Chapter 1: The Business Organisation

Question 1

What are the three collective goals of all organisations?

Answer 1

1. Collective goals
2. Social arrangements
3. Controlled performance

Question 2

What are the three things that organisations enable people to do and what does this result in?

Answer 2

1. Share skills and knowledge
2. Specialise
3. Pool resources

Resulting in synergy

Question 3

Define ‘For- profit’ organisations

Answer 3

Businesses whose primary goal is making a profit

Question 4

Define ‘For- profit’ organisations

Answer 4

Businesses whose primary goal is making a profit

Question 5

Name the three types of ‘for-profit’ organisations and define each

Answer 5

1. Sole traders - owned and run by one person. The owner is not legally separate from the business and therefore responsible for debts
2. Partnerships - owned and run by two or more individuals. The partners are not legally separate unless they are an LLP
3. Limited liability company - the company has a separate legal identity to its shareholders. The owners liability is limited to what they have invested

Question 6

Name the two types of limited company, define and give an example for each

Answer 6

Private limited company (Ltd) - shares cannot be offered to the public e.g Google

Public limited company (plc) - shared can be offered to the public e.g Cineworld

Question 7

Give examples of NFP organisations (not for profit)

Answer 7

Hospitals, councils, charities, schools

Question 8

What is the difference between the public and private sector?

Answer 8

The public sector is controlled by the government (police, public transport) whereas the private sector is run by individuals (businesses, charities and clubs)

Question 9

Define an NGO (non-governmental organisation)

Answer 9

An NGO does not have profit as its primary goal and is not linked to the government. They often promote environmental change. E.g The Red Cross

Question 10

Define co-operatives

Answer 10

Co-operatives are owned and controlled by members - each member gets to vote on key decisions and gets a share of the profit

Question 11

Name and define the two main types of external finance

Answer 11

Debt - borrowing cash from a third party and repaying at a later date

Equity - selling a stake in the business to raise cash

Question 12

Define working capital

Answer 12

The money available to organisations to pay for day-to-day activities