LO1 - Understand different types of businesses and their objectives Flashcards
Purpose and Examples
Different types of business activity and their function
- Primary (Extraction and Harvestation, e.g: farmer)
- Secondary (Manufactoring, e.g: bakery)
- Tertiary (Service, e.g: teacher)
Define and give examples of
Different sectors of operation
- Public (Government-owned, e.g: Hospital)
- Private (For profit, e.g: Construction)
- Third (Charity, e.g: Cancer research UK)
Advantages and Disadvantages of
Sole Trader Ownership
+Easy to set up
+Keeps all profit
-Unlimited liability
-Heavy workload
Advantages and Disadvantages of
Partnership
+Shared workload
+More access to finance
-Unlimited liability
-Profit is shared
Advantages and Disadvantages of
ltd.
+Limited liability
+Lower taxation
-Expensive set-up costs
-Shared profits
Advantages and Disadvantages of
plc.
+Limited liability
+Raise capital by selling shares
-Expensive to set up
-Vulnerable to takeover
Advantages and Disadvantages of
State/Government Owned
+Stable funding
+Reduced Competition
-Limited innovation
-Dependent on government funding
Advantages and Disadvantages of
Charities
+Tax benefits
+Enhanced reputation
-Limited profit
-Reliant on volunteers
Advantages and Disadvantages of
Community Interest Companies (CIC)
+Limited Liability
+Retention of customers
-Complex legal setup
-Reliant on community support
Factors which inform business ownership
- legal status
- liability
- funding
- control/decision making
- legal/administrative requirements
Differing business aims and objectives
- Survival (During start-up or a crisis)
- Financial (Throughout business)
- Growth (Long-term strategic goals)
- Reputation (Business targetting socially concious customers)
- Being Enterprising (Being your own boss, pursue own interests)
