business structure

Question 1

what are the two different sectors in business?

Answer 1

• private sector
• public sector

Question 2

what is the private sector?

Answer 2

The private sector includes all these businesses that are set up by individuals or groups of individuals, e.g. sole traders, partnerships, companies, charities
and cooperatives.

Question 3

what is the public sector?

Answer 3

The public sector is essentially business
activity that is owned/run by the government for the benefit of everyone,
e.g. army, police force, schools, hospitals

Question 4

What are the aims of business’s

Answer 4

The long-term intentions that provide a
focus for setting objectives.

Question 5

What are the objectives of a business

Answer 5

The medium to long-term targets
that can give a sense of direction to a manager, department or the whole organisation e.g. boost
market share from 8% to
10% within the next 3 years.

Question 6

what are goods

Answer 6

• items produced by the conversion
  of raw materials into finished products by the secondary sector. They are tangible/physical products, e.g. a car.

Question 7

what are the aims of the private sector

Answer 7

• survival
• profit maximisation
• maximizing growth
• gaining market share
• improving reputation
• competitiveness.

Question 8

what are the aims of the public sector

Answer 8

• provide a universal service to all UK
  households wherever they are located
• provide a service that the private sector may not be willing to provide as it may not be profitable to do so
• Provide merit goods to raise society’s
  standard of living

Question 9

what are public goods

Answer 9

Public goods are goods that would
not be provided in a free market system
because businesses would not be able to charge for them. e.g. street lighting, flood control, lighthouses

Question 10

what are merit goods

Answer 10

Merit goods are goods that could be
provided by the free market but policymakers recognise that they would be under-consumed. e.g. museums, libraries, roads

Question 11

what are sole traders?

Answer 11

business’ owned and run by one individual but they may employ people.

Question 12

benefits of being a sole trader

Answer 12

• Retention of Profits
• Full Control
• -Simple Setup
• Flexibility
• Privacy

Question 13

negatives of a sole trader

Answer 13

• unlimited liability
• more responsibility
• relies heavily on their ability to make
  decisions
• may work long hours and have limited
  holidays as there is no one to cover them
• limited sources of resources

Question 14

what are partnerships

Answer 14

Owned and run between 2–20
people.

Question 15

what are the benefits of partnerships

Answer 15

• can share resources and ideas
  can cover for each other (during holidays for example)
• have more sources of finance
• have shared responsibility and decision-making.

Question 16

negatives of partnerships

Answer 16

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

Question 17

what are private limited companies?

Answer 17

Often a small business. Shares do
not trade on the stock exchange.

Question 18

advantages of private limited companies

Answer 18

• The benefit of limited liability
• Can attract extra shareholders to invest
  because of limited liability.
• Control cannot be lost to outsiders
  – the ability to sell shares can generate the capital needed to expand the business.

Question 19

negatives of a private limited company

Answer 19

• Legal procedure in setting up takes time and costs money.
• Having to disclose the accounts
• Profits have to be shared with the other
  shareholders.
• Slower decision-making

Question 20

what are public limited companies

Answer 20

A Public Limited Company is a business with shares that can be sold to the public on the stock exchange, and shareholders have limited liability, meaning they only risk the amount they invested.

Question 21

what are the negatives of public limited companies

Answer 21

• Loss of Control
• Vulnerability to Takeovers
• High Costs
• competitors have access to documents

Question 22

what are social enterprises

Answer 22

A social enterprise is a business that aims to make a profit so they can reinvest into the community

Question 23

what are stakeholders?

Answer 23

A stakeholder is anyone with an interest or affected by the business.

Question 24

what are the main stakeholders

Answer 24

• Owner/Shareholder – they are interested in how much profit the business makes.
• Managers – they are concerned about their salary.
• Employees /workers – they want to earn high wages, have job security and a nice working environment.
• Customers – they want the business to produce quality products at reasonable prices
• Suppliers – want the business to continue to buy their products at a fair price.
• Competition – they have an interest in what the business is doing.
• Financiers/Lenders – want to be repaid on time and in full.
• Local Community – they have a stake in the business as employers of local people. Business activity also affects the local environment.
• Government – they are concerned with
  whether or not the business is operating within the constraints of the law