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Understaing Business > Types Of Organisations > Flashcards

Types Of Organisations Flashcards

1
Q

What is a SOLE TRADER

A

When a business is started up by one person - they own and control the business

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2
Q

How is a SOLE TRADER financed

A

Owners savings, loan from family, bank loan, bank over draft, government grants

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3
Q

What is the main objective of a SOLE TRADER

A

Maximise profits, survive

, grow and expand

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4
Q

What are examples of a SOLE TRADEr

A

Window cleaners, hairdressers

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5
Q

What are the ADVANTAGES of a Sole Trader

A
  • Owners make all their own decisions
  • keeps all the profit
  • decides when they want to work
  • they are their own boss
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6
Q

What are the DISADVANTAGES of a Sole Trader

A
  • 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
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7
Q

What is meant by UNLIMITED liability

A

If the business fails, the owner is legally responsible for all of the business debts

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8
Q

What is a PARTNERSHIP

A

When a businesses is started by 2-20 people. Therefore the business is owned and controlled by 2-20 people

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9
Q

How is a PARTNERSHIP financed

A

By partners savings, new partners,bank loan

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10
Q

What is a PARTNERSHIPS main objective

A

Maximise profits, survive, grow, expand

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11
Q

What are examples of PARTNERSHIPS

A

John Lewis, Marks & Spencer’s, Ben & Jerry’s

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12
Q

What are the ADVANTAGES of a Partnership

A
  • 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
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13
Q

What are the DISADVANTAGES of a Partnership

A 
• profits must be split between partners
•
Partners can fall out
• Partners must be in agreement about all decisions that are made
• have unlimited liability
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14
Q

Who owns a PRIVATE LIMITED COMPANY

A

Shareholders

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15
Q

What is meant by a Shareholder

A

An individual who pays money to own a share in the business

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16
Q

Who controls a PRIVATE LIMITED COMPANY

A

A board of directors

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17
Q

How is a PRIVATE LIMITED COMPANY financed

A

By shareholder investment, new shareholders buying shares, issue in more shares for sale, retained profits

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18
Q

What is the main objective for a PRIVATE LIMITED COMPANY

A

Maximise profits, maximise sales, survive and grow

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19
Q

What are examples of Private Limited Companies

A

Arnold Clark, Ryanair, Baxter’s

20
Q

What are the ADVANTAGES of a Private Limited Company

A
  • easier to raise finance as business type is seen as more stable
  • can benefit from all shareholder skills and experience
  • Has limited liability
21
Q

What is meant by LIMITED liability

A

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

22
Q

What are the DISADVANTAGES of a Private Limited Company

A
  • 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
23
Q

Who owns a PUBLIC LIMITED COMPANY

A

A minimum of two shareholders

24
Q

Who controls a PUBLIC LIMITED COMPANY

A

A board of directors

25
Q

How is a PUBLIC LIMITED COMPANY financed

A

By shareholders investment, new shareholders, bank loan, retained profits

26
Q

What is the main objective of a PUBLIC LIMITED COMPANY

A

Maximise profits, maximise sales, growth and market dominance

27
Q

What are the ADVANTAGES of a Public Limited Company

A
  • 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
28
Q

What are the DISADVANTAGES of a Public Limited Company

A
  • 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
29
Q

What is meant by a FRANCHISE

A

A business agreement that allows one business to trade using another businesses name and sell their products/services

30
Q

What are examples of a Franchise companies

A

McDonald’s, body shop, subway, Burger King

31
Q

What are the ADVANTAGES of a Franchisor

A
  • Guaranteed income each year from franchisees sales
  • rapid growth
  • risk is shared
  • Good ideas can be shared
32
Q

What are the DISADVANTAGES of a Franchisor

A
  • income from franchisee sales could be less

* Risk of damage to the business name/reputation a franchisee performance poorly

33
Q

What are the ADVANTAGES of a Franchisee

A
  • reputation of the franchisor will help business to gain customers and sales quickly
  • Franchisor will help and support
34
Q

What are the DISADVANTAGES of a Franchisee

A
  • 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
35
Q

What is meant by MNC

A

Multinational company

36
Q

What are the features of an MNc

A
  • 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
37
Q

What are the ADVANTAGES of a MNC

A
  • 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
38
Q

What are the DISADVANTAGES of a MNC

A
  • 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
39
Q

What is meant by GLOBALISATION

A

The process of businesses trading products all over the globe

40
Q

What are the ADVANTAGES of Globalisation

A
  • access to larger marketplace
  • develops brand internationally
  • Home market may be saturated
  • increase profit margins may be available
41
Q

What are the DISADVANTAGES of Globalisation

A
  • more competition
  • additional transport cost
  • additional research and development costs
  • legislation
  • culture/language
  • Profits go back to home country
42
Q

What businesses are in the PUBLIC Sector

A
  • Central government organisation( NHS,Police, fire service, HMRC)
  • local government(education, local councils, leisure and culture)
43
Q

What are the ADVANTAGES of businesses in the Public Sector

A
  • essential services are provided to all customers
  • faces little competition
  • provides services that could be unprofitable by firms in the private sector
  • provide employment
44
Q

What are the DISADVANTAGES of businesses in the Public Sector

A
  • 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
45
Q

What types of businesses are in the THIRD Sector

A

Charities and social enterprise

46
Q

What is the main objective for businesses in the THIRD sector

A

Maximise donations and raise awareness of the cars there supporting to provide a service

47
Q

How are businesses in the THIRD sector financed

A

Through donations from the public

Understaing Business (8 decks)

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