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Unit 6 > chapter 20 Business Organisations > Flashcards

chapter 20 Business Organisations Flashcards

1
Q

4 headings

A

formation
liability
finance
control

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2
Q

sole trader formation

A

start straight away in own name or register with CRO

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3
Q

CRO

A

Companies Registration Office

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4
Q

sole trader liability

A

unlimited

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5
Q

sole trader finance

A

limited to their savings or ability to access loans (can be difficult if theyre a new business with no history)

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6
Q

sole trader control

A

owner maintains total control and makes all decision

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7
Q

sole trader advs

A

easy/quick to set up
total decision making
keeps all profits
maintains privacy on accounts

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8
Q

sole trader dis

A

takes on all risks (personal and financial)
unlimited liability
may lack adequate capital
high work load (sole decision maker)

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9
Q

partnership formation

A

form LP1 must be completed for CRO

deed of partnership(contract) is signed

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10
Q

partnership liability

A

unlimited

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11
Q

partnership finance

A

2-20 partners can invest their savings plus loans

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12
Q

partnership control

A

decisions are shared by partners

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13
Q

partnership advs

A

risk and decisions shared

benefits from a range of experience/skills

access to more capital than sole trader

maintains privacy on accounts

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14
Q

partnership dis

A

unlimited liability

slower decision making (conflict)

partnership dissolved on death of partner

profits shared between partners

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15
Q

private limited company formation

A

must create a constitution
need to fill out form A1
CRO issues a cert of incorporation

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16
Q

private limited company liability

A

limited liability

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17
Q

private limited company finance

A

they can have up to 149 shareholders

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18
Q

private limited company control

A

1 share, 1 vote
shareholders can elect a board of directors,
bod appoints CEO who answers to the board

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19
Q

private limited company abbreviations

A

Ltd/CLS or DAC

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20
Q

private limited company advs

A

access to capital
limited liability
1 share, 1 vote
establishes a separate legal entity -bus not owners sued
continues existence upon death of a shareholder

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21
Q

constitution

A

name of company
statement stating company limited by shares
liability of shareholders are limited
rules and regulations for running the company
info available for public inspection

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22
Q

statutory meeting

A

1st meeting
constitution explained
share certs given to shareholders
vote on 1st BOD

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23
Q

companies act 2014

A

rules that companies must obey

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24
Q

CLS

A

Company Limited by Shares

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25
Q

DAC

A

Designayed Activity Company

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26
Q

memorandum of association

A

document completed setting out the relationship between the company and the general public. It includes the name of the company with Ltd after it

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27
Q

articles of association

A

document completed setting out the internal rules and regulations of the company. It describes the voting procedures for meetings

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28
Q

co-operative definition

A

members own the co-operative
common bond
business for their mutual benefit
worker/consumer/financial

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29
Q

co-operative formation

A

7+ members apply to the Registrar of Friendly Societies

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30
Q

co-operative liability

A

limited

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31
Q

co-operative finance

A

members receive a share of the profits in proportion to turnover

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32
Q

co-operative control

A

democratic structure

1 member 1 vote

33
Q

co-operative adv

A

limited liability
members have a say in the running of the business
common bond may not be profit-driven so good deals on loans

34
Q

co-operative dis

A 
profits shared
difficult to raise capital
everyone has a say regardless of capital invested
finances must be disclosed
complicated to set up
35
Q

PLC

A

public limited company

36
Q

plc formation

A

7+ shareholders

sell shares to the public

37
Q

plc liability

A

limited

38
Q

plc finance

A

can raise capital bu selling shares to public on tock exchange

39
Q

plc control

A

loss of control for original owners

40
Q

plc

A

stock exchange listing can boost exposure for the brand and can help attract top staff
easier targets for takeover bids because share price impacts the value of the company and that’s out of control for owners

41
Q

plc adv

A

limited liability
easier to raise capital
pay less tax on their profits than sole traders
attract a lot of media interest through newspapers and on TV which helps attract top employees

42
Q

plc dis

A

complicated to form
loss of control for original owners
open to hostile takeover as shares are public
expensive to sell shares

43
Q

semi-state bodies

A

state-owned enterprises that are technically commercially run, which benefits the Irish gvt (eg Dublin Bus, An Post, RTE, Bord Gais)

44
Q

semi-state bodies adv

A

employment

better standard of living

develop Irish economy- IDAs and foreign investment eg Dell and Intel, employment, pay taxes

profit, gvt receives money, ESB is successful

45
Q

semi-state bodies dis

A

might make a loss
not judged by profit- no incentive to reduce costs, tax payers money wasted

appointees are made by gvt, political reasons rather than expertise

large loans- gct cant give them money- EU comp policy

46
Q

Privatisation

A

sale of state-owned enterprises to the private sector
the sale raises money for the gvt but they then lose control over the service
eg Aer Lingus

47
Q

arguments for privatisation summarised

A
  • gvt revenue
  • reduced expenditure
  • efficiency
  • access to finance
  • industrial relations
  • competition
48
Q

arguments for privatisation

gvt revenue

A

large sum of money

335m for Aer Lingus

49
Q

arguments for privatisation

reduced expenditure

A

gvt won’t need to subsidise business

50
Q

arguments for privatisation

efficiency

A

state owned are perceived as inefficient as they rely on gvt funding

51
Q

arguments for privatisation

access to finance

A

take out loans

sell shares

52
Q

arguments for privatisation

industrial relations

A

job security

more likely to fo on strike when in the public sector

53
Q

arguments for privatisation

competition

A

reduce state monopoly
more competition
lower prices for consumers

54
Q

arguments against privatisation summarised

A
  • loss of state assets
  • increased unemployment
  • loss of control
  • profit motive/increased prices
55
Q

arguments against privatisation

loss of state assets

A

protect certain industries eg transport and water supply

56
Q

arguments against privatisation increased unemployment

A

loss of jobs due to rationalising

57
Q

arguments against privatisation

loss of control

A

end up with foreign investors

58
Q

arguments against privatisation

profit motive/increased prices

A

maximise profits

increase prices for consumers

59
Q

nationalisation

A

• when a privately rum business is taken over and run bu the state
• this happens when a business/industry cannot support itself
• the gvt deems it an essential service for citizens
• the gvt buys to save the business so that the services can be maintained
eg Angle Irish Bank in 2009

60
Q

franchising

A

involves the granting of a license by a franchiser to a franchisee entitling the franchisee to sell the product/service
the franchiser usually has a well establishes large and successful business with a good reputation and well-established name in the market

61
Q

franchise adv

A

• use a proven/successful business idea
• existing customer base, loyalty,
data on market
• benefit from economies of scale (advertising, raw materials)
• support/training/mentoring offered by franchisor

62
Q

franchise dis

A
  • more expensive: one-off payment of fee, the percentage of sales/profits
  • restricted innovation, limited range of offerings
  • restricted sales territories
  • risk of damage to brand’s reputation by other franchises
63
Q

evaluation of a franchisee

A

limitation on ability to make decisions
entrepreneurs are creative and adaptable
they get frustrated by no changes
eg can’t change the menu

64
Q

indigenous business

A

set up and owned by irish people
main place of business is Ireland
make products in Ireland eg Staffords

65
Q

importance of indigenous Firms in Ireland

A

1 firms have a high loyalty to Ireland
2 provide local benefits (eg purchase raw materials locally)
3 create entrepreneurial role models for young Irish residents
4 reduce our reliance on FDI (foreign direct investment)
5 increase Ireland’s export levels, if the companies sell abroad (improve balance of payments)

66
Q

Indigenous firms dis

A

1 sell at a higher price
2 Irish marketplace is limited in size
3 if Ireland gets a rep for supporting indigenous firms it may be a disincentive for foreign investment

67
Q

reasons to change organisation structure over time summarised

A 
liability
continuity
expansion
tax benefits
expertise
68
Q

reasons to change organisation structure over time

liability

A

move from unlimited to limited (eg sole trader to CLS)

69
Q

reasons to change organisation structure over time

continuity

A

company ceases to exist on death of owner in sole or partnership but not in Ltd/CLS

70
Q

reasons to change organisation structure over time

expansion

A

access to capital/ eg partnership can 2-20 investors, but Ltd/CLS can have up to 149 investors

71
Q

reasons to change organisation structure over time

tax benefits

A

Ltd/CLS pays 12.5% tax on profits, sole traders pay the same rates as PAYE employee (20-40%)

72
Q

reasons to change organisation structure over time

expertise

A

more owners bring more skills/ experience/ expertise, changing the structure allows this

73
Q

changing trends in ownership

A

• privatisation of state-owned businesses
raise cash for country to pay debts
10% of Dublin Bus Routes sold to Go Ahead in 2018

• Irish businesses are MNCs
small market,member of EU, freer world trade
eg primark or kerry group

• franchises are popular
lower risk eg starbucks

• popularity in alliances
share costs, resources, ideas, and customers

74
Q

Alliance

A

an agreement between 2+ businesses to pool resources or expertise to work together over a specified period of time or to complete a specified project, while all parties maintain their separate
eg Volkswagen and Microsoft

75
Q

Alliances adv

A
  • cost effective method
  • reduces risks
  • resources/expertise can be recruited
  • provides access to an extended business network and market
76
Q

alliances dis

A
  • disagreement
  • possible takeover
  • disclosure of knowledge
  • fewer alliance opportunities
77
Q

transnationals

A

mncs
•headquarters in 1 country and branches in many others
•produces goods in more than 1 country
operates on a worldwide scale
•treats the world as a single marketplace
can move operations from country to country in response to changing market conditions
eg Coca Cola or Microsoft

78
Q

transnationals adv

A
  • tax revenue for gvt
  • positive spin off effects
  • direct employment
  • positive impact on the BOT
79
Q

transnationals

A
  • footloose
  • repatriation of profits
  • pressure on gvt
  • fewer alliance opportunities

Unit 6 (5 decks)

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