Business Structure

Question 1

What is the public sector

Answer 1

Organisations owned and run by government
2 Huge part of the economy some of largest employers in uk
Government spends over £450 billion a year running public sector
3 focus on needs than wants
4 aim to create fair just society

Question 2

Why do we need public sector

Answer 2

1 some goods and services we need everyday are not available in the private sector eg street lights armed forces- called public goods
2 those that are provided are done so for profit eg health and education and not most can not afford

Question 3

2 features of public goods

Answer 3

1 non excludeable- no one can be prevented enjoying them
2 non rivalry-one person gaining from these goods does not stop others gaining too

Question 4

What are positive externalities

Answer 4

consuming merit goods has a positive effect on society eg attending school means an educated skilled workforce

Question 5

Why does government provide merit goods free at the point of delivery and what does this mean

Answer 5

Because of positive externalities they are paid for through taxation

Question 6

What is the private sector

Answer 6

part of uk economy operated by business owned by shareholders or private individuals

Question 7

what is the objective for private sector

Answer 7

1 To make return on investment- it measures how successful a business is
2 To increase shareholders value- measured by dividends paid and share prices
3 survival - more important at the start as new businesses often fail in first 2 years
4 Gaining market share -may spend to gain customers reducing profit short term concentrating on establishing the brand to be the most recognized on the market
5 improving ethics - minimize impact of business on environment

Question 8

Public private sector

Answer 8

Http://bit.ly/20bCfDm

Question 9

what is a sole trader

Answer 9

1 most popular form of business in Uk
2 run by single individual

Question 10

Advantages of sole trader

Answer 10

1 easy to set up - just inform inland revenue
2 low start up costs - no legal costs
3 no formal audited accounts needed

Question 11

Disadvantages

Answer 11

1 limited capital as rely on savings or secured loan
2 limited range of skills a good plumber but no marketer
3 all decisions and future success rests with one individual
4 has limited liability - liable for all business debts
5 hard to reestablish with death of owner

Question 12

Why is the main problem running a small business running in to debt and failing in first 2 years

Answer 12

sole traders open, they must let premises over a period of time eg 2 years, they must arrange contracts for phones and equipment. Monthly outgoing rise and they run out of money. They can not walk away as they are tied in for lease period so liable for the costs and assesses are siezed

Question 13

what is a partnership

Answer 13

joint ownership of a business 2-20 common in accountants layers ad doctors

Question 14

What are the rules of partnership

Answer 14

Laid down in partnership agreements or deeds of partnership which states the amount each person has invested, what each persons share of profit is, each persons roles and responsibilities, voting share, what happens when a partner dies and rules of dissolution

Question 15

How are disputes in a partnership resolved

Answer 15

According to 1890 partnership act which states each partner is equally responsible for debts

Question 16

what are the advantages of a partnership

Answer 16

1 wider shill set
2 capital more available
3shared decision making
4 less pressure

Question 17

What are the 2 types of LTDs

Answer 17

Public and private LTD

Question 18

What are LTD companies

Answer 18

1 assesses are owned by the business -
2 this separation is called incorporation
3 the business exists in law so action taken isn against the business and not share holders
4 share holders only loose what they invested - liability is LTD

Question 19

What is the difference between LTD and PLC

Answer 19

Public LTD trade shares on stock market

Question 20

What are the 2 main stock markets in UK

Answer 20

Alternative Ivestmnet Market AIM - smaller businesses
London Stock Exchange - larger businesses

Question 21

Why is ownership of PLCs changing all the time

Answer 21

Because shares are constantly bought and sold

Question 22

What are the advantages of a PLC

Answer 22

1 limited liability
2shares can only be sold if owners agree so control is not lost outside
3 can raise capital by increasing share holders
4 other businesses and lenders are more likely to fade and invest
5 business continues if owner dies
6 tax advantages for owners

Question 23

Disadvantages of PLC

Answer 23

1 legal costs to set up are high
2profits are shared
3 shares can not be sold to public and can restrict investment
Financial information is public

Question 24

What are non profit organisations

Answer 24

They are not in business to make money or maximise profit. There focus is social or ethical

Question 25

Why do non profit organisations need to produce high quality good and give value for money

Answer 25

Because they are competing with for profit organisations

Question 26

Why are charities established

Answer 26

Not established to make profit, they earn surpluses to collect money and spend on causes
Some have outlets to sell donations

Question 27

What are co operatives

Answer 27

Initially set up in 19th century by working people to stop profiteering and exploitation by companies shops and tallymen
2 they are owned by its members -if you are an employee you are a member after a short probation
3 members get dividends (share of profits) in form of money off vouchers

Question 28

What is the structure on a co op

Answer 28

Much flatter fewer layers and pay differentials between senior and junior workers
When decisions are made each member has an equal vote

Question 29

What are social enterprises give an example

Answer 29

businesses with clear social objectives
1 trade to help solve problems
2 make profit selling goods in open market then reinvest in their social objective
Jamie Olivers 15 chain of restaurants - training the homeless profits going to open next restaurant