Public Sector Organisation

Question 1

Public Sector Organisation

Answer 1

Owned and controlled by the government

Question 2

Aim of public sector

Answer 2

To help local communities and not to achieve profit.

Question 3

Private Sector Organisation

Answer 3

Organisation owned and run by individuals or groups

Question 4

Aim of Private Sector

Answer 4

Survival
Profit
Growth

Question 5

For Private Sector

Answer 5

Opportunity cost of government spending as more money can be used to improve education.

Quality of provision improved as they are aiming for profit maximization so they will want to offer an excellent service.

Question 6

For Public Sector

Answer 6

Better for low-income groups who may not be able to afford

Less absenteeism as less are off sick.

Question 7

Evaluation

Answer 7

Depends on the type of healthcare and government budgets.

General healthcare should be free as lower income earners may not seek treatment.

Question 8

Social Enterprise

Answer 8

Businesses that exist to benefit their communities and not soley to make profit

Question 9

Cooperatives

Answer 9

Owned by their members, typically employees,

Question 10

Charitites

Answer 10

Do not exist to make profits but to help different groups in society.

Question 11

Societies

Answer 11

A group who come together over shared interests and not to make profit.

Question 12

Internal Source of Finance

Answer 12

Personal Sources like savings or borrowings from friends and family.

Question 13

Advantages of internal sources of finance

Answer 13

Cheap with no interest
Keep control of business
Np adverse affect on cash flow

Question 14

Disadvantages of Internal Sources of Finance

Answer 14

Opportunity cost of using the money for business
Issues within the family
Personal savings may not be enough

Question 15

Overdraft

Answer 15

External ST

Short term money borrowed from banks allowing the business to go beyond zero in the bank balance.

Question 16

Overdraft Advantages

Answer 16

Flexible and can cover temporary cash flow issues.

Question 17

Overdraft Disadvantages

Answer 17

High interest charge
Need to provide evidence of cash flow to indicate the need of overdraft.

Question 18

Selling Shares

Answer 18

External LT

Sell shares in return for finance. The shareholders receive dividends of the profits made.

Question 19

Advantages of Selling Shares

Answer 19

No debt involved
Pay outs are based on dividends and not a fixed sum

Question 20

Disadvantages of Selling Shares

Answer 20

Less control of the business
The dividend pay-outs could exceed going interest rates dependant on profitability.

Question 21

Bank Loan

Answer 21

Borrowing money from a bank to payback over a period of time on a regular basis.

Question 22

Advantages of a Bank Loan

Answer 22

Fixed interest rates
Can get the exact amount needed

Question 23

Disadvantages of a Bank Loan

Answer 23

Interest charges are expensive
Size of loan is limited

Question 24

Venture Capital

Answer 24

External LT

Expert investors invest for a share of the business providing skills and experience.

Question 25

Advantages of Venture Capital

Answer 25

Increase expertise of owners to provide help. Business doesn't need to make repayments. VC may delay their dividends if the business is short on finance.

Question 26

Disadvantages of Venture Capital

Answer 26

Often demand a higher share of the business Owners lose control VC can change business direction

Question 27

Official Grants

Answer 27

External LT Provide free money to start up businesses to get their business up and running.

Question 28

Advantages of official grants

Answer 28

Free money Don't have to pay it back

Question 29

Disadvantages of official grants

Answer 29

Unlikely to get the full amount needed Lots of competition to get the grant Have to provide evidence for the grant.