit of limited liability?

Answer 2

1. Is a credible and trusted business structure
2. Has an organised management structure.
3. Can accumulate capital quickly by issuing shares upon formation and any time after information.

Question 3

What are the types of limited liability companies?

Answer 3

1. Private limited company (limited by shares)
2. Private limited company (limited by guarantee)
3. Private Unlimited company
4. Public Limited Company

Question 4

What is the importance of limited liability?

Answer 4

1. Reduces the risk
2. No distinction between the owner of the business and the business itself.

Question 5

What is unlimited liability?

Answer 5

Involves general partners and sole traders who are equally responsible for debt and liabilities accrued by the business.

Liability is not capped and can be paid through the seizure of owners personal assets.

Question 6

What are the three types of business ownership?

Answer 6

1. Sole traders
2. Partnership
3. Private limited company.

Question 7

What are the characteristics of sole traders?

Answer 7

1. Legally responsible for all aspects of their business and are personally reliable for their business finance.
   They can keep any profits, but they may also have to repay any debts out of their own pocket.

Question 8

What are the advantages of being a sole trader?

Answer 8

1. You’re the boss
2. Keeps all the profits
3. Start up costs are low
4. Maximum control over the business.

Question 9

What are the disadvantage’s of being a sole trader?

Answer 9

1. Have unlimited liability for debts as there’s no legal distinction between private and business assets.
2. Capacity to raise capital is limited.
3. All responsibilities for business decisions are your.
4. Taxed as a single person.

Question 10

What is a partnership?

Answer 10

A form of business where two or more people share ownership.

Question 11

What are the two types of partnership?

Answer 11

1. General partnerships
2. Limited partnerships.

Question 12

What is a general partnership?

Answer 12

The partners manage the company and assume responsibility for the partnerships debts and other obligations.

Question 13

What is a limited partnership?

Answer 13

Has both general and limited partners.
General partner own and operates the business and assume liability got the partnership.
Limited partners assume as investors only, no control over the business and are not subjected to the same liabilities of the general partner

Question 14

What is a joint venture?

Answer 14

Short term projects or alliances that bring together multiple partners for a project.

Question 15

What are the advantages of having a partnership?

Answer 15

1. Fairly easy to set up and maintain over time.
2. Can pool their resource’s to fund the company’s start-up.
3. Can share the workload and the rewards of business success.

Question 16

What are the disadvantages of having a partnership?

Answer 16

1. Could have a disagreement on business decisions.
2. All partners are liable for their own actions on behalf of the company as well as the action of the other partners.

Question 17

What is a private limited company?

Answer 17

A type of privately held business entity. Where the owners are only reliable to their shares and not the business debts.

Question 18

What are the advantages of having a private limited company?

Answer 18

1.Limited liability
2. Restricted sale or transfer of shares
3. Continued existence
4. Tax breaks

Question 19

What are the disadvantages of having a private limited company?

Answer 19

1. Shares cannot be sold on a public stock exchange
2. Limited growth and restricted number of shareholders.

Question 20

What is franchising?

Answer 20

When an established business allows a third party the right to operate using their trade-name, either through manufacturing, distribution or sale channels.

Question 21

What are the advantages of franchising?

Answer 21

1. Risk of business failure is reduced by franchising.
2. Will already have an established market share.
3. Franchisor gives you support.

Question 22

What are the disadvantages of franchising?

Answer 22

1. Expensive to buy a franchise.
2. Includes restrictions on how you run the business.
3. May find it difficult to sell your franchise.
4. All profits are usually shared with the franchisor.

Question 23

What does location mean in business?

Answer 23

The physical space where your business exists or operates from.

Question 24

What are the factors influencing business location?

Answer 24

1. The supply of labour
2. Transportation links
3. Communication links
4. The location of raw materials
5. Proximity to customers.
6. Climate
7. Government subsidies

Question 25

Why does the supply of labour factor in choosing a location for a business?

Answer 25

Locating to an area where there are many potential employees with the necessary skills for the job they have making it easy to find employees.

Question 26

Why does the location of raw materials factor in choosing a location of business?

Answer 26

Raw materials are nearby to reduce the cost of transportation.

Question 27

Why does being close to customers factor in choosing the location of a business?

Answer 27

The business needs to be close to their customers in order to be successful.

Question 28

Why does being some businesses locate in different countries?

Answer 28

1. Cheaper to operate overseas. 2. Wide range of raw materials. 3. Cheaper to employ skilled workers. 4. Avoid trade barriers and tarrifs

Question 29

What is the definition of of e - commerence?

Answer 29

Refers to the buying and selling of goods or services using their internet.

Question 30

What is the impact of internet on the location of the business?

Answer 30

1. It is now easy for business people to market their products and services. 2. Easy to market products and services to the right group of people. 3. Businesses no longer need to be located in town center. 4. Improved communication.

Question 31

What is the definition of the marketing mix?

Answer 31

Refers to the sect of actions, or tactics, that a company uses to promote it’s brand or product in the market.

Question 32

What are the four P’s in the marketing mix?

Answer 32

1. Product 2. Place 3. Price 4. Promotion

Question 33

What is price?

Answer 33

Price is the amount of money producers are willing to sell or the consumer willing to pay for the product.

Question 34

What is product?

Answer 34

Is the good or service being produced and sold in the market. This includes all the features of the product as well as it final packaging.

Question 35

What is brand image?

Answer 35

Is an identity given to a product that differentiates itself from competitors products.

Question 36

What is brand loyalty?

Answer 36

When customers keep buying the same brand again and again instead of switching over to competitors.

Question 37

What are the advantages of brand images?

Answer 37

1. Consumers recognise their product 2. Their product can be charged higher than less well-known brands. 3. Easier to launch new products.

Question 38

Why is packaging important in business?

Answer 38

1. Protects the product. 2. Easy for transportation 3. Allows the product to be easily used. 4. Promotes the product and brand name 5. It is attractive ad appealing to customers. 6. Consistent with the brand image of the product.

Question 39

How do we extend product life?

Answer 39

1. Introduce new variations of the original product 2. Sell the products into new markets 3. Increase and create new advertising campaigns 4. Make changes to the product.

Question 40

What is promotion?

Answer 40

Marketing activities used to communicate with customers and potential customers to inform and persuade them to buy a business’s products or services.

Question 41

What is the aim of promotion in business?

Answer 41

1. Increase sales and market share 2. Create a brand image. 3. Introduce new products to the market. 4. Compete with competitors.

Question 42

What is informative advertising?

Answer 42

Give audience detailed information about the product.

Question 43

What is persuasive advertising?

Answer 43

Tries to persuade the audience that they need the product.

Question 44

What are some advertising methods?

Answer 44

1. Local newspaper: cheap, lots of info, permanent copy, not everyone reads the newspaper anymore though. 2. Local or national television: Seen by many people, video can be interesting, choose which time to advertise, very expensive, no targeting of the audience, only good if you want to attract everyone.

Question 45

What is place in the marketing mix in business?

Answer 45

Place refers to how the product is distributed from the producer to the final consumer.