CH2 - Business Structure Flashcards
What are PLCs ?
PLCs - Public Limited Company
A company that offers shares to the public, owned by the government
What are the forms of business?
Sole Trader
Partnership
LTDs (Private limited company)
PLC (Public limited company)
Franchise
Co-operative
Key features of a PLCs
Company sells can shares on the stock market (to the public)/ Limited liability, they have a separate legal identity (entity- registered by companies house)
Advantages and Disadvantage of a PLC
Advantages :
Shareholders have limited liability, Have the ability to raise share capital (by selling shares on the stock market)
Disadvantages :
Shareholders expect dividends, have more complex accounts as the finances have to be made public
What is a sole trader?
A single person who has unlimited liability (self-employed - one person owns)
Advantages and disadvantages of a sole trader
Advantages:
They work locally and keep all profits, Easy to set up and low cost (just go to HMRC)
Disadvantages:
Hard to raise capital, all decision go through one person
NO Separate legal identity - Unlimited liability
What is a Partnership?
Formal agreement between two or more people sign deed of partnership
Advantages and disadvantages of a partnership
Advantages:
More people to share duties
Disadvantages:
Share profit
Arguments can slow down business (could lose business)
Unlimited liability
What is a Private Limited Company?
Advantages and disadvantages of an LTD
Advantages:
Owned by private people - become shareholder
Don’t sell shares on stock market only private
Limited liability (registered on companies house)
Profits gotten through dividends (as owner is shareholder)
Permission to sell shares have to be given by all shareholders (invited)
Disadvantages:
Loss of control, publish accounts
What is a Franchise ?
Buying into an existing brand, advice, training as well as the already established brand.
Advantages and Disadvantages of a Franchise
Advantages:
People can buy the uses of companies (licenses) - can uses the trademarks and knowledge of a business
Gain benefits of business
Disadvantages:
Hard to start up - find a franchise you want to work with
Expensive to set up
No free reign
What is a co-operative?
A group of business which join together to benefit from the economies of scale.
What is a public co-operation?
Business owned by the government
“Work together to make things better”
What is Industrialisation ?
Growing industry in a country
Benefits and Drawbacks of Industrialisation
Benefits of industrialisation:
Creation of new jobs, upskilling workers
Growth of country’s economy
Technological development
Drawbacks of industrialisation:
Environmental damage
Quality of life change - Good/Bad?
What is De-industrialisation ?
The fall in industry in a country
Benefits and Drawbacks of De-industrialisation
Benefits of de-industrialisation:
Increase of job opportunities in the service industries (Tertiary and quaternary sector)
Environmental benefits
Drawbacks of de-industrialisation:
Not up-skilling workers
Decrease in job opportunities in manufacturing
Job losses in agricultural, manufacturing
Urbanisation is?
Urbanisation (movement of people towards towns and cities)
What is a social enterprise?
A business whose primary purpose is to create social or environmental impact aside from generating profits
Profits are usually invested back into the business
Example of a social enterprise
Warby Parker - an eyewear company which donates a pair of glasses to someone in need for every pair sold
What is a Joint Venture?
A way of expanding into a foreign market, which can benefit the creation of jobs, branding, markets etc
Example of a Joint Venture
Volkswagen-China (1978)
What is a Holding company?
A company which owns many other companies in its portfolio
Sources of Finance for a company with Unlimited Liability
Investors :
Peer to Peer lending
Crowd Funding
Suppliers :
Leasing
Trade Credit
Bank :
Mortgage
Overdraft
Unsecured Loan
Internal :
Retained Profit
Personal Savings
External Bodies :
Grants
Sources of Finance for a company with Limited Liability
Investors :
Venture Capitalists
Business Angels
Internal :
Retained Profit
Debentures
Share Capital
What is the primary sector?
Raw materials
What is the Secondary Sector?
Manufacturing
What is the Tertiary sector?
Service
What is the Quaternary Sector ?
Pharma companies / Development
