Unit 1 - what is business?

Question 1

Advantages and Disadvantages of ethicality

Answer 1

Advantages:
Government subsidies
USP creates customer loyalty and retention
Encourages investors to invest.

Disadvantages:
Higher costs - costly suppliers.

Question 2

Incorporated businesses and features

Answer 2

PLC’s and Ltd’s have limited liability and a separate legal identity.

Question 3

Unincorporated businesses and features.

Answer 3

Sole traders and partnerships have unlimited liability and have full responsibility for the debts and financial components of the business.

Question 4

Market capitalisation

Answer 4

Value of all shares issued by a plc

Question 5

Influences on share price

Answer 5

Global economy
Company performance
Investor confidence

Question 6

Significance of share price changes

Answer 6

Indication of a business and managers performance
Will be watched carefully by competitors and other businesses for an opportunity for a hostile takeover.

Question 7

Privatisation

Answer 7

The transfer of assets from public to private sector.

Question 8

Pros of privatisation

Answer 8

Pros:
Improvements in economic efficiency as they can control costs and raise efficiency.
Businesses in competitive industries can make commercial decisions.
Improved profits = more corporation tax.

Question 9

Cons of privatisation

Answer 9

Cons:
Transferring to private sector may cost thousands of jobs
Government can provide funding requited to increase productivity .
Raised prices may become less affordable to the public.