Intro to Business (a level) Flashcards
What are 3 characteristics of a sole trader?
- 1 owner
- Pays income tax
- Unlimited liability
Why might people want to work for themselves?
- Easy to set up
- Sort own hours/be own boss
- Receive all profits
What are some disadvantages of being a sole trader?
- Unlimited liability
- Long hours
- Increased responsibility
- Need initial capital for investment
What are some advantages of partnerships?
- Ideas can be shared
- Capital invested from more people
- Workload can be shared
- Continiuity
What is a deed of partnership?
A legal document which lays out the rules for running the partnership
What is a sleeping partner?
Someone who invests money into the business but takes no part in the daily running
What is a limited company?
A business that is owned by its shareholders, run by directors and has a separate legal identity from its owner
What are some advantages of a limited company?
- Limited liability
- Debt is spread
- Easier to raise finance
- Continuity
- Easier for business to borrow money
What are some disadvantages of a limited company?
- More complicated to set up
- Risk of takeover
- Loss of individual control
What is a franchise?
When you pay royalty fee to trade under the name of another business (McDonalds)
Why might a business might want to take on a franchise?
- Tried and tested
- Well known brand
- National advertising
- less risk
- Training provided
What is the public sector?
A service provided by national government or local government (NHS, schools..)
What is the private sector?
A private service provided by a private business. These businesses will usually seek to make a profit
What might be some benefits of being in the public sector?
- Gov funded
- Public aren’t charged to use service (excluding tax)
What might be some problems of being in the public sector?
- More expensive
- Larger tax payments
- Busy (NHS)
- Can’t opt out
- No competition
What is meant by privatisation?
When public sector enterprises are sold by the government to businesses that are owned by private shareholders (British Gas,british airways..)
What is meant by nationalisation?
When private sector enterprises are bought/taken over by the government. The business becomes a gov owned business
What is meant by an entrepreneur?
An individual who sets up, runs and takes the risks associated with a new business
What is meant by enterprise?
The process by which new businesses are formed in order to offer products and services in a market
State the 4 factors of production
- Land
- Labour
- Capital
- Enterprise
Outline Land as a factor of production
Land includes all natural physical resources such as renewable energy.
Some nations are richly endowed with natural resources and then specialise in their extraction and production; other countries will then be heavily reliant on importing their resources.
