Types Of Organisation 2

Question 0

Describe a public limited company. Good things

Answer 0

It is normally large/dominant which means they are powerful. Huge amounts of money can be raised in this business from the sales of shares to the public. However, the would have low production costs because the firms may gain economy of scale. The shareholders have limited liability. Public limited companies are owned by shareholders and managed by a board of directors.

Question 1

Describe a Private Limited Company. (LTD)

Answer 1

1st: LTD’s have privately owned shares and cannot be made available to the public stock market.
2nd: This type of business is normally owned by a family and all the members are shareholders. - Shareholders have limited liability.
3rd: there must be a director and a secretary who keeps all the companies records.
4th: Owners have limited liability, the company cannot be lost to outsiders.
5th: Final accounts must be prepared and made available to interested parties.

Question 2

Describe a Public Limited Company. Bad things

Answer 2

A divorce of ownership and control can lead to a conflict of interests between shareholders and directors.
It can become inflexible due to its size
It came be very expensive to set up and also it can be taken over by outside interest.
The plc accounts can be looked over by public
It can De-list form PLC to LTD

Question 3

Explain the cycle of the Franchise.

Answer 3

1st: Franchise
2nd grants rights to use the produce/name/ service
3rd franchisee
4th pays a fee in royalties for this service.

Question 4

What is a franchise.

Answer 4

An agreement where a business ( the franchiser) sells rights to another business (franchisee) allowing them to sell products or use the company name.

Question 5

What is the Franchise contract?

Answer 5

Both parties agree to this contract agreement.

• How long the agreement will last
• The conditions under which the contract might be terminated by either side
• The territory covered by the agreement.

Question 6

What will the franchiser normally agree to?

Answer 6

• up hold brand image
• provide signs, fixtures and fittings
• provide training and advice

Question 7

What will the franchise normally agree to?

Answer 7

• Purchase stock for the franchisor

- pay an initial fee plus royalties in turnover

Question 8

Advantages to franchiser

Answer 8

• Expand rapidly
• Less risk
• Local knowledge
• Their investment as a motivation

Question 9

Disadvantages for the Franchisor

Answer 9

• The franchisee will fail making it reflect bad on the brand name
• The franchise may under declare its sales to reduce royalties

Question 10

Advantages for Franchisee

Answer 10

• Gets to use the successful brand name/product
• Takes advantage of bulk buying
• lower failure rates than independent firms

Question 11

Disadvantages for the franchisee

Answer 11

• little freedom pricing, offers , promotions
• the franchisee takes the the risk
• the franchisee may suffer is the other franchises are of a poor quality
• an obligation to buy inputs/ services form the franchiser