Unit 1.2

Question 1

> Turnover of 1.7m
9 member of staff

Answer 1

Micro Business

Question 2

Less than Turnover of 5.6m
less than 10-49 members of staff

Answer 2

Small Business

Question 3

Explain Medium Sized Business

Answer 3

Less than Turnover of 22.9m
Less than 50-249 member of staff

Question 4

Explain Large Business

Answer 4

Turnover of 22.9m +
249 member of staff +

Question 5

Explain Private Sector Business

Answer 5

Aim is to Make Profit

Capital Provided by Capitalists

Profit is divided amongst shareholder or is reinvested back into the business

Owned by Private Induviduals

Question 6

Explain Public Sector Businesses

Answer 6

1) Owned by the government
2) Controlled by the council
3) Capital is raised by taxes and rates
4) Profits is handed to back to the governments or used to schools/hospitals/roads
5) Aim is to provide a service

Question 7

What is a Sole Trader?

Answer 7

A sole trader is a business completely owned and controlled by a single person

Question 8

Advantages of Sole Trader

Answer 8

1) All Profits are kept( TMT a sole trader doesn’t need to split all his profits and has more money to spend on luxuries)
2) Better Control(The owner is able to make all the decisions herself)

Question 9

Disadvantage of a Sole Trader

Answer 9

1) unlimited Liability( If the business goes into debt, the owner might have to loose his personal possessions to repay his debt)
2) Lack of Continuity( is she was to become ill, her business may suffer as a result)

Question 10

What is a Partnership?

Answer 10

A partnership is when 2-20 combine to form a business.

Question 11

Agreement to set up a partnership

Answer 11

Deed of Partnership

Question 12

Advantages of a partnership

Answer 12

1) Partners have less workload( This is advantageous because the work can be shared , and if one person is ill other person can manage mean time)
2)Easy to raise capital as they can share the investment ( This is advantageous because it is easy to raise more capital)

Question 13

Disadvantages of Partnership

Answer 13

1) Conflict between partners( running a business’ as a partnership might be hard as different people have different views on how to run a business)
2) unlimited Liability( If the business goes into debt, the owner might have to loose his personal possessions to repay his debt)

Question 14

Explain Private Limited Companies

Answer 14

1) Owned by shareholders
2) Shares cannot be sold to the public or transferred without the permissions of all shareholders

Question 15

Advantages of Private Limited Companies

Answer 15

1) Shareholders have limited liability . This means that if a business goes into to debt, shareholders wont loose their personal possessions and would only loose what they invested

Question 16

Disadvantages of Private limited Companies

Answer 16

Shares cannot be sold to the public, this means that it is hard to raise capital for the business

Have to share dividend

Question 17

What do Public Limited Companies have at the end of their name

Answer 17

PLC

Question 18

What do Public Limited companies have at the end of their name

Answer 18

PLC

Question 19

Advantages of PLCs

Answer 19

1) Members of Public can buy shares, this means that it is easy to raise capital
2) Banks are will to give loans to PLC( this is advantageous because it is easy to raise capital)

Question 20

What is it called when shareholders have to divide their profit

Answer 20

Dividend

Question 21

Disadvantages of PLCs

Answer 21

Anyone can buy shares( This is disadvantageous because the company might be taken over

Decision making is often slow as several meetings have to be held

Question 22

What is a Franchise?

Answer 22

a Franchise is when a franchisor, gives permission to a franchisee to open up a business under the franchisor’s name

Question 23

Who is a franchisee?

Answer 23

is someone who buys a franchise form a franchisor

Question 24

Who is a franchisor?

Answer 24

is someone who sells a franchise to a franchisee

Question 25

Advantages of a Franchisee

Answer 25

Will create revenue as the brand is well established and customers are already intrested in the business

Banks are willing to give loans to franchises

Question 26

Disadvantages of Franchisee

Answer 26

Doesnt have much freedom to manage his store as he little control of the business and has to follow the franchisor’s guidelines( TMT less job satisfaction)

Has to pay the franchisor a down payment and has to pay royalties every month( tmt less profit)

Question 27

Advantages of a Franchisor

Answer 27

Franchising the brand allows the business to expand more quickly( This increases corporate image)

Doesn’t need as much day-to day involment in the business( Tmt there is less workload)

Question 28

Disadvantages of a Franchisor

Answer 28

Should a franchise do poorly, this will affect the whole brand’s reputation
This is putting the business at risk

Question 29

What are the monthly payments a franchisee pays to a franchise

Answer 29

Royalty Payments