Business Forms Flashcards
(33 cards)
Different classifications: By economic sector
Primary sector
Secondary sector
Tertiary sector
Different classifications: By geographical research
Local business
National business
Multinational business
Different classifications: By market type
Consumer market (B2C) Industrial market (B2B)
Different classifications: By owner type
Private sector
Public sector
What is unlimited liability?
Responsible for paying off all of the debts personally if the company can’t make its payments
What is Limited liability?
A persons financial liability is limited to a fixed sum, most commonly the value of a person’s investment in a company or partnership
What is a private limited company?
“Company” (‘shareholders’) - Limited liability - Incorporated Aim: growth, profit - Sells shares, sales of assets - Dividends retained profit
Pros of private limited company
- Limited liability
- More capital, more shares
- Control cannot be lost to outsides
- Pay less tax
- More credible, confidence from suppliers act
Cons of private limited company
- Publish financial info
- Profit shares
- Cannot raise as large as public
- Less Flexible
What is public limited company?
“Company” (‘shareholders’) - Limited liability - Incorporated Aim: growth, market share - General public can buy shares on stock exchange
Pros of public limited company
- Huge amount of capital raised
- More credible, confidence from suppliers
- Exploit economies of scale lower costs, more competitive
- Dominate market due to size
Cons of public limited company
- Setting up costs are high
- Outsiders can take control
- Competitors use info to advantage
- Legislation (processing of making or enacting laws)
What is a sole trader?
“Business”- (‘owners’) - Unlimited liability - Unincorporated One individual Aim: survival
Pros of a sole trader
- Have control
- Flexible + adopt to change
- Owner keeps profit
Cons of a sole trader
- Unlimited liability
- Struggle to raise finance
- Too small to exploit economies of scale
What is a partnership?
“Business”- (‘owners’) - Unlimited liability - Unincorporated 2 to 20 people Aim: profit, growth and quality
Pros of partnership
- Specialise in different areas
- Shared burden
- More owners, more capital
- Doesn’t have to publish info
Cons of partnership
- Unlimited liability
- Share Profit
- Disagreements
- Limited growth
What is a franchise?
Where a franchiser grants a license (franchise) to another business (franchisee) to allow it to trade using the brand/ business format
Advantage of franchises
- Expand and become more visible
- Franchisor gives you support
- Products and services will have already established a market share
Disadvantages of franchises
- Could damage reputation if franchise doesn’t do do well
- All profits are shared with the franchisor
- Contracts reduce independence
What is a franchisor?
Person who owns idea
Advantages of franchisor
- Fast method for growth
- Cheaper, as franchisee takes financial risk
- More motivated then employees
Disadvantages of franchisor
- Profit shared
- Poor franchisee can damage brand
- Cost of supporting can be high
