business structure Flashcards
1
Q
- what is the public sector made up of?
- give two examples
- why do we need the public sector?
A
- organisations owned and run by the government
- NHS, Police
- some goods and services we need in our everyday lives would not be provided by the private sector who are looking to make a profit.
-e.g. everyone benefits from street lighting
2
Q
1.what are public goods ?
- what are the 2 characteristics of public goods explained?
A
- goods that are only provided by the government
- non excludable: individuals cannot be prevented from enjoying the benefits of the provision of public g&s
- non rivalry: one person gaining from consumption of the g/s does not prevent others from also gaining from the g/s
3
Q
- what are merit goods?
- which sector provides these goods?
- give 3 examples
A
- goods that have positive externalities
- both sectors but the private sector wouldn’t supply enough
- -Public Library
- healthcare
- leisure centre
4
Q
- why does the public sector provide merit and public goods? (2)
A
- private companies wouldn’t provide g/s unless they’re making a profit
- not everyone is able to pay for these g/s so they would be underconsumed
5
Q
what are the aims of the public sector?
( 5 )
A
- to create a fair and just society
- provide quality service
- to spend tax payers money correctly
- to allow access to everyone
- to provide information
6
Q
- what is the private sector?
- what is a shareholder?
A
- organisations owned by private individuals or shareholders
2 a person who owns a share in a company and therefor gets dividends and the right to vote on how the company is controlled
7
Q
- what are the main aims of the private sector? and briefly explain
A
- to make a profit: profit maximisation and make a return on capital invested
- increase shareholder value: measured by the dividend paid and share price
- survival: more important in the shorter term and can include gaining customers and building a reputation.
larger business recession - gaining market share: gaining customers reduces profits in the short run but increases profits in long run
- improving ethics: some businesses look to minimise the impact of their activities on the environment or make sure their suppliers get a good deal
8
Q
- what is a sole trader?
A
- a business owned by one person that is the most popular form of business in the UK
9
Q
- what are the advantages of being a sole trader? (3)
- what are the disadvantages of being a sole trader? (4)
A
- easy to set up
- low costs due to simplicity of setting up and no legal formalities
- fast decision making
- easy to set up
- limited capital
- limited skills range
- single decision maker
- unlimited liability
10
Q
- what is a partnership?
- what are the rules of the partnership laid down in?
- what does the deed of partnership outline? (5)
A
- involves the joint ownership off a business, 2-20 people
- partnership agreement
- -shared profits of each partner
- roles and responsibilities
- voting shares
- what would happen if a partner were to die
- rules for dissolution of partnership
11
Q
- what are the advantages of a partnership (4)
- what are the disadvantages of a partnership? (5)
- what is a sleeping partner?
A
- wider range of skills
- greater availability of capital
- shared decision making
- reduced pressure
- limited capital still
- unlimited liability
-dissolution on death - potential strains
- conflict
- an individual who invests capital into a business but does not take an active role in its management or operations
12
Q
- what is a limited company?
- outline the characteristics of a limited company (3)
A
- company that has limited liability
- separate entity: business exists separately from shareholders
- employees are employed by LTD/ PLC
- any legal action is taken against the business and not the shareholders
13
Q
- what is an LTD
- what are the advantages of an LTD (4)
- what are the disadvantages of an LTD (3)
A
- private limited company: friends and family buy shares
- -limited liability
- capital can be raised by increasing shareholder number
- business continues if owner dies
- shares can only be sold if there is an agreement between shareholders
- other businesses and lenders are more likely to invest
- legal procedures in setting up increase costs
- profits are shared with shareholders
- public information on things such as finances would be available
14
Q
- what is a PLC?
- what are the advantages of a PLC?
- what are the disadvantages of a LTD?
A
- public limited company
- limited liability
- capital can be raised through selling shares to the public
- business continuity
- easier financing from banks and other lenders
- increased costs to set up
- legal requirements are increased
- loss of control as anyone can buy shares
- public accounts
15
Q
- what is a non-for-profit organisation?
- what are the aims of a non-for- profit organisation? (5)
A
- organisations that are not in the business for the money or maximise profits but to focus on social or ethical objectives
- customer satisfaction
- growth
- sustainability
- product development
- profit
