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Higher Business > Types of Businesses > Flashcards

Types of Businesses Flashcards

1
Q

what are private sector organisations

A

most common type of business organisation. they are sole traders, partnerships, private limited companies, public limited companies, franchises and multinationals

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2
Q

what is a sole trader

A

a business run by one person. e.g hairdressers

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3
Q

what are the main objectives of a sole trader

A

to survive, make a profit and provide a high quality service

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4
Q

how are sole traders financed

A

personal savings, loans from bank/family friends or government grants

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5
Q

what are the advantages of sole traders

A

easy to set up
owner keeps all profits
owner makes all decisions

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6
Q

what are some disadvantages of sole traders?

A

no new ideas come to business
unlimited liability
owner takes on entire workload

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7
Q

what is a partnership

A

businesses set up and controlled by 2-20 people. generally small, but attracts professionals in their crafts like dentists or doctors.

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8
Q

how is a partnership set up

A

a deed of partnership must be written. it will outline the important things such as how much each partner will receive from profits

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9
Q

what are the main objectives of a partnership

A

make a profit, survive and provide a high quality service

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10
Q

how are partnerships financed

A

each partners savings, loans from banks/family or friends and government grants

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11
Q

what are the advantages of partnerships

A

partnerships can share workload and responsibility
increased capital
each partner brings their own skill and unique experience

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12
Q

what are the disadvantages of partnerships

A

partners can disagree on important decisions
profits must be divided amongst all partners
all partners have unlimited liability

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13
Q

what is a private limited company

A

a business divided up into shares, with each member owning a number of shares each. must have a minimum of 2 shareholders. managed by a board of directors.

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14
Q

how is a private limited company financed

A

inviting people to purchase shares, loans from bank, government grants

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15
Q

how is a private limited company set up

A

register company with registrar of companies and complete a memorandum of association and articles of association. both documents outline company details

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16
Q

what are the main objectives of a private limited company

A

profit maximisation
sales maximisation
obtaining increased market share

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17
Q

what are the advantages of private limited companies

A

shareholders have limited liability
more financed can be raised from shareholders
control of company cannot be lost to outsiders (must invite people to purchase shares)

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18
Q

what are the disadvantages of private limited companies

A

profits shared amongst all shareholders
very complicated to set up, as involves legal process
difficult to raise large amounts of finance, shares cannot be sold on stock market

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19
Q

what is a public limited company

A

similar to a private limited company, controlled by a board of directors and owned by shareholders

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20
Q

how is a public limited company set up

A

the same as private limited company, registered with registrar of companies and memorandum of association and articles of association

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21
Q

how are public limited companies financed

A

selling shares on the stock market, bank loans and government grants

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22
Q

what are the advantages of public limited companies

A

shareholders have limited liability
banks more likely to lend money as its less risk
more capital can be raised than private limited companies

23
Q

what are the disadvantages of public limited companies

A

must publish annual accounts
can become too large to manage effectively
no control over who buys shares

24
Q

what is a multinational

A

a business that operates in at least one country. multinationals have a HQ in one country, but have bases like manufacturing or assembly plants in other countries, known as host countries

25
Q

what are the key features of a multinational

A

operations in several countries
distinct home base country
achieved a global brand
can dominate markets across many countries
greatly influence local economies

26
Q

why would a PLC want to become a multinational

A

increased market share
cheaper labour and production
avoid or reduce tax
save costs of transport

27
Q

what negatives do multinationals have to overcome when entering a host country

A

cultural variations must be overcome
high transport costs
can be difficult to control

28
Q

what positives do multinationals bring to host countries

A

new jobs and income, increasing standard of living
country has greater access to products/services
improves levels of expertise of local workers

29
Q

what negatives multinationals to host countries

A

jobs provided may be low skiles
dominance of large multinationals can close local businesses
multinationals can hold lots of power, may force host country to give into demands

30
Q

what is a franchise

A

a business agreement that allows use of an established brand or business name to sell their products or services

31
Q

what is a franchiser

A

the original brand that is selling a license to the brand

32
Q

what is a franchisee

A

the business purchasing a license to the brand

33
Q

what are the advantages for the franchiser

A

franchisers name becomes more known a business expands
low risk form of growth as franchisee invests majority of capital and work
income guaranteed as franchisee pays percentage of profits as royalties to franchiser

34
Q

what are the disadvantages for the franchiser

A

reputation of whole franchisee can be damaged by one poor franchisee
only a share of profits made by franchisees are share with the franchiser
checks must be carried out regularly to ensure franchisee is keeping to franchise standards

35
Q

what are the advantages for the franchisee

A

franchise is already known business with existing customer base
industry knowledge training provided by franchiser
franchisee benefits from national advertisements carried out by franchiser

36
Q

what are the disadvantages for the franchisee

A

very little autonomy over decisions as franchiser decides on products, uniforms etc
royalties must be paid each year
initial start up costs high

37
Q

what are the features of the central government

A

controlled by elected politicians, but has departments run by paid civil servants.

38
Q

what are the main objectives of the central government

A

provide essential services
improve society

39
Q

how is the central government financed

A

taxation - VAT, income and corporation tax

40
Q

what are the features of the local government

A

more localised and controlled by the central government

41
Q

what are the main objectives of the local government

A

meet local needs
provide a service

42
Q

how is the local government financed

A

central governments budgets
council tax
business rates

43
Q

what are the features of public corporations

A

controlled by a chairperson and a board of directors, assigned by the central government

44
Q

what are the main objectives of public corportaions

A

provide a service
serve public interest

45
Q

how are public corporations financed

A

grants from central government
selling merchandise
selling access to service (bbc selling tv license)

46
Q

what are voluntary organisations

A

set up to bring people together with similar interests (scouts, girl guides). managed and organised by a committee of elected volunteers

47
Q

how are voluntary organisations financed

A

grants, lottery, local authorities, charging fee to be part of organisation, fund raising activities

48
Q

what are the main objectives of a voluntary organisation

A

to serve people in local communities

49
Q

what are charities

A

formed to raise money for underprivileged people. not owned by anyone, run by trustees and have overall control of charity. trustees unpaid

50
Q

how are charities financed

A

shops, donations, lottery money.
surplus after cost goes to the need

51
Q

what is a social enterprise

A

run like a private sector business (sole trader, partnership etc). controlled by a board of directors/paid managers, employees paid

52
Q

how are social enterprises financed

A

capital investment, bank loans, government grants

53
Q

what are the advantages of social enterprises

A

some grants only available to social enterprises
attracts customers who appreciate the good causes they help
attracts good quality staff who want to help the cause

Higher Business (20 decks)

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