Types of Businesses

Question 1

what are private sector organisations

Answer 1

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

Question 2

what is a sole trader

Answer 2

a business run by one person. e.g hairdressers

Question 3

what are the main objectives of a sole trader

Answer 3

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

Question 4

how are sole traders financed

Answer 4

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

Question 5

what are the advantages of sole traders

Answer 5

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

Question 6

what are some disadvantages of sole traders?

Answer 6

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

Question 7

what is a partnership

Answer 7

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

Question 8

how is a partnership set up

Answer 8

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

Question 9

what are the main objectives of a partnership

Answer 9

make a profit, survive and provide a high quality service

Question 10

how are partnerships financed

Answer 10

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

Question 11

what are the advantages of partnerships

Answer 11

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

Question 12

what are the disadvantages of partnerships

Answer 12

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

Question 13

what is a private limited company

Answer 13

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.

Question 14

how is a private limited company financed

Answer 14

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

Question 15

how is a private limited company set up

Answer 15

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

Question 16

what are the main objectives of a private limited company

Answer 16

profit maximisation
sales maximisation
obtaining increased market share

Question 17

what are the advantages of private limited companies

Answer 17

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)

Question 18

what are the disadvantages of private limited companies

Answer 18

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

Question 19

what is a public limited company

Answer 19

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

Question 20

how is a public limited company set up

Answer 20

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

Question 21

how are public limited companies financed

Answer 21

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

Question 22

what are the advantages of public limited companies

Answer 22

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

Question 23

what are the disadvantages of public limited companies

Answer 23

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

Question 24

what is a multinational

Answer 24

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

Question 25

what are the key features of a multinational

Answer 25

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

Question 26

why would a PLC want to become a multinational

Answer 26

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

Question 27

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

Answer 27

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

Question 28

what positives do multinationals bring to host countries

Answer 28

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

Question 29

what negatives multinationals to host countries

Answer 29

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

Question 30

what is a franchise

Answer 30

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

Question 31

what is a franchiser

Answer 31

the original brand that is selling a license to the brand

Question 32

what is a franchisee

Answer 32

the business purchasing a license to the brand

Question 33

what are the advantages for the franchiser

Answer 33

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

Question 34

what are the disadvantages for the franchiser

Answer 34

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

Question 35

what are the advantages for the franchisee

Answer 35

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

Question 36

what are the disadvantages for the franchisee

Answer 36

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

Question 37

what are the features of the central government

Answer 37

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

Question 38

what are the main objectives of the central government

Answer 38

provide essential services improve society

Question 39

how is the central government financed

Answer 39

taxation - VAT, income and corporation tax

Question 40

what are the features of the local government

Answer 40

more localised and controlled by the central government

Question 41

what are the main objectives of the local government

Answer 41

meet local needs provide a service

Question 42

how is the local government financed

Answer 42

central governments budgets council tax business rates

Question 43

what are the features of public corporations

Answer 43

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

Question 44

what are the main objectives of public corportaions

Answer 44

provide a service serve public interest

Question 45

how are public corporations financed

Answer 45

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

Question 46

what are voluntary organisations

Answer 46

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

Question 47

how are voluntary organisations financed

Answer 47

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

Question 48

what are the main objectives of a voluntary organisation

Answer 48

to serve people in local communities

Question 49

what are charities

Answer 49

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

Question 50

how are charities financed

Answer 50

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

Question 51

what is a social enterprise

Answer 51

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

Question 52

how are social enterprises financed

Answer 52

capital investment, bank loans, government grants

Question 53

what are the advantages of social enterprises

Answer 53

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