Workbook 3 Flashcards
Sole trader
The business in owned and operated by one person
Partnership
A group with 2 - 20 people who own and run a business together
Unincorporated business
No separated legal identity.
Client can sue your company and you/make you sell your own assets
Liability
The level of risk in a company
Low
Unlimited liability
The risk is very high so everything is risky
Deed of partnership
A written document showing who is responsible for what and who has contributed more
Memorandum of Association
A document that contains all the important information about a business and it’s owners.
Also contains it’s goals
Private sector
Sector that consists of privately owned businesses who’s goal is to make a profit
Public sector
A sector that consists of government owned businesses that are operated by the government and paid for by taxes.
Sole trader advantages
-Few legal regulations to set up the business
-They are their own boss
-Has the ability to choose their own holidays
-Has the insentive to work hard as all the profits are theirs
-Doesn’t have to give out private information
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Sole trader disadvantages
The business stops when you are away
Unincorporated so you can be personal sued
Unlimited risk
Partnership advantages
If one owner is away then the business keeps running Partners can discus options More work is done More ideas about the company More capital
Partnership disadvantages
There can be disagreements between partners
Must share profits
Unincorporated can be sued personally
Unlimited risk
Public limited company
A company has at least two shareholders and can sell shares to anyone on the stock market through stock exchange
Private limited company
Has one or more shareholders and will only sell shares to people known to the company or existing shareholders
Shareholder
Someone who partly owns a business by investing in it
Accounts payable
We owe money😣
Accounts rrceivable
people owe us money😁
Incorporated business
Has a separate legal identity
Private limited company
Advantages
More capital
Divorce of ownership and control as shareholders appoint directors
Private limited company
Disadvantages
Must register with companies house
Legal documents
Accounts must be visible to community
Must pay dividends
main reason companies decide to go public?
To get more capital to be able to expand and grow
Franchise
An agreement by one company with another business to permit the sales of its goods and services using its trademark and brand. e.g Nike and rebel sport
Franchisor
An existing, usually well known company with an established identity, market and brand name
Franchisee
A sole trader/partnership/limited company that buys the right to use the business name, brand name, production methods and promotional material
Joint venture
A contractual agreement between two or more organisations to share the expertise, investment, management, cost, profits and risks of running a new business
e.g Japanese and the harbor bridge clip on lanes
Franchise advantages
- Popular
- Cheaper than starting a new business
- Get free advertisement from the main company
- Customer loyalty
- Quality control for the customer
Franchise disadvantages
- Must share a percentage of profits to with main company
- Could put a bad name on the company
- Costs a lot to set up
- Must follow the strict guidelines from the main company
Joint venture advantages
- Gets expertise
- More capital invested
Joint venture disadvantages
- Disagreements
- Must share profits
- Cultural issues
Venture capital
Capital provided for a business by people or groups usually for a share in the business and profits.
e.g. shark tank, dragons den
Dividens
The amount of money paid to the shareholders based on the profit of the business/limited company
Centralised
Keeping all decisions within the head office or the center of the organisation
Decentralised
Decision making powers and passed down the organisation to empower subordinates and regional manergers
Hierarchy
The layers of management and command in the organisations (family tree sort of)
Chain of command
The line of management and authority in a hierarchical organisation
Function
Departments e.g. accounts, marketing, sales, production
Delegation
The process of assigning tasks and the authority to carry them out to subordinates
Subordinates
The people/employees/workers below someone
Organisational structure
How roles, responsibilities and management authority are allocated within an organsiation
Span of control
The number of subordinate staff that a manager serpervises
Internal communication
Communication between people in the same organisation
External communication
Communication with people outside the organisation
Medium of communication
Methods of communication used
Feedback
A response provided during two way communication from the receiver to the sender
Two way Communication
Both sender and receiver are involved in the communication process allowing a discussion
Features for effective communication
- Clear
- Appropriate
- Cost effective
- Available/accessable
Agenda
A to-do list. A list of items to be discussed at a meeting
Memorandum
A note or recording to remind, prompt, or inform someone
