Companies Flashcards
What is unlimited liability?
When the owners of a business are personally liable for any debts which the business may have.
What is limited liability?
When the liability of the owners of the business, the shareholder, to pay off its debts is limited to the amount of money which they have invested in the business when buying shares.
What’s a shareholder?
Anyone who has invested in the business.
What’s a business plan?
A document which puts together all the information showing how a business might survive in a competitive world.
What’s a brand?
A design, name or symbol which differentiates a product from competition and allows customers to identify it easily e.g. Nike, McDonald etc.
What’s a sole trader?
Any business that is owned and controlled by one person despite having employees.
They tend to be specialists in a service e.g. Photographers, plumbers etc.
It’s easier to set up and you have the freedom to make decisions however they have responsibility and unlimited liability.
What’s a partnership?
A business owned by 2 or more people
Professionals who may go into partnerships can benefit from shared expertise.
E,g, doctors, dentists etc.
The benefit from shared experience and a second opinion however there may be disagreements and they have unlimited liability.
What’s a private limited company?
An ltd is often a small business such as independent retailers in a market town.
They don’t trade on the stock exchange and profits are shared proportionally amongst shareholders.
E.g. New look, book ends etc.
They have limited liability but it’s growth may limit to the number of shareholders and shares can’t be sold without the agreement of other shareholders.
What’s a public limited company?
A plc is often a larger, well known business.
It shares trade on the stock exchange and is available to the general public.
E.g. Microsoft, McDonald, Facebook etc
They have limited liability and can raise a large capital sum since there’s no stakeholder limit and profits are shared among more people, overall ownership is lost and decisions may take longer.
How could a sole trader raise finance?
Bank loans
Friends and family
Personal savings
What’s a deed of partnership?
A legal document which will stop partners from falling out and having disagreements over the basic business rules which is considered a disadvantage of partnerships.
What’s an advantage of a sole trader registering to an ltd?
An advantage of a sole trader registering themselves to a private limited company is that they will only be partially liable for debt and so gain limited liability.
This is an advantage as they don’t have to pay for all of the debt themselves and so won’t be at risk of losing their own possessions e.g. Their home.
An example could be that, if a mechanics opened up as a sole trader and couldn’t pay off the debt, the sole trader would risk losing their home but, as an ltd, he’d only have to pay back what he put in so there’s a reduced risk.
Adv and dis of forming a limited company
Advantages
Limited liability
Company has it’s own legal personality
Raising money by selling shares
Disadvantages
Expensive to set up
Company information must be published yearly
Ownership is diluted
What documents must be filled out when forming a limited company?
The memorandum of association and articles of association.
Why choose to be a plc instead of a private limited company?
A plc can make money by selling their shares.
What is customer service?
Customer service is the experience a customer gets when using products made by the business. Satisfied customers make repeat purchases and recommend the product to friends, leading to additional word-of-mouth sales.
Customers want to buy goods and services that meet their needs at a price they can afford. For example a café thrives when friendly staff serve tasty, well made meals, in generous portions, at competitive prices.
The minimum standard required to meet a customers expectations.
Good customer service is all about exceeding customers’ expectations to give customers a positive experience that brings them back I me and time again.
What’s quality?
Meeting the minimum standard expected to satisfy customer needs. High quality products will meet and even exceed expectations.
How can customer service be improved?
Training so that staff understand their role and responsibilities. For instance, asking every customer if they are happy with their meal.
Innovation or introducing new ideas and methods.
For example, altering the menu every three months keeps customers interested and helps a café to stay one step ahead of the competition.
Listening to customers helps a business adjust its products to better match consumer needs and respond to any problems.
What are the main methods of managing quality during production?
Quality control
Quality assurance
Quality culture
What’s quality control?
The checking of a good or service at the end of the production process (before it’s delivered to a customer).
It relies on the inspection process.
It’s more detection than prevention.
This ensures it meets minimum standards.
Pros and cons of quality control
Pros: Cheaper in the short run Quicker More productive Only an an inspector
Cons:
More wastage
More expensive in the long run
More defects - lower quality
What’s quality assurance?
The checking of a product or service at each stage of its production / while travelling along the production line.
Every member of staff has the role and responsibility for quality and relies upon self-checking, this the business can assure the customer that the product is high quality.
Pros and cons of quality assurance
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What’s a brand?
A design, name or symbol which differentiates a product from competition and allows customers to identify it easily e.g. Nike, McDonald etc.
What’s a sole trader?
Any business that is owned and controlled by one person despite having employees.
They tend to be specialists in a service e.g. Photographers, plumbers etc.
It’s easier to set up and you have the freedom to make decisions however they have responsibility and unlimited liability.
