Component 1 - Business structure

Question 1

Explain : The difference between Private and Public sector

Answer 1

Private sector - Owned and operated by private individuals.

Public sector - Owned and operated by the government E.G The NHS

Question 2

Explain : The aims of private sector businesses including survival, growth and profit

Answer 2

Objectives :

Survival - New businesses may prioritise survival in the initial start up period in a competitive market.

To gain market share - A business will do this by reducing profits in the short term but increasing profits in the long term.

To make a Profit - They want to make a return on the capital invested in the business.

Question 3

Explain : The roles of the public and private sectors in the provision of goods and services

Answer 3

Public Sector (Centrally planned)
- Provides goods and services that are considered to be in the public interest and are funded through taxes

Private sector (Free market )
- Provides goods and services that are not considered to be in the public interest and are typically funded through profit-seeking activities

Question 4

Explain : 3 Characteristic of a sole trader

Answer 4

Sole trader
- Owned and operated by a single person.
- unlimited liability.
- Complete control over decision making .

Question 5

Explain : 3 Characteristic of a Partnership

Answer 5

Partnership
- Owned and operated by two or more people.
- Unlimited liability.
- Partners share control and management of the
business and profits and losses.

Question 6

Explain : 3 Characteristic of a LTD

Answer 6

Private limited company
- Separate legal entity from its owners
- limited liability
- Governed by a board of directors

Question 7

Explain : 3 Characteristic of a PLC

Answer 7

Public limited company
- Listed on a stock exchange
- Separate legal entity from its shareholders
- Limited liability

Question 8

Explain : what is meant by unlimited liability and limited liability

Answer 8

Unlimited liability
- The owner/owners are personally liable for any debts incurred by the business

Limited liability
- The owner is only liable up to the amount of capital invested into the business in the case of insolvency

Question 9

Explain : The One feature of not-for-profit organisations including;

• social enterprises
• charities
• co-operatives

Answer 9

Not-For- Profits do not operate with the incentive of profit but rather a Ethical or Moral cause.

Social enterprise
- They generate income through trading activities but the primary aim is to achieve social or environmental goals.

Charity
- Not-for-profit and tax-exempt

Co-operatives
- Organisations owned and controlled by its members
- Profits are shared in proportion to input to the business

Question 10

Evaluate : Different legal structures for a business

Answer 10

Write answer in book or on word

Question 11

Evaluate : Factors affecting the choice of the legal structure of a business