type of business organisation

Question 1

name businesses in private sector business

Answer 1

sole trader
partnership
limited companies
franchise
joint venture

Question 2

define sole trader

Answer 2

a business that is owned and controled by just one person who takes all the risk and recives all the profit

Question 3

why people choose sole trader business

Answer 3

be their own boss and make their own decision
decide when and how many hours to work
have a business that use their skills and interest

Question 4

what are the advantage of a sole trader business

Answer 4

easy to set up
make all the decisions
has complete control
keeps all the profit

Question 5

what are the disadvantage of sole trader

Answer 5

unlimited liability responsible for business debt
may not be able to raise fund
may have to work long hours
difficult to compete with larger rivals
may not have business skills to run a business

Question 6

define partnership

Answer 6

a business formed by two or more people who will usually share responsibility for day to day running of the business

Question 7

what are the advantage of partnership business

Answer 7

easy to set up deed of partnership
partners invest in the business so greater access to fund
shared decision making
shared managment and workload

Question 8

what are the disadvantage of partnership

Answer 8

unlimited liability
shared profit
business ceases to exist if one partner leaves
desicions binding on all partner
difficult to raise finance

Question 9

define unicoporated business

Answer 9

a business that does not have leagal identity separate from its owner. the owner have unlimited liability for buisness debt

Question 10

define unlimited liability

Answer 10

if an unicoporated business fail then the owner might have to use their personal wealth to finance any business debt

Question 11

define shareholder

Answer 11

a person or organisation who owns shares in a limited company

Question 12

define private limited company

Answer 12

often a small to medium sized company owned by share holders who have limited libility the company cant sell its hare to general public

Question 13

define public limited company

Answer 13

often large company owned by share holders who have limited liability the company can sell its share to general public

Question 14

define ordinary share holder

Answer 14

the owner of limited company

Question 15

define limited laibility

Answer 15

the share holders in a limited company fails which only risk losing the amount they have invested in the company and not any of their personal wealth

Question 16

define dividend

Answer 16

a payment out of profit to share holders as a reward for their investment

Question 17

what are the features of limited companies

Answer 17

. legal document Aa Ma
. shareholders invest capital by buying shares of the company
. ordinary share holders are the owner of the company
. have limited liability
. continues running even one owner dies
. profits are shared

Question 18

what re the owners ofPLC

Answer 18

small number of share holders often members of the family or friends

Question 19

size of PLC

Answer 19

small compared to PULC

Question 20

define collateral

Answer 20

non-current assets offered as security against borrowing

Question 21

disadvantage of public limited companies

Answer 21

legal formalities
. directors decision making is somtimes influenced by major investors who seeks to satisfy there own objectives
. risk of take over

Question 22

define franchise

Answer 22

a business system where enterprenure buy right to use the name logo and product of existing business

Question 23

benifits of franchise

Answer 23

less chance of faliure
franchisors often provide advice and training to franchisee
franshisor will finance the promotion through national advertising
. guranteed quality suppiles

Question 24

limitation of franshising

Answer 24

initial cost of buying into a franchise can be expensive
franchisor will take persantage of revenue or profit
strict control
franchisee still have to pay for local promotion

Question 25

define joint venture

Answer 25

two or maore business agree to work together on a project and set up a separate business for this purpose

Question 26

what is the main reason for joint venture

Answer 26

it reduce risk for each business and cut cost
bring different experties to the joint venture
market and product knowledge can be shared

Question 27

limitation for joint venture

Answer 27

any mistake can damage reputation of all firms
may have different business culture so difficult in desicion making