Term 1: JSL Flashcards
(Corporate social objectives)
What is a sole trader?
A business owned by one person but can have multiple employees
What are the advantages of being a sole trader?
+ Potential for greater financial rewards
+ Make all the decisions
+ Choose working hours
+ Easy to set up
What are the disadvantages of being a sole trader?
- Unlimited liability
- Lack of start up capital
What is a partnership?
2 or more people own and run a business together
What are the advantages of a partnership?
+ More initial capital
+ Shared responsibility
+ More ideas
+ Reduced stress
What are the disadvantages of a partnership?
- Unlimited liability
- Shared profits
- People do more work than others: disagreements
Define unlimited liability
Shareholders are at risk of unlimited losses and may have to sell personal assets to cover any debts
Define limited liability
The maximum loss for the shareholder is the value of their investment
What is the purpose of a deed of partnership?
To lay down the rules for running the partnership
What is a sleeping partner?
Someone who invests money in the business but doesn’t take part in the day to day running
Define a limited company
A business owned by its shareholders and has a separate legal identity from its owner
Advantages of limited companies
+ Limited liability
+ Debt spread among shareholders
+ Easy to raise finance
Disadvantages of limited companies
- Financial information is NOT private
- Shares cannot be offered for general sale
What does PLC stand for?
Public Limited Company
What is a PLC?
A type of of limited company where shares can be offered to the general public
Advantages of PLCs
+ Raise large sums of shares on the stock exchange
Disadvantages of PLCs
- Financial information NOT private
- Easily taken over (shareholders have little say unless they have a large amount)
What is a limited liability partnership?
A legal partnership where all the partners have limited liability
What is the public sector?
Services provided by the government or local government, e.g NHS
What are the advantages of public services?
+ Costs are already covered by the taxpayer.
+ Free services
What are the disadvantages of public services?
- All government money comes from taxes
- No competition so no incentive to be efficient
What is the private sector?
Businesses owned by private individuals
What is meant by privatisation?
Public sector enterprises are sold by the government to businesses which are owned by private shareholders.
FOR privatisation
+ Private businesses are motivated by profits and so are more efficient
+ Increased competition
+ Government doesn’t need to invest
AGAINST privatisation
- Jobs put at risk
- Prices increase e.g private healthcare//NHS
What is meant by nationalisation?
Private sector businesses are bought and taken over by the government
Franchising
Paying a fee to trade under another business’ name that already exists and is typically well known e.g. Subway
What are the advantages of a franchise?
+ Brand name is already recognised - less risk
+ Advertising is done for you
+ Ongoing training
What are the disadvantages of a franchise?
- Removes an individual’s creativity
- Fees too high and unjustified
- One bad franchise has a knock-on effect
What is an aim?
What you are trying to achieve over a set period of time
What is an objective?
The specific short term goals required to meet aim
What is a mission statement?
The overall purpose of the business
What are the 2 types of objective?
Strategic and tactical
What is a strategic objective?
Slightly longer term than a tactical objective
What is a tactical objective?
A very short term and very specific objective
What are SMART objectives?
Specific Measurable Achievable Realistic Timed
How many meanings does enterprise have?
2
What are the 2 meanings of “enterprise”?
- Simply another name for a business
- The action taken by someone who shows the initiative by taking a risk by setting up, investing in and running a business
What is meant by an entrepreneur?
An individual who starts up his/her own business
What are 3 characteristics of an entrepreneur?
Hardworking
Reliable
Creative
What is a constraint on a business?
A limitation that affects the achievement of the business aims
What is a stakeholder?
Anyone with an interest in the business
What is meant by the 4 factors of production?
The inputs in the production of goods/services
What are the 4 factors of production?
Land
Labour
Capital (Tech)
Enterprise
Who is a co-operative owned by?
It’s members who each get a % of the profits
What does a co-operative seek to do?
It seeks to provide a service its members need. Members seek to keep prices affordable
Name the sectors of the economy
Primary
Secondary
Tertiary
Quaternary
What is meant by the primary sector?
Businesses that produce the raw materials
What is meant by the secondary sector?
Businesses that turn the raw materials into products
What is meant by the tertiary sector?
Businesses that sell the products, offer a service
What is meant by the quaternary sector?
Businesses that are focused on research and development
What is meant by social enterprise?
A business that exists to help people
What are businesses that offer social enterprise often referred to?
The Third Sector
What are corporate social objectives?
Objectives that ensures the business is seen as being caring by the local community
Why are corporate social objectives increasing?
Media and customer expectations
What are the advantages of behaving morally?
+ Can change an existing negative corporate identity
+ More customers = more sales
What are the disadvantages of behaving morally?
- Increases costs, may require specialist staff
- Takes time
- Significance?
