UB - Types of Business organisation & objectives Flashcards
What is limited liability ?
Where shareholders are only responsible for the money they invested
What are the features of a public sector ?
Owned by Government
Controlled by government ministers
Financed by Taxes
Aim to provide a service to the public
What is the objective of the public sector ?
to provide a service to the public
What are the features of a sole trader ?
Owned by One person
Controlled by owner
Financed by Savings, loans from family
owner has UNLIMITED LIABILITY
Examples:
Hairdressers, Butchers, Electrician
What is unlimited liability ?
The owner is responsible for all business debt
What are the features of a partnership ?
Owned by 2 - 20 people
Controlled by Partners
Financed by Partners who invest savings
Partners has UNLIMITED LIABILITY
Examples:
Law firm, dental practice, estate agents
How are charities funded ?
Donations
Fundraising
Grants from Governments
What is the purpose of charities ?
Benefit a social cause
What is a business plan ?
A written document that describes the core business objectives and how the business plans to achieve them over a set period of time
What are some sources of help and advice in a business plan ?
- Be specific
- Know your Finnace
- Know your Market
Who are interested in looking at a business plan ?
- Entrepreneur
- Government
- Banks
- Investors
What information is included in a business plan ?
- Objectives
- Marketing stratagies
- Design and development of products
- Summary
What are the features of a private limited company ?
Owned by one private (invited) shareholder
Controlled by a Board of directors elected at the AGM
Financed by selling shares privately to family and friends
Private Limited Company has LIMITED LIABILITY
Examples:
Corner shop
What are business objectives ?
(PPIGSS)
Profit
Provide a quality service
Increase market shares
Growth
Survival
Social responsibility
How is a social enterprise funded ?
- Retained profit
- Donations
- Fundraising
What is the purpose of a social enterprise ?
To have a social impact rather than making a profit for their owners
What are the advantages and disadvantages of a sole trader?
Advantages:
- nobody to disagree with
- usually small in size
- relatively easy to set up with little legal work required
Disadvantages:
- unlimited liability
- relies on their savings
- you have to do all the work
What are the advantages and disadvantages of a Private limited company ?
Advantages:
- easy to raise finances and shares
- shareholders have limited liability
- owners maintain control of their business
Disadvantages:
- Shares cant be sold publically
- The legal set-up costs are expensive
- dividends must be given to shareholders
What are the advantages and disadvantages of a partnership ?
Advantages:
- partners can share workloads
- simpler to cover holidays and illnesses
- risks you take are shared
Disadvantages:
- profits shared among partners
- Chances of arguments & disagreements
- Partners have unlimited liability
In PPIGSS what is provide a service ?
All organisations: Private, Public and Third
Businesses want to provide a high quality service so that customers return
Private and social enterprises: good customer service
Public and charities: service for the community
In PPIGSS what is Profit maximisation ?
Private sector and social enterprises
Cut costs and increase prices
Private sector organisation want to maximise profits as it will be able to grow if it has increased retained profits
Social enterprises may want to maximise profits to have more
money to help their cause
In PPIGSS what is increase market share ?
Private sector- large organisations (LTD)
Increase sales so that they are the market leader
They can release a new product or increase promotion
In PPIGSS what is growth ?
Private and third sector
Private sector grow through increasing the number of shops, selling online, bringing out new products
Charities grow through raising awareness
Social enterprises grow through both increasing sales and also raising awareness
In PPIGSS what is survival ?
Private and third sector
Usually aim of smaller organisations
Private and social enterprises = have enough income from sales to cover costs
Charity= aim to increase donations to cover costs
Public will aim to use taxes efficiently
In PPIGSS what is social responsibility ?
Private, Public and third sector
This is when a business aims to carry out its activities AND benefit society or the environment
Advantages:
Good reputation
Customer are attracted by wanting to support an
ethical business
Good quality employees may be attracted to an
ethical business
May be able to attract ethical investors
