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Question 1

What is a sole trader/proprietor

Answer 1

A business controlled by 1 owner

Question 2

Advantages of a sole trade

Answer 2

• Full Control

- Receive all profits

Question 3

Disadvantages of sole trader

Answer 3

• Unlimited liability

- Limited capacity to raise capital

Question 4

What is a partnership

Answer 4

Business owned by 2 or more people

Question 5

Advantages of a partnership

Answer 5

• Share ideas/offer different skills

- higher initial capital

Question 6

Disadvantages of partnership

Answer 6

• Disagreements/conflict

- Have to share profit

Question 7

What is unlimited liability

Answer 7

Being responsible for all the debts of the business

Question 8

what is a Limited liability partnership

Answer 8

A legal partnership where all partners have limited liability

Question 9

what is a Deed of partnership

Answer 9

A document containing an agreement that details the rights and obligations of each partner

Question 10

What is sleeping partner

Answer 10

Someone who invests but does not take part in day to day activity (limited partner)

Question 11

What is a private limited company

Answer 11

Business owned by shareholders who are family or friends, and ran by a board of directors

Question 12

Advantages of Ltd

Answer 12

• Limited liability for shareholders

- Continuity

Question 13

Disadvantages of Ltd

Answer 13

• Complicated to set up

- Accounts have to be public

Question 14

What is a public limited company

Answer 14

Business that is owned by shareholders (public), and is ran by board of directors

Question 15

Advantages of Plc

Answer 15

• Greater ability to raise finance

- More publicity

Question 16

Disadvantages of Plc

Answer 16

• Pressure from shareholders

- Greater threat of takeover

Question 17

What is a franchise

Answer 17

A firm that offers its brand, products, training etc for use in return for royalty payments

Question 18

Advantages of a franchise

Answer 18

• Free brand exposure

- Training included

Question 19

Disadvantages of franchise

Answer 19

• Royalty payments

- Lack of Control

Question 20

What is meant by the public sector

Answer 20

Services that are provided by the national or local government, funded by tax

Question 21

What is meant by the private sector

Answer 21

Services/goods provided by private firms, funded by the consumer

Question 22

Positives of public sector

Answer 22

• Provide non-profitable services

- Available to everyone

Question 23

Negatives of public sector

Answer 23

• No incentive to provide quality

- Funded by taxpayer (not fair)

Question 24

What is meant by privatisation

Answer 24

When public sector enterprises are sold by government to private firms

Question 25

Advantages of privatisation

Answer 25

- Government can raise capital | - Private firms increase quality

Question 26

Disadvantages of privatisation

Answer 26

- Redundancies | - Increases in prices

Question 27

What is nationalisation

Answer 27

When private sector firms are bought and taken over by the government

Question 28

What is a mission statement

Answer 28

States overall purpose of firm

Question 29

What is the purpose of a mission statement

Answer 29

- Motivates form to carry out main function | - Helps recruitment/detainment of staff

Question 30

What is an aim

Answer 30

What a firm is targeting to achieve in the long term

Question 31

What is an objective

Answer 31

A specified, short term target

Question 32

What are the 2 forms of objectives

Answer 32

SMART | PIGSS

Question 33

What does SMART objectives stand for

Answer 33

``` Specific Measurable Achievable Realistic Time bound ```

Question 34

What does PIGSS objectives stand for

Answer 34

``` Profit Increases market share Growth Service/ethics Survival ```

Question 35

Give examples of constraints on objectives

Answer 35

- Lack of capital - Lack of demand - Unavailability of premises

Question 36

What are corporate social objectives

Answer 36

Environmental, ethical, sustainable and community focused objectives

Question 37

Advantages of corporate social objectives

Answer 37

- Improve reputation | - In reader motivation for staff

Question 38

Disadvantages of corporate social objectives

Answer 38

- High costs (maybe no return) | - Cynical accusations, bad publicity magnified more

Question 39

Why may objectives for a business change

Answer 39

- Economic change - Legal issues - Political issues - Social attitudes (demand)

Question 40

Give an example of conflicts of objectives

Answer 40

Environmental + growth

Question 41

What is a business plan

Answer 41

Statement that outlines how managers/owners intend to achieve objectives

Question 42

What may a business plan include

Answer 42

- Finance - Market research - Objectives - Potential strategies

Question 43

Why may strategies fail

Answer 43

- Lack of market knowledge - La k of capital - Poor management

Question 44

Why is a business plan important

Answer 44

- Set a budget - Obtain bank loan - Help achieve aims and objectives

Question 45

Define a risk

Answer 45

Investment of resources when returns are not certain

Question 46

Define reward

Answer 46

Returns achieved through taking risk/investment

Question 47

What is a quantifiable risk

Answer 47

One that can be measures

Question 48

What is a non-quantifiable risk

Answer 48

One that can’t be measured (eg if taking a risk leads to stress in business)