Types Of Organisations Flashcards
What is a SOLE TRADER
When a business is started up by one person - they own and control the business
How is a SOLE TRADER financed
Owners savings, loan from family, bank loan, bank over draft, government grants
What is the main objective of a SOLE TRADER
Maximise profits, survive
, grow and expand
What are examples of a SOLE TRADEr
Window cleaners, hairdressers
What are the ADVANTAGES of a Sole Trader
- Owners make all their own decisions
- keeps all the profit
- decides when they want to work
- they are their own boss
What are the DISADVANTAGES of a Sole Trader
- if they choose not to work there is no income
- harder to raise finance as business is seen as “risky”
- can be stressful with no help
- have unlimited liability
What is meant by UNLIMITED liability
If the business fails, the owner is legally responsible for all of the business debts
What is a PARTNERSHIP
When a businesses is started by 2-20 people. Therefore the business is owned and controlled by 2-20 people
How is a PARTNERSHIP financed
By partners savings, new partners,bank loan
What is a PARTNERSHIPS main objective
Maximise profits, survive, grow, expand
What are examples of PARTNERSHIPS
John Lewis, Marks & Spencer’s, Ben & Jerry’s
What are the ADVANTAGES of a Partnership
- responsibilities and workload are shared
- knowledge and experience from all partners is gained
- there is cover when a partner is off unwell
- more than one person putting money into the business
What are the DISADVANTAGES of a Partnership
• profits must be split between partners • Partners can fall out • Partners must be in agreement about all decisions that are made • have unlimited liability
Who owns a PRIVATE LIMITED COMPANY
Shareholders
What is meant by a Shareholder
An individual who pays money to own a share in the business
Who controls a PRIVATE LIMITED COMPANY
A board of directors
How is a PRIVATE LIMITED COMPANY financed
By shareholder investment, new shareholders buying shares, issue in more shares for sale, retained profits
What is the main objective for a PRIVATE LIMITED COMPANY
Maximise profits, maximise sales, survive and grow
What are examples of Private Limited Companies
Arnold Clark, Ryanair, Baxter’s
What are the ADVANTAGES of a Private Limited Company
- easier to raise finance as business type is seen as more stable
- can benefit from all shareholder skills and experience
- Has limited liability
What is meant by LIMITED liability
If the business fails, shareholders are only legally responsible for the month they have invested into the business and not all debts of the business
What are the DISADVANTAGES of a Private Limited Company
- profits has to be split between all shareholders
- Business has to publish their financial account so everyone could see them
- There are legal procedures that must be followed when setting up this type of business
Who owns a PUBLIC LIMITED COMPANY
A minimum of two shareholders
Who controls a PUBLIC LIMITED COMPANY
A board of directors
How is a PUBLIC LIMITED COMPANY financed
By shareholders investment, new shareholders, bank loan, retained profits
What is the main objective of a PUBLIC LIMITED COMPANY
Maximise profits, maximise sales, growth and market dominance
What are the ADVANTAGES of a Public Limited Company
- access to more capital one private limited companies
- employs specialists
- Limited liability for shareholders
- Company doesn’t die if owner dies
- can take advantage of economies of scale due to size
What are the DISADVANTAGES of a Public Limited Company
- formation expensive(legal and administrative cost)
- must publish/go public with accounts
- may become to large to manage
- decisions more difficult to get an agreement
- have no control over who can purchase a share
What is meant by a FRANCHISE
A business agreement that allows one business to trade using another businesses name and sell their products/services
What are examples of a Franchise companies
McDonald’s, body shop, subway, Burger King
What are the ADVANTAGES of a Franchisor
- Guaranteed income each year from franchisees sales
- rapid growth
- risk is shared
- Good ideas can be shared
What are the DISADVANTAGES of a Franchisor
- income from franchisee sales could be less
* Risk of damage to the business name/reputation a franchisee performance poorly
What are the ADVANTAGES of a Franchisee
- reputation of the franchisor will help business to gain customers and sales quickly
- Franchisor will help and support
What are the DISADVANTAGES of a Franchisee
- franchisee has no control over products and prices
- Can be expensive to purchase a franchise
- Franchisee must purchase order supplies from the franchisor
- Franchisee has to pay a percentage of the profits to the franchisor
What is meant by MNC
Multinational company
What are the features of an MNc
- operate in several countries
- How’s distinct homebase countries where the headquarters are located
- recognised around the world
- revenue can be larger than some countries
- can greatly influence local economies
What are the ADVANTAGES of a MNC
- to reduce production costs(cheaper labour/land)
- reduce transport costs
- penetrate new markets
- take advantage of “host” government assistance and incentives
- to earn higher after tax profits
What are the DISADVANTAGES of a MNC
- damage to reputation
- currency’s fluctuations( exchange rates)
- poor infrastructure
- cultural differences( language barrier)
- transportation cab be expensive
- difficult to control/mange in many countries
What is meant by GLOBALISATION
The process of businesses trading products all over the globe
What are the ADVANTAGES of Globalisation
- access to larger marketplace
- develops brand internationally
- Home market may be saturated
- increase profit margins may be available
What are the DISADVANTAGES of Globalisation
- more competition
- additional transport cost
- additional research and development costs
- legislation
- culture/language
- Profits go back to home country
What businesses are in the PUBLIC Sector
- Central government organisation( NHS,Police, fire service, HMRC)
- local government(education, local councils, leisure and culture)
What are the ADVANTAGES of businesses in the Public Sector
- essential services are provided to all customers
- faces little competition
- provides services that could be unprofitable by firms in the private sector
- provide employment
What are the DISADVANTAGES of businesses in the Public Sector
- often considered to be bureaucratic
- As no profit motive , can be like of innovation
- I change in government is likely to mean a changing priorities, funding,spending
What types of businesses are in the THIRD Sector
Charities and social enterprise
What is the main objective for businesses in the THIRD sector
Maximise donations and raise awareness of the cars there supporting to provide a service
How are businesses in the THIRD sector financed
Through donations from the public
