Business Structure Flashcards
what is the public sector?
- business activity that is owned/ran by the government for the benefit of everyone
what is the importance of the public sector?
- things like street lighting wouldnt be provided by the private sector who are looking to make a profit
- we all benefit from them without paying for them
what are 3 aims of the public sector?
- provide a universal service to all UK households
- provide a service that the private sector may not be willing to provide as it may not be profitable to do so
- provision of merit goods to raise societys standard of living
what is the private sector?
- businesses that are set up by individuals or groups of individuals
what are 4 aims of the private sector?
- survival
- profit maximisation
- gaining market share
- maximising shareholder value
what is the difference between aims and objectives?
- aims are long term
- objectives are medium to long term
what is a service?
- intagible
- a task performed in return for payment
what are goods and different types?
- tangible products
- consumer goods: used by the consumer
- producer goods: bought by another business and used to help make other goods
- single use
- durable
what are public goods and their 2 characteristics?
- goods that wouldnt be provided in a free market system because businesses wouldnt be able to charge for them
1. non-rivalry
2. non-excludability
what are merit goods?
- goods that could be provided by the free market but policy makers recognise they would be underconsumed
what are sole traders?
- owned and run by 1 individual but they may employ people
what are 2 pros and 2 cons of being a sole trader?
+ independence
+ privacy of business affairs
- unlimited liability
- responsibility
identify 3 reasons why someone may want to set up their own business
- financial reward
- independence
- identifying a gap in the market
what is a partnership?
- owned and run by 2-20 people
what is the deed of partnership?
- a legal agreement setting out the rights and responsibilities of partners
what are 2 pros and 2 cons of partnerships?
+ shared responsibility
+ shared ideas and resources
- unlimited liability
- loss of control
what are 3 arguments in favour of becoming a partnership?
- new skills
- shared workload
- potentially more capital
what are 3 arguments against becoming a partnership and staying as a sole trader?
- maintain independence
- avoid arguments
- keep profits
what is an LTD?
- private limited company
- often a small business
- shares do not trade on the stock exchange
what are 2 pros and 2 cons of LTDs?
+ limited liability
+ control cant be lost to outsiders
- have to disclose the accounts
- shared profits
what is a PLC?
- public limited company
- usually a large, well known business
- shares trade on the stock exchange
what are 2 pros and 2 cons of PLCs?
+ limited liability
+ huge amounts of money can be raised from stock exchange
- have to publish more info that LTDs
- loss of control
what are 3 reasons for becoming a PLC?
- brand recognition
- easier to gain loans
- large amounts of money can be raised through stock exchange
what are 3 reasons to remain an LTD?
- remain in control
- preserve customer relationships
- keep additional accounts private
what are 2 pros and 2 cons of moving prom a sole trader to an LTD?
+ more capital available
+ limited liability
- need to publish accounts
- less control
what are charities?
- non-profit making organisations established with the aim of collecting money from individuals and spending it on a cause
what is a social enterprise?
- for-profit and not-for-profit businesses with social and environmental objectives
- surpluses are mainly reinvested for that purpose
what are stakeholders?
- anyone with an interest in a business
- individuals, groups or organisations that are affected by the activity of the business
who are shareholders?
- owners of a limited company
