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Management of Business > Private Sector & Public Sector > Flashcards

Private Sector & Public Sector Flashcards

1
Q

Define the Private Sector

A

Businesses that are owned and operated by individuals or groups with a main goal of generating profits. Owners answers the economic questions

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2
Q

Sole Trader

A

business pwned and operated by one individual

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3
Q

Advantages of Sole Trader

A

1) Easy to for
2) Quick Decision making
3) Owner enjoys all profits
4) Benefit from grants
5) Flexibility

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4
Q

Disadvantages of Sole Trader

A

1) Unlimited Liability
2) High risks
3) Difficulty in sourcing capital
4) Do not benefit from economies of scale
5) Lack of continuity
6) Less informed decision making

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5
Q

Partnerships

A

Partnership Act (1890) - A business where 2-20 persons work together to make profit.

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6
Q

Partnership Deed

A

1) Capital Contribution
2) How P/L id shared
3) How a partnership will be ended
4) How much control
5) Rule for adding new partners

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7
Q

Advantages of Partnerships

A

1) Easy to form
2) Privacy
3) Shared responsibilities
4) Larger capital base

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8
Q

Disadvantages of Partnerships

A

1) Unlimited Liability
2) Slow decision making
3) Conflict
4) Lack of continuity

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9
Q

Limited Liability Partnership

A

one partner has unlimited liability liability while rest experience limited (Partnership Act 2000)

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10
Q

Limited Companies

A

A business regarded as an artificial person distinct and separate from owners. The companies Act of 2004.

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11
Q

Articles of Association

A

includes number of directors, rights of shareholders, procedures of meeting/how directors are appointed, tenure of directors, process of transferring shares

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12
Q

Memorandum of Association

A

name of company, address of registered office, objectives of company, details of capital, liabities of owners.

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13
Q

Private Limited Companies

A

Limited to 50 individuals and are not sold on the stock exchange

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14
Q

Advantages of Private Limited Companies

A

Limited Liability
Continuity
Greater Capital
Lower possibility of loss of control
Legal identity sperate from owners

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15
Q

Disadvantages of Private Limited Companies

A

Less capital since shares cannot be traded
Share of Profit
Less privacy than ST and Partnership since statements must be sent to office
Legal Requirements

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16
Q

Public Limited Companies

A

Traded to general public

17
Q

Advantages of Public Limited Companies

A

Limited Liability
Continuity
Economies of Scale
Loans
Freedom to transfer shares

18
Q

Disadvantages of Public Limited Companies

A

Legal Requirements
High cost of formation
Lost of internal control threat
No Privacy
Conflict
Overexpansion (impersonality can lead to diseconomies of scale)

19
Q

Holding Companies

A

A company that owns/controls seprate businesses but do not tie them into one unified company

20
Q

Conglomerates

A

A conglomerate is a large business formed when one company purchases or merges with many other companies

21
Q

Co-operatives

A

A group of persons voluntarily coming together to achieve a common economic/social/cultural need via democratic control e.g Credit Union, Workers Union

22
Q

Principles of Co-operatives

A

1) Voluntarily open membership
2) Democratic control
3) Mac share a member cannot exceed 20%
4) Development and Training of memebrs

23
Q

Advantages of Co-operatives

A

Creates employment, democratic control, guaranteed market, minimal advertising costs, economies of scale

24
Q

Disadvantages

A

Inexperienced management, minimal profits, conflict, long decision making

25
Q

Franchises

A

contractual agreement between a franchisee and franchisor allowing the franchisee to operate under the trade name. There are pure franchises (complete business format and system), product distribution franchises (license to sell), trade name franchise (right to use name)

26
Q

Advantages of Franchises

A

Management and support
Brand name appeal and goodwill
Taxes paid on imported goods
Marketing of the franchisor
Franchiser pays royalties
Expansion

27
Q

Disadvantages

A

Increased competition for local firms
Less control for franchisee
Franchisee is obligated to pay royalties and purchase from franchisor
Franchisor can lose trade secrets

28
Q

Joint Ventures

A

Two or more persons/businesses agree

29
Q

Advantages of Joint Venture

A

Fostering expansion
Shared lost
Capital
Access to advanced technology
Shared risks
Product diversification
utilizes established channels of distribution

30
Q

Disadvantages

A

Loose trade secrets
Loss of Credibility
Lack of trust
Disagreement/Conflict
Loss of Independence

Management of Business (16 decks)

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