business structure Flashcards
what are the two different sectors in business?
- private sector
- public sector
what is the private sector?
- In the private sector, businesses are operated and owned by private individuals and companies.
- Private sector businesses are generally run “for profit” – to earn returns for the business owners (e.g. shareholders).
what is the public sector?
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
What are the aims of a business
The long-term intentions that provide a
focus for setting objectives.
What are the objectives of a business
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.
what are goods
- items produced by the conversion
of raw materials into finished products by the secondary sector. They are tangible/physical products, e.g. a car.
what are the aims of the private sector
- survival
- profit maximisation
- maximizing growth
- gaining market share
- improving reputation
- competitiveness.
what are the aims of the public sector
- 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
what are public goods
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
what are merit goods
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
what are sole traders?
business’ owned and run by one individual but they may employ people.
benefits of being a sole trader
- Retention of Profits
- Full Control
- -Simple Setup
- Flexibility
- Privacy
negatives of a sole trader
- 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
what are partnerships
Owned and run between 2–20
people.
what are the benefits of partnerships
- 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.
negatives of partnerships
- unlimited liability
- loss of control
- slow decision-making
- disagreements between partners
- profits must be shared between partners
what are private limited companies?
- A Private Limited Company is a type of business owned by a small group of people
- where the owners (shareholders) have limited liability.
advantages of private limited companies
- 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.
negatives of a private limited company
- 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
what are public limited companies
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.
what are the negatives of public limited companies
- Loss of Control
- Vulnerability to Takeovers
- High Costs
- competitors have access to documents
what are social enterprises
A social enterprise is a business that aims to make a profit so they can reinvest into the community
what are stakeholders?
A stakeholder is anyone with an interest or affected by the business.
what are the main stakeholders
- 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
