1.4 making the business effective

Question 1

sole trader advantages and disadvantages

Answer 1

advantages:
-makes all the decisions
-quick and easy to set up
-keeps all the profits
-financial info is kept private
disadvantages:
-unlimited liability
-difficult to raise money and establish the business
-lots of pressure on one person
- can be difficult to run if owner takes time off

Question 2

partnership advantages and disadvantages

Answer 2

advantages:
- wider expertise
-share ideas in decision making
- risk is shared
- easier to establish the business
- business financial info kept private
disadvantages:
- profits are shared
- decisions made by one partner can affect all partners
- mey be disagreements

Question 3

private limited company advantages and disadvantages

Answer 3

advantages:
-limited liability
-easier to establish
- business continues to trade even if shareholders change
disadvantages:
- more complex to set up
- disagreements between shareholders
- business financial info is published
- more requirements to report information to organisations

Question 4

advantages of franchising

Answer 4

• lower risk then to set up independently
• support and training provided by franchisors
• franchisees benefit from national marketing campaigns

Question 5

disadvantages of franchising

Answer 5

• franchisees have to pay an initial fee as well as ongoing fees or a share of their profits
• cannot make independent decisions
• brand reputation can be ruined by other franchisees if they dont maintain standards

Question 6

factors influencing business location