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Business Component 1 > Business Structure > Flashcards

Business Structure Flashcards

1
Q

private sector and examples

A

the private sector includes all these businesses that are set up by individuals or groups of individuals
•sole traders, partnerships, companies, charities and cooperatives

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2
Q

public sector and examples

A

the public sector is business activity that is owned/run by the government for the benefit of everyone
•army, police force, schools, hospitals

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3
Q

Goods

A

Items produced by the conversion of raw materials into finished products by a secondary sector; tangible/physical products

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4
Q

consumer goods

A

goods that are used by the consumer

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5
Q

producer goods

A

Items that are bought by another business and used to help make other goods

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6
Q

Single use goods

A

Items that can only be used once

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7
Q

Durable goods

A

Items that can be used over and over again

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8
Q

Services

A

Intangible, a task performed in return for payment; including personal/direct services

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9
Q

Business aims

A

The long-term intentions that provide a focus for setting objectives- usually qualitative sometimes in the form of a mission statement

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10
Q

Business objectives

A

The medium to long-term targets that can give a sense of direction to a manager, department or whole organisation

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11
Q

private sector aims

A

•survival
•profit maximisation
•maximising growth/sales revenue/shareholder value
•gain market share
•diversify into new products/markets
•social aims/ethical/ environmental aims
•improve reputation/quality
•increased efficiency
•competitiveness

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12
Q

public sector aims

A

•provide a universal service to all UK households
•provide a service that the private sector may not be willing to provide
•merit goods raise society’s standards of living
•ensure effective provision of public goods

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13
Q

public goods and examples

A

goods that wouldn’t be provided in a free market system because businesses wouldn’t be able to charge for them
•defence, social protection- police, street lighting

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14
Q

public goods characteristics

A

•non-rivalry - the consumption of the good by one individual doesn’t reduce the amount available for others
•non-excludability - it is impossible to exclude others from benefiting from their use

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15
Q

merit goods and examples

A

goods that could be provided by the free market but policy makers recognise that they would be under-consumed, there are external benefits and are provided free from charge by the Government
•health, education, libraries, museums, roads

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16
Q

importance of public sector

A

•goods and services needed in everyday life and wouldn’t be provided by the private sector who want to make profit
•everyone benefits from them without paying for them

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17
Q

sole trader

A

owned and run by one individual but they may employ people

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18
Q

advantages of sole traders

A

•independence/own boss- quick decision making due to full control
•wants to develop skills
•increased rewards- to earn more
•privacy of business affairs- no legal requirement to share performance

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19
Q

disadvantages of sole trader

A

•unlimited liability
•more responsibility
•relies heavily on ability to make decisions
•may work long hours and have limited holidays
•limited sources of resources

20
Q

reasons to set up your own business

A

•financial reward
•independence
•personal satisfaction
•prefer to work alone
•interest
•may take over family business
•identifying gap in market
•lack of employment opportunities
•encouragement by external agencies

21
Q

partnerships

A

owned and run between 2-20 people

22
Q

Deed of partnership

A

A legal agreement setting out the rights and responsibilities of the partners:
•how much capital they’ll contribute
•how profits will be shared
•procedure of ending the partnership
•how much control each has
•rules for taking on new partners

23
Q

Advantages of partnership

A

•share resources and ideas
•can cover for each other
•have more sources of finance
•shared responsibility and decision making

24
Q

disadvantages of partnerships

A

•unlimited liability
•loss of control
•slow decision making
•disagreements between partners
•profits must be shared between partners

25
Q

private limited companies

A

often a small business- shares do not trade on the stock exchange

26
Q

advantages of LTD

A

•benefit of limited liability- can attract extra shareholders to invest
•control cannot be lost to outsiders- owners have to invite people to buy company shares
•continuity
•increased capital- selling shares

27
Q

disadvantages of LTD

A

•legal procedure in setting up takes time and money
•have to disclose the accounts- can be looked at by public/ competition
•profits have to be shared
•slower decision making

28
Q

public limited companies

A

•usually a large, well-known business- shares trade on the stock exchange

29
Q

advantages of PLC

A

•all shareholders maintain limited liability
•larger size means more market power
•huge amount of money raised from sale of shares to public on the stock exchange- can use to expand the business
•economies of scale
•greater dominance in the market
•often easier to raise finance- banks are more willing to lend

30
Q

disadvantages of PLC

A

•can be expensive to set up
•outside interests could take control
•greater divorce of ownership and control
•accounts can be inspected by public/ competitors
•have to publish more info
•greater size may lead to slower decision making
•time consuming to gain listing
•inflexible due to size

31
Q

charities

A

a non-profit organisation established with the aim of collecting money from individuals and spending it on a cause

32
Q

charities characteristics

A

•not established to make profits but can earn surpluses
•often have a narrow focus on what they want to achieve
•raise the majority of finances through voluntary donations

33
Q

social enterprises

A

include for-profit and not-for-profit businesses with primarily social objectives, trading for social and environmental purposes , whose surpluses are principally reinvested for that purpose in the business or the community

34
Q

social enterprises characteristics

A

•seek to survive, make profit and wish to grow
•distinctive as their social or environmental purpose is central to what they do- profits are reinvested to sustain and further their mission for positive change

35
Q

stakeholder

A

anyone with an interest in a business- individuals, groups or organisations that are affected by the activity of the business

36
Q

interests of owner/shareholders

A

how much profit the business makes

37
Q

interests of managers

A

concerned about their salary

38
Q

interests of employees/ workers

A

want to earn high wages, have job security and a nice working environment

39
Q

interests of customers

A

want the business to produce quality products at reasonable prices and to have a variety of products/ services to choose from

40
Q

interests of suppliers

A

want the business to continue to buy their products at a fair price

41
Q

interests of competition

A

what the business is doing, and to keep up with them

42
Q

interests of lenders

A

want to be repaid on time and in full

43
Q

interests of government

A

whether or not the business is operating within the constraints of the law; how many jobs its providing and how much tax they have to pay

44
Q

interests of trade unions

A

fight for the rights of their members and put pressure on the business to behave in a certain manner

45
Q

interests of the local community

A

employment, increased regional wealth, improved facilities and infrastructure

Business Component 1 (11 decks)

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