Unit 1 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
-
What is ansoff matrix
Market development:
what is a private sector?
busineses that are owned and run by private individuals and organizations that aim to eatn a profit for their owners.
- although they operate independently, they must abide by the rules and regulation of the country
eg: sole tradders, partners, privately held comapnies
What is a public sector?
organizations that are controlled by regional and/or national governments, with a main aim of providing goods and services to the general public
- such services can, but do not always charge customers
eg: healthcare, education, emergency services
What is a sole trader
a type of business owned and operated by 1 individual, while they can hire employees, they retain full ownership, control and responsibility including profit and liabilities.
What are advantages and disadvantage of sole traders
ADV:
1. Simple setup: quick and cost effective to establish
2. Full profit retention
3. Owner has full control for decision making
DISADV:
1. Unlimited liability: personal assets are at risk
2.High workload: they bear all responsibilities and risks
3.Limited financing: reliance on personal funds and difficulty accessing external funds
What is a partnership?
A business owned by 2 or more individuals who share responsibility for the businesses operations, profit and liability. Can be up to 20 partners
What are advantages and disadvantages of partnerships?
ADV:
1. Increased Finance:
2. Specialization: diverse skills and shared responsibility
3. Shared Workload
DISADV:
1. Conflict: disagreements between partners = slower decision making
2. Profit sharing: earnings are divided
3. Unlimited liability: personal assets are at risk
What is a privately held company?
it is a business owned by a small group of private investors whose shares are not publicly traded. They have limited liability and are not personally responsible for the company’s debts beyond their investment.
What are advantages and disadvantages of privately held company?
ADV:
1. shares cannot be sold or bought without agreement
2. limited liability: shareholders only risk losing their investments
3. increased finance: more capital is raised than sole tradders and partnership
DISADV:
1.Expensive to opperate
2. shares can only be sold to family and friends
3. Targeted takeover by larger companies
What is a public held company?
it is a limited liability business owned by shareholders, where shares are traded openly in a public stock exchange. (eg: NYSE). This allows the general public to buy and sell shares without prior permission from shareholders
What are advantages and disadvantages of publicly held company?
ADV:
1. can raise significant funds from selling shares on stock market
2. shareholders have limited liability
3. continuity of business despite major changes with shareholders
DISADV:
1. business must disclose financial accounts = lack of privacy
2. high administrative cost
3. rivalry threat of takeover bid
What is a silent/sleeping partner?
inactive owners of a partnership business, who provides additional capital without being involved in the actual running of the business
