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Business Yellow Unit > Ownership > Flashcards

Ownership Flashcards

1
Q

What are the sectors of industry?

A

Private- owned and controlled by private individuals and investors

Public- owned and controlled by the government

Third- set up to raise money for causes or to provide facilities for their members.

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2
Q

What is a sole trader?

A

A business that is owned and controlled by one person. Usually small businesses and are a popular choice for start ups.

Eg. Newsagents, hairdressing, plumbing

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3
Q

Adv of sole trader?

A
  • less legal documents
  • can keep all the profits
  • can choose when and where to work
  • full control over decisions
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4
Q

Disadv of sole traders?

A
  • Stress with decision making
  • difficult to take time off
  • raising capital is difficult
  • unlimited liability
  • difficult to achieve economies of scale
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5
Q

What is a partnership?

A

A business that is formed by two or more people on the basis of a partnership agreement. The partners provide the capital to start the business

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6
Q

What is the max number of partners?

A

Usually 20, with a few exceptions.

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7
Q

Adv of partnership?

A
  • shared workload, responsibility and decision making
  • different skills and experience
  • finance raised more easily
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8
Q

Disadv of partnership?

A
  • Profit must be split
  • unlimited liability
  • arguments & disagreements
  • legal documents must be drafted
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9
Q

What is limited liability?

A

Limited liability is when the owner will not lose more than they have invested into the business (no personal assets will be taken if the business goes bust or in debt)

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10
Q

What is unlimited liability?

A

Unlimited liability means the owners have responsibility for the business’ debt meaning the owner may lose personal assets.

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11
Q

What is a private limited company? (Ltd)

A

An ltd’s owners (usually friends and family) must buy shares in the company. An ltd is controlled by a board of directors appointed by shareholders

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12
Q

Adv of an ltd?

A
  • limited liability
  • finance can be raised through selling shares
  • owners have control over who buy shares in business
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13
Q

Disadv of an ltd?

A
  • complicated to set up
  • must abide by the companies act
  • must publish annual accounts
  • costs of set ups can be high
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14
Q

What is the minimum amount of shareholders that an ltd can have?

A

2

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15
Q

What is a public limited company? (Plc)

A

A large company who’s shares can be bought and sold on the stock exchange. Large amounts of capital can be raised by selling shares to investors

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16
Q

Who is a plc owned by?

A

Owned by shareholders who have purchases on the stock market but are run and controlled by a board of directors who are appointed by the shareholders

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17
Q

Adv of a plc?

A
  • limited liability
  • easier to trade shares
  • huge sums of capital can be raised
18
Q

Disadv of plc?

A
  • the must publish annual reports
  • growing so large can mean they become inflexible and difficult to manage effectively
  • in large plc’s, employees may feel very out of touch from those on top and may be difficult to take a personal approach on customer service
  • the legal procedures needed to set them up can be very costly
19
Q

What is a franchise?

A

An agreement for one party (the franchisee) to trade under the name of another (the franchiser)
Many use franchising as a means of starting up their own business and there is less likelihood of failure as support and guidance is provided by the franchiser to the franchisee.

20
Q

Adv of the franchiser

A
  • quicker growth
  • will receive a share of profit
  • innovation can be shared
  • protection against competitors
21
Q

Disadv of the franchiser

A
  • reputation/ brand may be tarnished

- will not receive 100% of profit

22
Q

Adv of the franchisee

A
  • existing, well-established brand and reputation
  • benefit from advertisement
  • training may be offered
  • shared innovation
23
Q

Disadv of the franchisee

A
  • must abide by structure set

- must contribute % of profit

24
Q

What is a multinational?

A

Large companies that have branches in more than one country.

25
Q

Characteristics of a Multinational company?

A
  • world wide operation
  • advanced technology
  • economies of scale
  • dominant in the market
26
Q

Adv of the multinational?

A
  • secure cheaper premises and labour
  • to avoid trade barriers like the EU Common External Tariff
  • Employment and health legislation in other countries may be more relaxed
27
Q

Disadv of the multinational?

A
  • complex to meet different legislative requirements

- some countries may not respect copyright

28
Q

Adv to the host country?

A
  • provide jobs and income

- improve level of expertise of local workers

29
Q

Disadv to the host country?

A
  • jobs may be only low level skills
  • profits go back to the home country
  • cut corners
  • may exert political muscle
  • may force out local companies
30
Q

What is a cooperative?

A

A business/ organisation who is owned and controlled by its members, who receive a share of profits/ benefits.

31
Q

Adv of a cooperative?

A
  • employees have incentive to work hard ad they own part of a business
  • employees can contribute towards decision making
32
Q

Disadv of a cooperative?

A
  • possibility of conflict

- longer decision making

33
Q

What is the public sector?

A

The overriding aim of public sector activity is to provide services thought necessary for the general public. It’s often the case that public sector organisations have to operate within an allocated budget.

34
Q

What is central government?

A

Provides us with services such as NHS, Social Security Defence and are financed by the government in order to carry out their policies in these areas.

35
Q

What are public corporations?

A

Public corporations are business organisations which are owned and run by the state on behalf of the people.

36
Q

Why do public corporations exist?

A

To:

  • set up and run essential services that might not br profitable
  • poorly managed/ drain on the public purse
  • make industries more competitive
37
Q

What are local authorities?

A

Run by elected councillors and provide essential services which might be unprofitable if provided by private firms such as schools.

38
Q

What is the third sector?

A

Organisations with different aims to private sector enterprises. They are not for profit and very often exist to help a charitable cause

39
Q

What is a charity?

A

No individual owner of a charity

  • Controlled/managed by board of trustees (unpaid)
  • financed by donations, grants, lottery, sales and fund raising
  • objectives include relieving poverty, advance education and cure cancer
40
Q

What is a voluntary organisation?

A

Run and staffed by volunteers

  • controlled/managed by elected members, chairperson
  • financed by grants, lottery, membership fees
  • objectives include helping young people? Providing opportunity for activities otherwise not available
41
Q

What is social enterprise?

A

Operate in a business-like way but also has a main social or environmental aim

  • controlled/managed by a board of directors on behalf of all stakeholders
  • financed by grants, loans and equity finance
  • objectives include to generate an income to tackle a social cause

Business Yellow Unit (4 decks)

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