Component 1 Booklet 2 Flashcards
What are the aims of a public sector business?
- to provide services to the public
- to benefit society
- to improve efficiency
Examples-street lighting,the army,the police
What are Public Goods?
Good and Services which must be provided collectively because:
- Non excludability-Goods can’t only be used by those who have paid for it
- Non rivalry in consumption-the amount consumed by one person doesn’t reduce the availability of it to another
Example-Street lighting
What is a partnership?
- Were more than one person owns the business
- Can be anywhere between 2-20 partners
- majority have unlimited liability
What is a Deed or Partnership?
A document that sets out the rules of partnership.
It can include:
•amount of capital each partner will invest
•How profits are shared
•methods of leaving the partnership
What is a Public Limited Company?(PLC)
- widely known and nationally employ far more people than LTD’s
- shares are bought and sold on the stock exchange.
- needs to have a minimum of £50,000 share capital.
- legally have to publish details of their accounts
- Divorce of ownership and control can occur
Example-Marks and Spencer’s was a LTD before floating on the stock market(became PLC)
What is a limited company?
- owned by shareholders
- run by board of directors
- have limited liability
- can own property and other assets
- can enter into contracts
- can sue and be sued
- can borrow and lend money
What is a Social Enterprise?
- A business with primarily social objectives
- Profits are usually reinvested,rather than being driven by the need to maximise profit
- NOT a charity-it’s a proper business that makes its money in a socially responsible way
Example-Jamie Oliver’s fifteen restaurant-purpose is to empower young people who need a second chance.
What is required to set up a limited company?
A memorandum of Association and Articles of Association
What is a Memorandum of Association?
•Sets out the company name,where the registered office is and what the business will do
What are Articles of Association?
•sets out the rules for how the business will be run and how directors will be appointed
What is a public sector business?
A business owned and controlled by the government
What are the aims of a private sector business?
- to provide and manufacture goods
- to make profit
- to gain market share
What is a Private Sector Business?
Businesses set up by individuals or groups of individuals
What are merit goods?
•Goods and services that the government feels people will underconsume and therefore they need to be provided for free so that consumption doesn’t depend on ability to pay
Example-Education
What is a Sole Trader?
- owned by one person
- can employ any number of employees
- have unlimited liability
- have limited access to sources of funds.They usually use:bank loans,personal savings or loans from family/friends
Examples-Plumber,Corner ships or local takeaways
What is unlimited liability?
The owners are personally liable for the debts of the business and there’s no limit to this responsibility(they will have to sell personal possessions to pay debt)
What is limited liability?
Companies are responsible for the money they owe but personal possessions of the owner are safe.
What is a Worker Co operative?
- owned and controlled by the employees who share the profits
- each member has an equal say
- most are Ltds however some are partnerships.
What is a consumer co operative?
- owned and controlled by members who are consumers
- prices are set at the level of competitors
- any profit is given back to members depending on how much they have spent in the shop
What is a Charity?
- A charity is an organisation that is registered and regulated by the charities commission.
- Trustees are appointed to run the charity and put the organisations aims into practise
- NOT for profit
What is a Society?
An organisation that is traditionally founded by groups of people who share their resources to gain rewards
Example-Building societies
What is a private limited company?(LTD)
- owned by shareholders
- sell shares privately. (all shareholders must agree any sales)
- often owned by families or friends
- has to be at least 2 shareholders who are also directors of the company
Example-Warburtons which is owned by the Warburton family
What are barriers to entry?
Things that would stop new companies entering the market
Examples-
•high set up costs
•high levels of competition from large established businesses
