Unit 3, AOS 1, Dp 1

Question 1

Sole trader

Answer 1

a business structure that is owned and operated by one individual, they are unincorporated and have unlimited liability.

Question 2

Sole trader +

Answer 2

+ owner has full control and decision-making power
+ low risk of disputes
+ easy to register and set up

Question 3

Sole trader -

Answer 3

• Unlimited liability puts owners personal assets at risk
• may be difficult to take time off
• life of the business ends when the owner dies

Question 4

Partnership

Answer 4

a business structure that is owned by 2 to 20 owners with unlimited liability

Question 5

Partnership +

Answer 5

+ greater range of expertise and ideas amongst numerous partners
+ financial and legal risks are shared between partners
+minimal startup costs

Question 6

Partnership -

Answer 6

• conflicts could arise due to shared decision-making
• profit needs to be shared between partners
• liability for debts incurred b other partners is held by all partners

Question 7

Private limited company

Answer 7

An incorporated business structure that has at least one director and a maximum of 50 shareholders with limited liability e.g cotton on

Question 8

Private limited company +

Answer 8

+ limited liability
+ greater variety of expertise and ideas
+ incorporated businesses have greater access to capital, banks are more inclined to provide them with loans

Question 9

Private limited company -

Answer 9

• complex reporting requirements, such as annual reports for shareholders
• complex to establish, longer startup time
• expensive to set up and operate

Question 10

Public listed company

Answer 10

An incorporated business that has an unlimited number of shareholders and lists and sells its shares on the ASX, with limited liability e.g Commonwealth Bank

Question 11

Public listed company +

Answer 11

+ shareholders have limited liability
+ greater access to expertise
+ no permission needed to trade and sell shares

Question 12

Public listed company -

Answer 12

• complex reporting requirements (annual financial reports)
• greater time taken to set up as it is a complex business structure
• expensive to set up and operate

Question 13

Social enterprise

Answer 13

type of business that aims to fulfil a community or environmental need by selling goods or services

Question 14

Social enterprise +

Answer 14

+ community benefits from business activities
+ employees have purposeful work
+ likely to receive financial support

Question 15

Social enterprise -

Answer 15

• difficult to balance achievement of financial objectives with social objectives
• may be difficult to obtain a bank loan as the business does not solely focus on financial objectives

Question 16

Government business enterprise

Answer 16

business owned and operated by the government typically to cater for essential public needs

Question 17

GBE +

Answer 17

+ delivers goods and services that help the community and the community’s needs
+provides healthy competition to private sector
+ rely on the government for initial investment

Question 18

GBE -

Answer 18

• Governments and politicians can interfere and change the strategic direction of the business
• have to follow excessive rules and formalities
• productivity may be lower than private-sector as there tends to be a lack of accountability in the public sector