Types of Businesses (unit 1.2) Flashcards
What is a multinational company
It is a company that is located in more than 1 country. with its branches, offices and facilities in more than one country
- it often has its head offices in 1 country
- it has 25% of its earning revenue outside of the country
What are advantages of multinational companies?
- increase in customers = wider target audience
- access to cheaper supplies = saves money
- access to cheaper labour = decrease in finance
- wider range of skills = increase in productivity and innovation
What are private limited companies
it is a business owned by a shareholder with limited liability and whos shares are private and cannot be sold on the stock market but can be sold to family and friends
What are 4 features of private limited companies
- difficult to raise finance
- limited liability
- they vote on major decisions
- their shares can only be sold/bought privately
What is a public limited company
it is a incorporated business that allows the general public to buy and sell shares in the company via stock market ; all shareholders have limited liability
What are advantages and disadvantages of public limited companies
Pro:
- more sources of finance
- limited liability
Con:
- no control of who your shareholders are
- expensive to set up
Ansoff matrix
STEEPLE (4marker) and analysis
mission statement
types of diseconomies of scale and disadvantages
types of economies of scale and advantages
What Is economies of scale
cost reductions that occur when a business increases their production
the cost advantages a company gains when it increases their production
(can occur via: negotiation)
What are the advantages of economies of scale?
- lower production costs
- Increase in profit
- competitive advantage
What is diseconomies of scale?
when a business grows so large that their cost per unit increases
What are types of diseconomies of scale
Types:
Internal: an increase in average cost of production in the business due to factors that are within control of the organization.
External: a decrease of average costs of the business due to factors that are beyond the control of the organization
What are the disadvantages of diseconomies of scale?
- reduces employee motivation = because they feel like they are not doing enough in the business and/or are not valued
- lack of communication
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What is ansoff matrix
Market development:
what is a private sector
it is a business owned and run by private individuals that usually may earn a profit.
they operate independently however they must oblige the country’s rules and regulations
eg: sole tradders
partnerships
private and public held companies
