Progress Check Revision

Question 1

Aims of businesses in the private sector

Answer 1

Spotting a gap in the market
turning a new idea into a success
maximizing profits

Question 2

Aims of businesses in the public sector (central government, local government)

Answer 2

To provide a high-quality product/service
To provide essential services such as hospital care, education, defense and police
provide services that are not entirely profit-driven

Question 3

Aims of businesses in the third/voluntary sector

Answer 3

fund rasing to support causes
raise awareness
clubs provide servises and facilites for members

Question 4

What is a sole trader

Answer 4

A sole trader is a one-owner business (it is owned and controlled by one person). Most small businesses are sole traders, for example, hairdressers or plumbing businesses.

Question 5

Where is finance mostly souced for a sole trader

Answer 5

Finance is available from the owner’s own savings, bank loans, and government grants.

Question 6

What do sole traders aim to do

Answer 6

Sole traders usually aim to survive and maximize profits.

Question 7

What are the disadvantages of a sole trader

Answer 7

*Work may stop or business may close if the owner is ill
*If owner dies the business may cease trading
*Difficult for owner to get time off
*Owner is responsible for all business debts (Unlimited Liability)

Question 8

What are the advantages of a sole trader

Answer 8

*One person owns and runs the business
*Owner keeps all the profits
*Relatively easy to set up
*Owner gets to make all the decisions

Question 9

What are the disadvantages of a partnership

Answer 9

*Partners are responsible for the debts of the business (Unlimited Liability)
*Disagreements and arguments between partners

Question 10

What are the advantages of a partnership

Answer 10

*Partners bring different skills and knowledge
*More capital (money) available
*May be easier to obtain loans from banks and other lenders
*Partnerships aim to earn a profit

Question 11

What are the advantages of a private limited company (LTD)

Answer 11

*Owners have limited liability (cant lose personal belongings)
*Survival and growth
*Easier to raise finance from banks and other lenders
*The company aims to maximise profits
*Control of the company remains within the family and not lost to outsiders

Question 12

What are the disadvantages of a private limited company (LTD)

Answer 12

*Cannot sell shares on the stock market.
*Profits have to be shared between shareholders

Question 13

What are the advantages of a public limited company (PLC)

Answer 13

*Easy to borrow huge amounts of money from banks and other lenders
*Can become very powerful and dominant businesses
*Limited liability – shareholders can only lose the values of their shares

Question 14

What are the disadvantages of a public limited company (PLC)

Answer 14

*Costly and fairly complicated to set up
*They have no control over who buys shares on the Stock Market

Question 15

What are some feautures of a public limited company (PLC)

Answer 15

*Public Limited Companies tend to be large
*Name of company ends with the letters plc
*Members of the public must be able to access all financial records
*Members of the public can buy shares in the company on the Stock Exchange

Question 16

Tangible Goods?

Answer 16

These can be seen and touched and include things like TV’s and clothes.

Question 16

Who is an Entrepreneur?

Answer 16

A person who combines the factors of production to set up in business to earn profit.

Question 17

What should a business plan include?

Answer 17

General details – the name of the business, proposed location and what it is going to produce;

the market – who are the potential customers?

Human resources – who will be employed and work for the business?

Finance – what are the expected costs of running the business, what sales income is expected and what is the expected profit? Also where is the start-up cash coming from, ie, all from the owner/s or partially from a loan?

Question 18

What is a stakeholder?

Answer 18

A person or group of people who have an interest in a business or organization and in the way in which it is managed and run.

Question 19

True or False A stakeholder has an influence on the business

Answer 19

True

Question 20

The business cycle

Answer 20

1) needs and wants
2) entrepreneur creates good product/service
3) sell to make a profit
4) pay employees employ more people
5) more people have more money