CH1: Business organisations

Question 1

Definition: microeconomics

Answer 1

Deals with decisions made at the level of the company based on the type of organisation and their market

Question 2

Definition: macroeconomics

Answer 2

Considers the impact of governmental decision on the economy

Question 3

Definition: Economics

Answer 3

Concerns the allocation of scarce resources (e.g. gov budget, people, raw materials)

Question 4

Definition: Organisation

Answer 4

A group of people organised and managed in a way that aims to follow a corporate goal or need.

note. it also has a clear structure and standardised systems/processes, and need management to control them.

Question 5

Definition: sole trader

Answer 5

a single person business where this person performs every role

Question 6

Benefits of an organisation vs. sole trader?

Answer 6

organisations make it easier to share; ideas, knowledge, experience, skills and resources, and hence achiever more than someone working alone

Question 7

What are features or Private sector organisations?

Answer 7

Owned by investors
Responsible to shareholders
May be run for profit or not profit

Question 8

What are features or Public sector organisations?

Answer 8

Owned by the state
Responsible to the government 
Generally not run for profit
Don't have shareholders
May provide goods and services for the country as a whole

Question 9

Definition: Non Governmental Organisation (NGO)

Answer 9

is a PRIVATE sector organisation which is NOT run for profit, but focuses on other goals such as ethical standards e.g. Oxfam

Question 10

What further groups are private sector profit seeking organisations split into?

Answer 10

Incorporated and unincorporated

Question 11

Definition: unincorporated organisation

Answer 11

When the business owners and the business hold the same legal identity.

Note. the owners are held personally liable for the business’s debts: they have UNLIMITED liability

Question 12

What are the 2 types of unincorporated organisations?

Answer 12

1) Sole trader - wholly liable for the debts

2) Partnership -jointly liable for the debts

Question 13

Definition: incorporated organisation

Answer 13

When the business owners and the business have separate legal identities

Note. the owners are not personally responsible for the business’s debts: they have LIMITED liability.

Question 14

What are the 2 types of incorporated organisations?

Answer 14

Private limited company (Ltd)

Public limited company (PLC)

Question 15

What are features of a PLC?

Answer 15

Shares can be issued to the public and traded on the stock exchange

Owners risk losing control by selling stake to the public

Large number of shareholders to report to and additional regulations to comply with

Tend to be larger companies which have issued shares to fund business ventures

Question 16

What are features of Ltd companies?

Answer 16

Shares cannot be issued to the public

Owners retain a high degree of control of the business

Small number of shareholders to report to

Tend to be smaller companies e.g. market town retailers

Question 17

What are features of Co-operatives?

Answer 17

Co-operatives are owned and controlled by the MEMBERS rather than shareholders.

The WELFARE of members is a key GOAL (i.e. prioritise this over profits). Members may be CUSTOMERS or STAFF. e.g. John Lewis.

It also aims to make profits for its members.

Question 18

What are features of Mutual organisations?

Answer 18

Owned and controlled by members rather than shareholders.

members tend to be CUSTOMERS and they tend to focus on FINANCIAL products e.g. mutual building societies such as UK’s Nationwide

Question 19

In terms of Economics, what are considered as scarce resources?

Answer 19

• Government’s budget
• The POPULATION
• An individual’s income
• Fossil fuels

Question 20

Why might some people choose to put their money into a building society vs. an alternative kind of financial organisation?

Answer 20

1. building societies are run for the benefits of their members (who tend to be customers)
2. building societies will redistribute any trading surplus through the features of their products