Module 2 Flashcards
What is the key objective of businesses?
To make profit.
What are the objectives of a sole trader?
To provide a living for the owner, profit and growth.
Who controls a sole trading business?
One owner.
What are the sources of finance for a sole trader?
Owner’s capital, overdraft, credit card, loans, grants, mortgage and profit.
How are the profits distributed in sole tradership?
All to the owner.
What are the objectives of a partnership?
To provide a living for the owner, to run a professional service, profit, growth and increased market share.
Who controls a partnership?
Well, the partners… Duh.
What are the sources of finance to a partnership?
Partners’ capital, credit card, overdraft, loans, grants, mortgage and profit.
How are the profits distributed in a partnership?
Between the partners.
What are the objectives of an incorperated business?
Profit, growth and increased market share.
Who controls an incorperated business?
The board of directors, and managers working on their behalf.
What are the sources of finance to an incorperated business?
Share capital, overdraft, loans, mortgage, debentures and profits.
How are profits distributed in an incorporated business?
Between shareholders.
What are the objectives of a franchise?
For the franchisor to expand business over a wider area and increase profits.
For the franchisee to set up a profitable enterprise using the support of the franchising organisation.
Who controls a franchise?
The franchisee, subject to limitations established when forming the franchise.
What are the sources of finance available to a franchise?
Franchisees have to pay a fee to the franchisor to buy the franchise rights; they can then access other sources of finance, such as bank loans, to keep the business running.
How are the profits distributed in a franchise?
Franchisees pay a set percentage of their profits to the franchisor.
What are the objectives of a joint venture?
To create a new venture based on an agreement between two existing companies; to make a profit in a new area of operations.
Who controls a joint venture?
The new venture becomes a distinct entity, with responsibility for running the venture.
What are the sources of finance for joint ventures?
Funds provided by the companies that create the joint venture; the joint venture can then access other sources of funds.
How are profits distributed in a joint venture?
The joint venture distributes the profits to the companies that set it up.
A business must have clear objectives. Businesses should keep their objectives in line with SMART. What does SMART stand for?
S - Specific M - Measurable A - Achievable R - Realistic T - Timed
What are the 7 objectives of the public sector?
- Growth
- Expansion
- Survival
- Increased market share
- Social responsibly and image
- Customer loyalty
- Brand recognition
What is another term for internal growth?
Organic growth.