Parts to a business Business Flashcards
What are stakeholders?
Anyone who has an interest in the business
How much influence to stakeholders have over the business?
All stakeholders have some influence
Depending on the type of stakeholder and business, depends on how much influence this is
What are some advantages to being a sole trader/proprietor
They are easy to set up
Easy to run
Flexible as you can make your own choices on when to work
Can take expenses off tax
Only the inland revenue and customs and excise know your finances
What are some disadvantages to being a sole trader/proprietor
You have unlimited liability
Lack of continuity as when the owner stops the business stops
Business will suffer if they can’t work
Have to work a lot to keep the business going
Difficult to raise capital
What are the advantages of being a partnership?
They are easily formed
the debts are spread among the partners
more capital can be raised then a sole trader
workload, ideas and decisions are shared
different partners have different skills they can bring to the business
What are the disadvantages to being a partnership?
Partners have unlimited liability
Harmful actions/ mistakes of one partner are sorted out by the others
Profits have to be shared
you have less control as you’re not the only boss
partners can disagree about decisions
Different partners can have different work ethics
What are sleeping partners?
They invest money into a business but do not take any part in decision-making they purely fund it or pay off the debt
What are social enterprises?
An organisation using commercial strategy to help the public and environment
make money by selling goods and services
put any profit back into own or local businesses
What is a limited company?
two types of limited company: one private and one public
they both have limited liability, shareholders and are set up in the same way
What do private limited companies (Ltd) have that public limited companies (Plc) don’t have?
They must know all the shareholders, can have 2 to 50 of them. Are usually smaller businesses with less money involved in them
What a public limited companies (Plc) have a private limited companies (Ltd) don’t?
They are usually larger organisations
the shares are sold to public on the stock exchange
has to have more than £50,000 worth of shares
have a majority shareholder with more than 51% of the shares
What are the advantages of a private limited company (Ltd)?
Shares to raise capital
separate legal identity from owners
business can continue even if one of the shareholders wants to sell their shares
is not affected by the death of shareholder
What are the advantages of a public limited company (plc)?
Can raise lots of the finance by selling shares
easy to raise extra finance in a short space of time
What are the disadvantages of a private limited company (LTD)
Hard to raise extra capital
a dividend has to be given to the shareholders each year if the company makes a profit
financial information is available for anyone to see
shares can only be sold to people known to the company
can be costly and time-consuming to register and set up
What are the disadvantages to a public limited company (plc)?
Dividends have to be paid to shareholders each year as a share of the profits
shareholders with a few numbers of shares will have little say in how business is run
is expensive and requires a lot of paperwork to set up
financial information is available to public
takeover risk- anyone buying shares on the stock exchange can take the business over if they get 51% or more
What are the stages of setting up a limited company?
1) come up with business idea and name
2) get company register, apply to registrar at company house
3) draw up memorandum of association
4) and articles of association
5) send articles and memorandum to company house
6) companies registrar issues a certificate of incorporation
What is a multinational company?
A company which operates in several countries across the world
What are the benefits of a multinational company?
The manufacturing can be spread across the world and be placed with market
economies of scale gained by doing
things in bulk
goods can be produced in places where the costs are lower
What are the drawbacks of a multinational company?
Communication problems are caused by having locations in different countries
different legal requirements are needed for different countries
transport costs are high
exchange rates fluctuate in different countries
What is a cooperative?
A business that is owned by its members
members are usually employees in the business
each member holds a share in the business
What are the advantages of a corporative
Employees are more stable, caring and responsible
they get greater job satisfaction
More responsible to customers and community of the business
What are the disadvantages of a cooperative?
Possible conflict Takes time to make decisions Participation of members is required for success Record keeping is necessary Finance is provided by the members
What are the types of business growth?
1) internal growth
2) external growth
3) integration
What are the four main ways of external growth?
Merger
take over
Acquisition
joint-venture
What are the two types of integration?
Vertical integration and horizontal integration
Why might a business relocate?
Tradition Infrastructure Labour Cost Climate Access to market Availability of raw materials Type of product / service
What is an enterprise?
Describes the skills and personality of a person that makes them succeed in the business
What is an entrepreneur
A person who takes a risk of starting and running a business
What are the stages of recruitment?
Identify a job vacancy
write job description and person specification
advertise the vacancy
receive application forms
shortlist applicants
interview applicants
offer the successful applicant the job and contact the unsuccessful candidates
sort the contract of employment with the successful candidate
How is the business most likely to encourage applicants for a post?
Publishing job adverts
Where is the details of skills and qualities required for post usually found?
Person specification
Where are the details of employee tasks for a post usually found
Job description
Where would you usually find a summary of the work history of a prospective employee?
Their CV
What department is responsible for recruitment and selection of new employees
Human Resources (HR)
