Topic 1 - What is Business? Flashcards
1
Q
Analysing external environment (PESTLE)
A
Political
Economic
Social
Technology
Legal
Ethical/ Environment
2
Q
Sole Trader
A
- most common type
- individual
- quick and easy to set up
- owner has complete control
- unlimited liability
- harder to raise finance
3
Q
Unlimited Liability
A
- personally responsible for the debts and liability of the business
4
Q
Limited Company
A
- separate legal entities to the founders
- companies are owned by their shareholders and run by directors
- shareholders own a share in the company but do not own the assets of the company
- limited liability
- easier to raise finance
- public disclosure of company information
5
Q
Limited Liability
A
- protects the shareholders, they only lose the value of their investment
6
Q
Public Limited Company
A
- more specialist type of limited company
- shares may be quoted and traded on the Stock Exchange
- public companies have substantially more shareholders
7
Q
Public Sector Companies
A
- owned or controlled by the government
- e.g. Network Rail
8
Q
Public Sector Organisations
A
- provides goods and services which are owned and operated by public bodies
- these are funded by central and local government
- e.g. NHS
9
Q
Not-for-Profit Organisations
A
- benefit the community, social aims
10
Q
Private Limited Companies
A
- privately owned
- shared cannot be traded publicly
- usually just one or a few shareholders
11
Q
How do shareholders get their rewards?
A
- dividends
- capital growth
12
Q
Dividends
A
- payments made to the shareholders by the company from earned profits
- “per share”
13
Q
Capital Growth
A
- arises from an increase in the value of the business
- reflected in an increase in a share price
- only realised when a share is sold
14
Q
Market Capitalisation
A
share price (per share) x number of shares in issue
15
Q
Factors influencing PLC’s share price
A
- financial performance
- management reputation
- state of the economy
- general market
16
Q
Share Capital
A
- known as equity finance
- the money a company raises by issuing common stock
- returns: dividends and capital growth
- long term source of income
17
Q
Debt
A
- most commonly in the form of loans or overdrafts
- return: interest on amount loaned
- repaid over an agreed period
18
Q
Two methods of issuing shares
A
Flotation
Rights Issue
19
Q
Flotation
A
- share issued on the Stock Exchange for the first time
20
Q
Rights Issue
A
- fresh issue of new shares to existing shareholders, usually at a discounted price
21
Q
Stakeholders
A
- any individual or organisation who has a vested interest in the activities and decision making of a business
- do not own the business
- may work for (employees) or transact with the business
- e.g. customers, suppliers, employees, local community, competitors
