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Business questions Flashcards

1
Q

Private enterprise objectives:

A
  • Make profit to survive
  • Increase sales revenue and market share
  • growth through expanding the business
  • providing employment
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2
Q

Public sector objectives:

A
  • To provide services that are considered essential for the benefit of everybody
  • employment support
  • help others
  • protection
  • infrastructure
  • emergency services
  • education
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3
Q

Non-profit making organizations

A
  • Charities and voluntary
  • Are set up to meet a social need or to provide help
  • Need to earn enough income to cover their costs
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4
Q

Business stakeholders:

A 
Employees 
Consumers
Managers
Local community
Government 
Owners
Financiers 
Suppliers
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5
Q

Consumer goods:

A 
Magazines
Telephone 
Crisps
Handbag 
Computer game
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6
Q

Consumer services:

A 
Car wash
Banking
Health care
Education 
Air travel
Garden design
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7
Q

Producer goods:

A 
Tools
Office furniture
Sugar cane
Tractor
Delivery van
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8
Q

Producer services:

A 
Market research
Software design
Industrial cleaning
Printing
Insurance
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9
Q

Smart objectives

A 
Specific 
Measurable
Achievable
Realistic
Time related

Example: To increase turnover by 8% in the next 12 months

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10
Q

Business objectives:

A
  • Help to decide where to take the business and what steps are necessary to get there
  • owners may have more motivation
  • employees need something to work towards
  • it is easier to assess the performance of a business
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11
Q

Financial objectives:

A 
Survival
Profit 
Sales
Increase market share
Financial security
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12
Q

Non-financial:

A

Social objectives
Challenge
Personal satisfaction
Independence and control

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13
Q

Why do objectives change:

A 
Technology 
Market conditions 
Internal reasons
Legislation 
Performance
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14
Q

Entrepreneurs

A

They are innovators and try to make money out of an idea
Are responsible for organizing other factors in production
They have to make al, the key decision
They are risk takers

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15
Q

Sole traders advantages:

A

Flexibility
The owner keeps all the profit
They are independent and have full control

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16
Q

Disadvantages of entrepreneurs

A

Independence may seem to much
No continuity
Long hours of very hard work

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17
Q

Deed of partnership:

A

States how much capital each partner will contribute
How profits (and losses) will be shares among the partners
The procedure of ending the partnership
How much control each partner has
Rules for taking on new partners

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18
Q

Advantages of partnership

A

More profit can be raised
Easy to set up and run
The job of running a business is shared

19
Q

Disadvantages of a partnership

A

Partners have unlimited liability
Profit has to be shared
Partners may disagree and fall out

20
Q

What do franchisor offer the franchisees:

A

A license to trade under the company’s name
A start-up package including help, advice and essential equipment
Training in how to run the business
Materials, equipment and support services that are needed to run the business
Marketing support that is organized on behalf of all franchisees

21
Q

In return the franchisees have to pay certain fees:

A

A one-off start-up fee
An ongoing fee
Contribution to marketing costs
Franchisers may make a profit on some of the materials, equipment and merchandise supplied to franchisees

22
Q

Advantages to franchisee:

A

Back up support is given
It’s a safer way of starting a business
Set-up money is predictable

23
Q

Disadvantages to franchisees

A

Profit is shared with the franchisor
Lack of independence
Can be a really expensive way of starting a business

24
Q

Advantages to franchisor

A

Faster method of growth
Cheaper method of growth
Franchisees take some of the risk

25
Q

Disadvantages to franchisor

A

Potential profit is shares which franchisees
Poor franchisees may damage the brand’s reputation
Cost of support for franchisees may be high

26
Q

Social enterprises

A

Have a clear social or environmental mission
Generate most of their income through trade or donations
Reinvest most of their profits
Are majority controlled in the interests of the social mission
Are accountable and transparent

27
Q

Social enterprises may have a variety of forms:

A

Consumer cooperatives
Retail cooperatives
Worker cooperatives
Charities

28
Q

Limited companies:

A

The owners have limited liability
Run by directors
Owned by shareholders
Raises capital by selling shares
Shareholders elect directors to run the company
Issued with a certificate of incorporation

29
Q

Memorandum of association

Articles of association

A
  • Describes what a company has been formed to do

* internal rules covering what directors can do

30
Q

Private limited companies

A

Their business name ends with limited of Ltd
Shares can only transferred ‘privately’
There are often family business owned by family members or close friends
The directors of these firms tend to be shareholders and are involved in the running of the business

31
Q

Advantages of limited companies:

A

Shareholders have limited liability
Business continues if a shareholder dies
More capital can be raised

32
Q

Disadvantages of limited companies:

A

Costs money and time to set up
Profits are shared between more members
Takes time to transfer shares to new owner

33
Q

Public limited companies:

A

Their shares are bought and sold by the public on the stock exchange
Have PLC after their name

34
Q

Advantages of public limited companies

A

May be able to dominate the market
Shareholders have limited liability
Large amounts of capital can be raised

35
Q

Disadvantages of public limited companies:

A

Setting up costs can be expensive
Outsiders can take control by buying shares
Managers may take control rather than owners

36
Q

Multinacionals:

A

Huge assets (land, buildings, plant…) and turnover
Highly qualified and experienced professional executives and managers
Highly influential both economically and politically
Powerful advertising and marketing capability
Highly advanced and up-to-date technology
Ownership and control is centered in the host country
Wert efficient since they can exploit huge economies of scale

37
Q

Features of public corporations:

A

Owned by the government
Controlled by law
Sometimes provides public services
Incorporated
The government provides the capital needed by public corporations from tax
You have to prove what you are doing with your money

38
Q

Reasons for public corporations:

A

Avoid wasteful duplication
Fill in the spaces left by private sector
To maintain control of strategic industries
To save jobs
To serve unProfitable regions

39
Q

Disadvantages of public corporations:

A

They are payed with tax
Public corporations don’t try to be efficient as they don’t try to make a profit
If a new government is elected, they may change the way public corporations are organized
They are often very large and can be very difficult to control because of this

40
Q

Privatisation

A

when a public corporation is transferred to the private sector
The private sector pays the government for shares in the company to become private
There may be less rules about the way the business is ran because it is now private and the owners can do what they want
Governments also do their with land and property by selling it.

41
Q

Why does privatisation take place?

A

To generate income for the government
To sell of the business that are not run very well as a public corporation
To make the mr,te free from regulation and rules which should encourage private sector businesses to provide their services
To ensure that the government doesn’t interfere in the running of a business

42
Q

Factors that change in different type of ownerships/depending on the ownerships

A 
Growth
Size
Control 
The need for finance
Limited liability
43
Q

Other factors affecting the forms of ownership:

A

Type of business activity (e.g services such as gardening tend to be provided by sole traders)
How the business plans to use its profits
Shareholders of the business (e.g leading employees in a private limited company may discourage the shareholders from going public)

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