Business structure

Question 1

What are private sector businesses ?

Answer 1

Businesses that are owned by individuals, from smaller businesses to large multinational companies owned by individual shareholders

Question 2

What are public sector businesses ?

Answer 2

Businesses owned by the government

Question 3

What do the aims of private sector businesses depend on ?

Answer 3

Stakeholders

Question 4

What are the 8 aims of private sector businesses ?

Answer 4

1. Survival
2. Profit maximisation
3. Sales maximisation
4. Market share
5. Cost efficiency
6. Employee welfare
7. Customer satisfaction
8. Social objectives

Question 5

What is survival ?

Answer 5

Ensure its continuing existence, likely for new businesses

Question 6

What is profit maximisation ?

Answer 6

Producing level of output that generates the most profit

Question 7

What is sales maximisation ?

Answer 7

Achieving highest amount to sales revenue is most important

Question 8

What is market share ?

Answer 8

Focus on capturing as many customers as possible

Question 9

What is cost efficiency ?

Answer 9

Trying to reduce expenses to lowest level possible

Question 10

What is employee welfare ?

Answer 10

Tries to ensure wellbeing & safety of employees

Question 11

What is customer satisfaction ?

Answer 11

Needs & wants met as much as possible

Question 12

What are social objectives ?

Answer 12

Tries to ensure it has maximum positive impact on society & environment

Question 13

How do aims in the private & public sector differ ?

Answer 13

Public sector = profit not often seen as something an organisation wishes to achieve

Question 14

What are 3 features of public sector organisations ?

Answer 14

1. Non-excludability
2. Non-rivalry
3. Merit goods

Question 15

What is non-excludability ?

Answer 15

Goods & services are for any person who needs them

Question 16

What is non-rivalry ?

Answer 16

One consumer using product or service does not stop other consumers using same product or service

Question 17

What are merit goods ?

Answer 17

Product or service offered to society on basis of how deserving it is of public finance

Question 18

What are 5 aims of the public sector ?

Answer 18

1. Transformation of the economy
2. Balanced regional development
3. Providing range of services for society
4. To allow people to live safely & securely
5. Regulate markets that private sector businesses operate in to benefit society

Question 19

What are 4 roles of public sector businesses ?

Answer 19

1. Provide essential services
2. Prevent customer exploitation
3. Avoid duplication of resources
4. Protects jobs & industries

Question 20

What are 3 roles of private sector businesses ?

Answer 20

1. Provide more efficiency than state-run businesses
2. Allow higher prices
3. Move away from public sector

Question 21

What is a sole trader ?

Answer 21

Business with a single owner

Question 22

What are 3 advantages of a sole trader ?

Answer 22

1. Quick & easy set up
2. Simple to run with control
3. Minimal paperwork

Question 23

What are 4 disadvantages of a sole trader ?

Answer 23

1. Unlimited liability
2. Harder to raise finance
3. Higher tax
4. Business suffers if owner is ill

Question 24

What is a partnership ?

Answer 24

Business owned by 2+ people who share everything

Question 25

What are 4 advantages of a partnership ?

Answer 25

1. Can limit effects of unlimited liability through partnership agreement 2. Easier to raise finance 3. Workload shared 4. Partners have full control

Question 26

What are 3 disadvantages of a partnership ?

Answer 26

1. Unlimited liability 2. Slower decision making 3. More expenses = create & stick to partnership agreement

Question 27

What is a private limited company ?

Answer 27

Selling shares to family & friends

Question 28

What are 4 advantages of a private limited company ?

Answer 28

1. Limited liability 2. Easier to raise finance 3. Exists as separate legal person 4. Possible to pay less tax

Question 29

What are disadvantages of a private limited company ?

Answer 29

1. Financial information public 2. More expensive procedures

Question 30

What is a public limited company ?

Answer 30

Selling shares to the general public through the stock market

Question 31

What is the stock market ?

Answer 31

A market where shares are bought & sold by the public

Question 32

What are 3 advantages of a public limited company ?

Answer 32

1. Limited liability 2. Raise larger sums of money 3. Gain large media coverage = more investment

Question 33

What are 3 disadvantages of a public limited company ?

Answer 33

1. Cant control who buys & sells shares 2. Increase in cost of meeting legal obligations 3. Outside investors able to disagree & change the way business is run

Question 34

What is a social enterprise ?

Answer 34

Aim is to reinvest profits into the business or community

Question 35

What is a charity ?

Answer 35

Organisations set up to provide help & raise money for those disadvantaged in society

Question 36

What is a cooperative ?

Answer 36

Business or organisation run by people who work for it & owned by people who use it

Question 37

What is a friendly society ?

Answer 37

Set up to help members with different issues

Question 38

What is unlimited liability ?

Answer 38

Personal possessions of owners are at risk from being seized if business cannot pay debts

Question 39

What is limited liability ?

Answer 39

Personal possessions of the owner are not at risk of being seized if business debts cannot pay its debts

Question 40

What are the factors affecting the legal structure of a business ?

Answer 40

1. Type of business being considered 2. Not wishing to expand 3. Amount of risk & borrowing money 4. High start up costs 5. Whether the business will continue regardless of situation

Question 41

What are internal stakeholders ?

Answer 41

Groups within a business

Question 42

What are external stakeholders ?

Answer 42

Groups outside a business

Question 43

What are the 3 impacts of a sole trader on stakeholders ?

Answer 43

1. Owner = all risks & earns all rewards 2. Suppliers & investors = financial risks due to low financial security & unlimited liability 3. Customers = tailored products & services

Question 44

What are the 3 impacts of a partnership on stakeholders ?

Answer 44

1. Partners = share burden of running business 2. Customers = range of products & services 3. Employees = wider pool of skill

Question 45

What are the 3 impacts of a private limited company on stakeholders ?

Answer 45

1. Owners = limited liability, more capital 2. Customers = better customer service 3. Shareholders = not sold publicly, less finance

Question 46

What are the 3 impacts of a public limited company on stakeholders ?

Answer 46

1. Owners = can hire experts to run various part of organisation 2. Shareholders = less say in how business is managed 3. Customers = less flexible in tailoring product or service

Question 47

What are the 3 impacts of a cooperative on stakeholders ?

Answer 47

1. Employees & customers = have say in how business performs 2. Employees = can be flexible to cater for needs 3. Customers = better customer service