Business Structure AOS1 Flashcards
Define Business
An organisation where goods and/or services are sold for money.
Outline an advantage for businesses
- To make a profit.
- Fill a gap in the market.
Define sole trader
Business structure owned and operated by one person.
Outline an advantage for sole trader structures
- Simple and easy to set up.
- Owner keeps all the profit.
- Inexpensive to set up.
Outline a disadvantage for sole trader structures
- Unlimited liability.
- More difficult to gain finance.
Define partnership (Business structure)
Type of business structure owned by between 2 and 20 people.
Outline an advantage for partnership structure.
- Simple.
- Workload can be shared.
- Can provide more expertise
Outline a disadvantage for a partnership structure.
- Profits need to be shared.
- Unlimited liability.
Define company
A business structure, known as an incorporation that is owned by shares (Owners are called shareholders).
Define private limited company
An incorporated business owned by between 1 and 50 private shareholders.
Outline an advantage for having a private limited company structure
- Limited liability.
- Can control who invests in the company.
- More expertise.
- Separate legal entity.
Outline a disadvantage for having private limited company structures
- More complex structure.
- More reporting requirements to the government.
- Shares cannot be traded freely.
Define Public Listed company (Business structure).
Incorporated business whose shares are freely listed and traded on a public exchange.
Outline an advantage for having a public listed company structure
- Limited liability.
- Easy to raise capital.
Outline a disadvantage for having a public listed company structure
- Highly complex structure.
- Takes lots of time and money to establish.
Define social enterprise
Business that exists primarily to fulfill a social need that benefits a community not shareholders.
Outline an advantage for having a social enterprise structure
- Improve/maintain morale within the business.
- Improve business perception > reputation.
Outline a disadvantage for having a social enterprise structure
- Can be difficult to obtain finance (May rely on grants or donations).
- Can be hard to focus on a social need.
Define Government Business enterprise (Structure)
Business owned and operated by the government.
Outline an advantage for having a government business enterprise structure.
- May invest in areas others are hesitant to.
- Do not need to rely on making profits as the government funds them.
Outline a disadvantage for having a government business enterprise structure
- Can be politcal interfaces.
- Strategic directions can change with changing governments.
