LO1- Understand Different Types Of Business And Their Objectives Flashcards
Business Activities Definition
Any events that have been taken which lets them achieve their objectives
Retail Customers Definition
Physical form of customers that buy a finished product
Business Customers Definition
Businesses that purchase products from other businesses to make a different product
Primary Activity Definition
The extraction and harvesting of raw materials
Secondary Activity Definition
They take raw products to manufacture products
Tertiary Activity Definition
The provision of services
Private Sector Definition
Businesses not owned by the government, aim to make a profit
Public Sector Definition
Businesses owned by the government, wide rang of services
Third Sector Definition
Do not aim to make a profit and are not owned by the government
Liability Definition
A liability is something a company, business or person owns. It is usually a sum of money. Meaning they are responsible for it.
Centralized Structure Definition
A structure where decisions making is kept at the top of the hierarchy. Suits small businesses best.
Decentralised Structure Definition
A structure where decision making is more spread out and filtered down the hierarchy. Suits big businesses like certain supermarket chains to make the best decisions for the locals’ needs.
What are the advantages of centralized structure?
Easier to implement policies,
decision making is quicker,
strong leadership is required
What are the disadvantage of centralized structure?
Employees do not have a say,
cost,
communication of messages
What are the advantages of a decentralised structure?
decision making is shared, improved level of customer service, decision making is based on other factors like location, age and etc, good way to train managers, employees have more power.
What are the disadvantages of a decentralised structure?
Decision making is shared,
more arguments between employees.
Unlimited Liability Definition
responsible for debt, owner is the business.
Limited Liability Definition
you only lose what you put in and the owner is not the business.
List Public Limited company features
- multiple owners(shareholders)
- run by board of directors
- funded by retained profits
- funded by shares
- unlimited members
- shares available to public
- limited liability
- centralized
- chain of commands
- international
List Private Limited company features
- multiple owners(shareholders)
- run by board of directors
- funded by retained profits
- funded by shares
- maximum members 200
- shareholder invited
List Government features
- owned by the government
- run by board directors
- funded by taxation
- limited liability
- centralized
- chain of commands
- national
List Charity features
- funded by grants (lottery)
- fundraising and donations
- not for profits
- limited liability
- quick to setup
- tax relief
List Community Interest Company (CNC) features
- Funded by grants
- Fundraising and donations
- Not for profit
- Limited liability
- Decentralized
- Can pay dividends
List Sole trader features
- one owner,
- unlimited liability,
- scope= local,
- no structure,
- easy to make decisions,
- can have employees but it is only one owner.
List Partnership features
- more than one owner,
- profits shared,
- unlimited liability,
- possible conflicts,
- Decentralized,
- few functional areas.
Aims Definition
long term goals which a business works to achieve in about a year
Objectives Definition
short and specific which is used to support or help the business achieve their aim.
Why do businesses set aims and objectives?
- To show progression in the business
* To have an idea of how much they have achieved in that time which can boast confidence.
What is a sole traders?
Owned by one person, although the owner may decide to employ others to work alongside them.
What is a partnership?
A business with a minimum of two partners. It can be straightforward to set up, although a Deed of partnership is advisable. This summaries the details of the owners, e.g the capital each has invested and how profits will be shared.
What is a Private Limited Company?
A company is a separate legal entity to the owners. It is a form of ownership where shares in the business are sold to raise finance. Those who purchase the shares are legal owners. The people who set up the business will have most of the shares and also invite people to invest in the business hence why it is private.
What is a Public Limited Company?
A separate legal entity from its owners, the shareholders. These shares can be bought in the stock market which makes it public to all people. The business has limited liability and it must have share capital of more than 50k, at least two shareholders, two directors and etc.
What is a Government owned?
A business owned and funded by the government
What is a Charity?
Includes voluntary and community groups. They have charitable aims other than making money. They make profit sometimes but that will go into the cause they are helping.
What is a Community interest company (CIC)?
Limited company that aim to benefit the community or trade with a social purpose rather than earning high profits for shareholders. Although shareholders get a small return, most profits are invested into community or a social enterprise.
What is revenue?
Total income generated by the sales of goods or services.
What does booming mean?
Term used to show that the economy is doing well
What does recession mean?
Term used to show that the economy is not doing well where demand and output fall
What is legal status?
The form of ownership as some forms will result in the business being separate legal entity from the owner.
What does liability mean?
These are legal responsibilities or obligations. Amounts owed like loans, mortgages and etc can be considered to be liabilities.
What is funding?
Funding the the amount of money needed to start a business. Business ownerships like sole trader or partnerships need less money to start and run than a public limited company for example.
What is decision making?
The form of ownership chosen will influence the level of control the owners have with regard to decision making.
What is survival?
Survival is important for business, especially new businesses. The chances of survival can be influenced by finance, the economy and failure to survive a recession.
What financial aims could a business have?
Break even, increased revenue, reduce cost, make a profit
How can growth be measured?
In terms of number of employees, increasing the value of sales or increasing output.
How can a business improve their reputation?
Produce good quality products, provide excellent customer service and act in a ethical and socially responsible manner.
