Theme 1 - 5.3 and 1 - 5.4 Business objectives and Forms of businesses Flashcards

1
Q

What is sales maximisation ?

A

When businesses lower prices to gain market share

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2
Q

What is a sole trader ?

A

A person that sets up a business on its own , they can have employees but there is only one owner.

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3
Q

What is a public limited company (PLC) ?

A

Shares are floated on the stock market and can be bought by anybody.

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4
Q

What is a private limited company (LTD) ?

A

Shares can only be sold to friends and family.

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5
Q

What is a partnership ?

A

2-20 owners that set up a business as joint owners.

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6
Q

What is a franchisor ?

A

The person that sells the franchise.

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7
Q

What are the advantages of a sole trader ?

A
  • Have full control over the business.
  • all profits kept.
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8
Q

What are the disadvantages of a sole trader ?

A
  • Unlimited liability.
  • Don’t have economies of scale.
  • more risky as you take on full burden of responsibility.
  • Difficult to raise capital.
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9
Q

What are the advantages to a partnership ?

A
  • Risk distributed on more people.
  • Easier to raise capital.
  • more ideas from multiple partners.
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10
Q

What are the disadvantages of a partnership ?

A
  • loss of control of business.
  • profits are shared.
  • unlimited liability.
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11
Q

What are the advantages to a private limited company ?

A
  • limited liability.
  • more control over business as only family and friends can buy shares.
  • share capital can easily be generated.
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12
Q

What are the advantages to a public limited company ?

A
  • Limited liability.
  • Share capital easily raised.
  • Reduced risk.
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13
Q

What are the disadvantages to a public limited company ?

A
  • cannot sell shares on stock exchange.
  • Accounts cannot be kept private, public can see what capitals spent on.
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14
Q

What are the disadvantages to a private limited company ?

A
  • Potential loss of control
  • Short terminism ==> selling shares means that the company immediately can generate profits but in the long term they have lost some of the company.
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