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business 🪩 > Types of business organisations > Flashcards

Types of business organisations Flashcards

1
Q

Types of private sector businesses

A
  • sole trader
  • partnership
  • private limited company
  • public limited company
  • multinational
  • franchise
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2
Q

Sole trader

A

A sole trader is a business owned by one person.

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3
Q

Advantages of being a sole trader

A
  • easy to set up
  • sole trader retains all profits for herself
  • sole trader makes all the decisions
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4
Q

Disadvantages of being a sole trader

A
  • can be difficult to raise finance
  • unlimited liability
  • heavy workload
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5
Q

Partnerships

A

A partnership is a business set up by the deed of partnership document.
Partnerships can have a minimum of 2 and a maximum of 20 partners.

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6
Q

Advantages of being a partnership

A
  • more equity available to finance the business compared to a sole trader
  • different partners can bring different skills
  • workload is shared
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7
Q

Disadvantages of being a partnership

A
  • unlimited liability
  • profit is shared between the partners
  • partners may not always agree on decisions for the business
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8
Q

Private limited company

A

Companies often need to grow larger than the maximum number of 20 partners allowed in a partnership.

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9
Q

Advantages of being a private limited company

A
  • owner can retain control
  • more able to raise money
  • limited liability
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10
Q

Disadvantages of being a private limited company

A
  • must be registered with the registrar of companies
  • high legal and administrative set up costs
  • harder to motivate and control workers
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11
Q

Public limited companies

A

Unlike a private limited company, a public limited company can offer shares of the business to the public.
There are some requirements which a company must meet before they can become a Plc:
- they must have share capital of at least £50,000
- they must have two shareholders, two directors, and a qualified company secretary

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12
Q

Advantages of being a public limited company

A
  • raise more money by selling shares on the stock exchange
  • easier to grow and diversify
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13
Q

Disadvantages of being a public limited company

A
  • disagreement over how to run the company
  • threat of takeover
  • difficult to pursue objectives other than increasing profit
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14
Q

Multinational organisation

A

A multinational organisation is a company which has its headquarters in one country but has assembly or production facilities in other countries.

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15
Q

Reasons to become a multinational

A
  • to increase market share
  • to secure cheaper premises and labour
  • to avoid tax or trade barriers
  • government grants
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16
Q

Advantages of being a multinational

A
  • creating jobs
  • bringing expertise and improving the skills of the workforce
  • benefiting from economies of scale
  • gaining technical economies with automated equipment
  • achieving purchasing economies
17
Q

Multinationals can be accused of

A
  • relying on deskilled jobs that may be low paid
  • not keeping profits in the host country
  • cutting corners
  • exploiting the workforce and environment
  • exerting political muscle
18
Q

Franchising

A

An entrepreneur can opt to set up a new independent business and try to win customers. An alternative is to buy into an existing business and acquire the right to use an existing business idea.

19
Q

What is a franchise?

A

A franchise is a joint venture between:
A franchisee, who buys the right from a franchisor to copy a business format.
And a franchisor, who sells the right to use a business idea in a particular location.

20
Q

Where is the money raised for public sector organisations from?

A
  • income tax
  • national insurance
  • VAT
  • air passenger duty
  • fuel duty
21
Q

What are the three different levels of government in Scotland?

A
  • UK government
  • Scottish government
  • local government
22
Q

What are the reserved matters that are run by the UK government?

A
  • economic policy
  • defence
  • international relations
23
Q

What are the devolved matters that the Scottish government is responsible for?

A
  • health
  • education
  • police
  • transport
24
Q

What services do the local governments run?

A
  • housing
  • libraries
  • schools
  • bin collection and recycling

business 🪩 (21 decks)

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