Unit 2

Question 1

Six stages of the enterprise process

Answer 1

Identifying the problem 
Exploring creative solutions
Action Planning
Implementing the plan 
Monitoring progress

Question 2

Sole trader

Answer 2

A person responsible for setting up and running an enterprise that he or she runs alone.

Question 3

Advantages of a sole trader

Answer 3

• Simple to establish
• take decisions independently
• any profit made after the tax is kept by the owner
• flexibility
• provide more of a personal service to customers
• recieve government support

Question 4

Disadvantages of a sole trader

Answer 4

• Has limited liability meaning that the owner is totally responsible for any debt that the enterprise has
• Difficulites in raising finance
• Owner may lack the skills to make business decisions
• Difficult to compete with larger firms
• Can be personally taken to court if there is any dispute

Question 5

Partnership

Answer 5

A type of business organisation owned by two or more people

Question 6

Advantages of a partnership

Answer 6

• easy to form
• more than one owner so easier to raise money
• specialise in paricular aspects of work
• can share the decision making

Question 7

Disadvantage of partnership

Answer 7

• Have unlimited liability - they may be asked to sell their personal possesions if partnership on debt
• not large enough to gain economies of scale
• Disagreements can affect the enterprise
• If a partner leaves the partnership is dissolved
• Profit has to be shared among all the partners
• partners can be sued by customers

Question 8

Limited Company

Answer 8

• A company that is legally independent from its shareholders, who as a result have limited liability.
• people who put money into the company can only lose this money if the company goes bankrupt their own personal possesions are not at risk.

Question 9

the two types of limited company

Answer 9

• private limited company - the shares cannot be bought by members of the public.
• public limited company- the shares are sold on a stock exchange. They can be bought by the members of the public .

Question 10

advantages of a limited company

Answer 10

• can raise more money than sole traders and partnerships
• gain economies of scale
• will continue if the owner dies

Question 11

Disadvantages of a Limited Company

Answer 11

• accounts may be avaible to the public
• orignal founders can lose control as people buy shares
• Profit has to be shared with a number of people
• Shares of private limited company cannot be sold to the general public
• Limited Companies may be inflexible

Question 12

Co-operative

Answer 12

• a type of business organisation owned by its customers or its employees

Question 13

Two types of co-operative

Answer 13

• Consumer or retail Co-operative

- A producer or worker co-operative

Question 14

Advantages of a Co-operative

Answer 14

• Shareholders in a consumer or producer co-operative have limited liability
• Producer cooperative the workers are shareholders so less likely to be in disputes.
• there is a democratic ownership , one member one vote
• consumer cooperative- the business is run into the customers interest
• involve the local community
• are more ethical

Question 15

Disadvantages of a cooperative

Answer 15

• shares are not normally sold on stock exchange
• Producer cooperative- workers difficult to raise enough capital
• Producer cooperative- wokers lack of experience to make the enterprise succesful