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Business structures Flashcards

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1
Q

what is a public sector?

A

-the public sector is that sector of the economy that is owned and controlled by the government rather than individuals
-main aim is to provide a good quality service that is accessible to everyone
E.G. police, school, hospitals

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2
Q

what is a private sector?

A

-the private sector is owned and controlled by individuals or groups of individuals rather then the government.
-main aim is to survive and make profit

E.G. ASDA, apple

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3
Q

why do some industries exist in both private and public sectors?

A

people are willing to pay to get better services and some willing to wait

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4
Q

what are public goods?

A

goods where consumption by one person does not reduce the amount available to others and, once provided, all individuals will benefit

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5
Q

what are the 2 features of public goods?

A

-non-excludability
-non-rivalry

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6
Q

what is non-excludability?

A

individuals cannot be prevented from enjoying the benefits provided by public goods

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7
Q

what is non-rivalry?

A

one person gaining from consumption of a good or services will not prevent others from gaining the goods or services.

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8
Q

what is a merit good?

A

a merit good is one that is deemed to be beneficial for society but is under provided by the merit

E.G. education, health care

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9
Q

what are the aims of the public sector?

A
  • make essential services available to all for the goods of society
    -services that would not be provided by the private sector
    -services that can not be easily charged for or sold profitably but benefit everyone
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10
Q

what are the aims of the private sector?

A

-survival:
=to continue to exist as a business
=this may be the primary objective of a start-up business
-profit:
=to achieve sales revenue that is higher that the total costs
=profit=sr-tc
-growth:
=to increase in size either by value of sales or volume of sales
=this may be organically i.e opening new stores

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11
Q

what benefits does the private sector bring to the economy and society?

A

-better and faster quality services
-creates jobs
-paying taxes
-tailored
-increase GBP

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12
Q

what is the importance of the private sector?

A

-profit incentive help drive down prices
-creates jobs
-social enterprise and charities

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13
Q

what is a sole trader?

A

an individual who owns and runs their business. they may employ workers

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14
Q

what is unlimited liability?

A

the business is liable for all the debts of the business, up to and including the values of all assets held

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15
Q

what does a sole trader having unlimited liability mean?

A

-they do not have a separate legal existence from their owner
-meanings owners are personally responsible for all the debts and may sell personal professions to pay back

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16
Q

what are the benefits of a sole trader?

A

-less paper work
-more earning potential
-low over heads

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17
Q

what are the disadvantages of a sole trader?

A

unlimited liability
-less customer trust
-higher taxes

18
Q

what is a partnership?

A

a partnership involves the joint ownership of a business where 2 to 20 people share the costs, risks and responsibilities of being in business together

19
Q

what is the deed of partnership?

A

it is a legal document that sets out the rules under which the partnership will operate

20
Q

what does the deed of partnership cover?

A

-sets out the share of profits
=determines how much money the partners will get

-partnerships role in the business
=ensuring the business has an organisational framework

-what will happen if one of the partners were to pass away
=shows where the business will go after partner leaves or passes

-voting shares of each partner
=the number of voting share is often allocated in relation to the relative size of the investment made by each partner

21
Q

what are the benefits of a partnership?

A

-liability split between partners
-cover for someone if ill
-more investments

22
Q

what are the drawbacks of a partnership?

A

-sharing profits
-unlimited liability
-disagreements
-responsible for other owners mistakes

23
Q

what is limited liability?

A

the owners are not responsible for the company’s debt, they can only lose the money that they have invested in the business in form of shares

24
Q

what is needed to set up a limited company?

A

-companies must be registered at companies houses
-companies must send the following:
=memorandum of association
=articles of association

25
Q

what is a memorandum of association?

A

basic details about company
E.G name, address, nature of company

26
Q

what is a article of association?

A

rules of the company
E.G. procedures that must be followed, duties of directors, voting rights

27
Q

what is a private limited company (ltd)?

A

type of organisation you can set up to run your business

28
Q

what are key points about ltd?

A

-companies have ltd after their name
-owned by shareholders
-can only sell shares onto other shareholders

29
Q

what are the advantages of an ltd?

A

-limited liability
-other businesses and lenders are more likely to trade and invest
-more capital can be gained

30
Q

what are the disadvantages of an ltd?

A

-legal procedures in setting up
-profits have to be shared with shareholders
-shares cannot be sold to public

31
Q

what is a public limited company (plc)?

A

a business that is managed by directors and owned by shareholders.

32
Q

what are the key points about plc?

A

-have plc after the name
-shares can be sold to public
-open to more public scrutiny

33
Q

what are the advantages of a plc?

A

-limited liability
-more funds can be raised through
-selling shares to the public

34
Q

what are the disadvantages of a plc?

A

-loss of control
-lack of privacy
-more complex to set up

35
Q

what are examples of not for profit organisation?

A

-charities
-co-operatives
-social enterprises

36
Q

what is a not for profit organisation?

A

businesses that are made not to maximise profits instead their focus is on social or ethical objectives

37
Q

what is social enterprises?

A

a business with a social or environmental purpose who reinvests at least 50% of the profits they make to help achieve their objectives and create a social/environmental change

38
Q

what is a co-operative?

A

-organisations that operate for the wellbeing of their members
-members can be customer, employers, suppliers

39
Q

what are the benefits of a co-operative business model?

A

-controlled by and owned by people who works in it
-employers have no responsibility
-equal vote

40
Q

what are the drawbacks of a co-operative business model?

A

-managers don’t get paid well
-requires continuous cooperative education programs for members
-could lead to disagreements

41
Q

what are charities?

A

organisations with an aim to support a specific cause or benefit for the well being of society

Business (9 decks)

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