chapter 1

Question 1

enterprise process definition

Answer 1

the various stages involved in starting and running an enterprise

Question 2

enterprises process

Answer 2

identifying the problem, need or want-thorough research for the market need
exploring creative solutions-
action planning-breaking goals down into tasks, setting timescales and milestones
implementing the plan- all activities must be carried out efficiently, effectively, and lawfully
monitoring progress- to make sure everything is going according to plan.
evaluation of success and failures- reviewing final outcomes, to come up with suggestion for improvements in the future

Question 3

sole trader

Answer 3

a business that is owned and run by just one person though it may employ staff. it is an unincorporated business in which owner has unlimited liability for the business.

Question 4

unincorporated business

Answer 4

a business that does not process a separate legal identity from its owner. the owner(s) have full liabilty for the business

Question 5

unlimited liability

Answer 5

shareholders/owners are liable for all the debts of their organisation and stand to lose their investment as well as personal assets if the business goes into debt.

Question 6

advantages of being a sole trader

Answer 6

c-heap, quick and simple to start (less legal documents and legal formalities)
-the owner can keep all the profits
-the owner can make his/her own decisions and has full control of their business.

Question 7

disadvantages of being a sole trader

Answer 7

-the owner is fully responsible for all the debt, also known as unlimited liability
-it is difficult to raise finance, so often owner has to rely on personal savings

Question 8

partnership

Answer 8

a business that is owned by two or more people, known as the partners. this sort of business organisation is unincorporated and so the partners have unlimited liability.

Question 9

advantages of partnerships

Answer 9

cheap, quick and simple to start. (less documentations)
the partners can keep all the profits
the partners have full control of their business
the decision-making and workload is shared.

Question 10

disadvantages of partnerships

Answer 10

-the partners are fully responsible for all debt (unlimited liability)
-it is difficult to raise finance, so often entrepreneurs have to rely on personal savings
-disagreements and conflicts between partners can slow down the business
-the decision made by one partner is legally binding on all the others.

Question 11

limited company

Answer 11

an incorporated business that is a separate legal entity from its owners.

Question 12

private limited company

Answer 12

the shares of a private limited company are usually held by friends and family so there are so small numbers of shareholders

Question 13

public limited company

Answer 13

shares offered to and often owned by the public and other organisations

Question 14

limited liability

Answer 14

shareholders/owners are only liable to pay or lose the amount they have invested

Question 15

advantages of limited company

Answer 15

-the shareholders have a limited liability
-it is easier to raise finance than it is for sole traders and partnerships as they can sell their company’s shares
-since the company is a separate unit from the owners, it will continue to exist even if one of the owners leaves or dies.

Question 16

disadvantages of a limited company

Answer 16

not so easy to set up as there are a lot of legal formalities, rules and regulations
-the original owners may lose control of the business as shares are sold to the public
-the accounts of the company have to be published for the public to see

Question 17

co-operative

Answer 17

a type of business organisation that is owned and managed by people who use its services or who work there.
consumer co-operative- owned by consumers who buy the goods and or services
producer co-operative- owned by producers of goods who have come together to sell their goods
worker co-operative- run by employees

Question 18

advantages of co-operative

Answer 18

democratic
the members work together, fewer chance of conflict as they share a common interest
the owners/shareholders have limited liability
get some sort of tax relief from the gov.
are treated as separate legal units and so the death of a member does not affect its community

Question 19

disadvantages of co-operative

Answer 19

difficult to raise finance as they cannot issue shares
accounts have to be made necessarily have the required skills to run the business, hire prof

Question 20

franchise

Answer 20

a from of business organisation that allows a company (franchisee) to buy the right to use an existing company’s (franchisor) brand name and products/service

Question 21

advantages of franchises

Answer 21

franchisee greater chance of success as they are selling a well-known product service
the franchisor might provide help (training, advice)
the franchisor may do some advertising on a national scale to reduce the franchisee’s costs
easier to gain loan from the bank, as the business is low-risk

Question 22

disadvantages of franchises

Answer 22

the franchisee will pay a liscense fee and % of the revenue to the franchisor
initial costs of setting up a franchise business is high
the franchise will not have full control over how much he can run his business as he will follow controls set by the franchisor

Question 23

not-for-profit enterprises
(social enterprise)

Answer 23

are directly involved in producing goods or providing services, but not in a socially responsible way
sell products or services to reinvest into the business that benefits the community and not-for-profit max. of its owners/shareholders
generate their own income
aim is to improve social conditions

Question 24

charities
(social enterprise)

Answer 24

raise money by doing fundraising activities and collecting donations
provide quick solutions to immediate disasters/adversity and their impact is short lived

Question 25

advantages of social enterprises

Answer 25

comitted employees- people feel the need to help
job satisfaction is high as they have made a difference
bring a positive change to people and communities

Question 26

disadvantages of social enterprises

Answer 26

social enterprises may be less competitive in the market due to limited capital