LO1 Flashcards
what is primary activity?
Key purpose is harvesting raw materials
what is secondary activity?
Key purpose is to manufacture products
what is tertiary activity?
key purpose is to provide a service what ar
what are the sectors of a business?
private, public, third
what are the different types of business ownership?
Sole trader, plc, ltd, partnership, gov owned, non-profit, community interest company.
what factors inform business ownership?
Legal Status, Liability, funding, decision making, Legal requirement
what are the business aims and objectives?
survival, financial, growth, reputation, being enterprising
what are the functional areas of a business?
finance, marketing, sales, HR, operations, customer service, business support services, R&D , procurement
What are two advantages and two disadvantages of a sole trader?
Аdvantages:
-there are fewer legal requirements
-sole traders make all the decisions
Disadvantages:
-sole traders are personally liable for any debts
-sole traders often work long hours and take few holidays as there is no one to take responsibility when they aren’t there.
What are the advantages and disadvantages of a partnership?
Advantages:
-there are the others to discuss decisions with and cover due to holidays and sickness.
-each partner offers up capital meaning there are more finance available for investment
Disadvantages:
-the business does not have separate legal identity to the owners
-all the profits are shared
What are the advantages and disadvantages of a private limited company?
Advantages:
-shares can be sold to raise extra finance
-the owners can choose who they sell the shares to
Disadvantages:
-shares cannot be sold to the general public, therefore limiting finance
-becoming a limited company can be an expensive and lengthy process.
What are the advantages and disadvantages of the public limited company?
Advantages:
-shareholders benefit from limited liability
-shares can be bought, sold and transferred easily
Disadvantages:
-the legal process is long and lengthy
-plcs are in the public domain so anyone including competitors can view them
What are the advantages and disadvantages of gov owned?
Advantages:
-support from government ensures that these industries survive
-the government can support large business that are struggling to survive
Disadvantages:
-businesses that are not answerable to shareholders regarding profits may not prioritise cost control
-these businesses can be used for political gain
What are the advantages and disadvantages of a charity?
Advantages:
-such groups are quick and easy to set up and can make an immediate impact.
-there are few legal requirements to set one up
Disadvantages:
-they often depend on volunteers which can make it difficult to maintain support in the running of the group
-larger charities use aggressive commercial tactics to raise money which could put off potential supporters.
What are the advantages and disadvantages of a community interest company?
Advantages:
-the company has its own legal identity
-the reputation of the business may be enhanced
Disadvantages:
-tax must be paid on profits
What are the factors which inform legal business ownership?
Factors are: legal status, liability, funding, decision making and legal requirements
