Chapter 2, 4, 18 Flashcards
What is a sole trader?
When individuals establish and operate a business on their own. E.g. hairdresser, window cleaners
Advantages and disadvantages of sole traders
It’s easy to start and manage but it can involve a lot of work and no support
Pros of being a company
It can offer support through coworkers in tough situations and results in less work for the average employee
What does limited liability mean?
A company is responsible for the money it owes and the personal possessions of its owners are safe
Private limited companies “Ltd”
Smaller than public limited companies.
Ltd’s benefit from limited liabilities
Able to make more long term investments
The owners of the company agree to pay if it fails
Public limited companies “plc”
They get more investors
Access to capital (they can sell shares using stock exchanges)
They can take over other businesses
Unlimited liability
Market capitalisation
Total amount of shares sold x value of shares
Role of shareholders:
The more shares they have the more influence and percentage of the company they have
Influences on share prices
The company’s performance
Business environment
Four principle functions of management
Planning
Organising
Directing
Controlling
Pros and cons autocratic:
Can easily make decisions
Clear path of direction
Focused leader
Lacks relationship with employees
Lack of trust
System of dependence
Pros and cons democratic
Relationship with employees
Feel included in decision making
Effective communication
Less authority
Takes much longer to come to a decision
Can lead to procrastination
Laissez-faire
Workforce self motivated
Workforce agree with each other
Lack a sense of direction
Low authority over employees
