business structure Flashcards
(23 cards)
What is private sector
business owned and ran by individuals or groups
What is public sector
businesses owned and ran by the goverment to benefit everyone
What is a good
items produced by conversion of raw materials into a product
What is a service
an intangible task performed in return for payment
What is a consumer good
goods used and bought by consumers
What are producer goods
goods bought by other business to help produce other goods
What is an aim
a long term intention that provides a focus for setting objectives
What is an objective
specific, measuresble medium to long term targets that help achieve objectives
Aims of private sector
growth, profit, gain market share, survival
Aims of public secotr
provide services that private sector businesses would not deem profitable
provide a universal service to all uk
make a trading surplus
provision of merit goods to raise society’s standards of living
some people not aboe to pay fot certain merit goodd
aim to provide good customer service
What is a public goods
a good that would not be provided in the free market as businesses would not be able to charge for them
What two things are public goods
non excludable-impossible to prevent individuals from benefiting from good
non rivalry-one individual benefiting from good does not reduce amount available to others
What is a merit good
good that could be provided in free market but policy makers understood it would be underconsumed
eg health care , education, roads
Ads and disads of being a sole trader
-keep all profit
-sole control/own boss
-easy and quick to set up
-no need to publish accounts
-unlimited liability
-raising capital
-impact of illness
Ads and disads of partnership
-share resources and ideas
-cober for each other(illness/holidays)
-shared debt and responsibilities
-unlimited liability
-less control and slower decisions
-profit is shared
-disagreements
Ads and disads of ltd
-limited liability
-control not lost to outsiders
-attract extra shareholders to invest
-continuity if partner dies
-tax advantage if paying high rates of income tax
-legal prodedure in setting up takes alot of time and money
-disclose accounts
-profits shared with other shareholders
-slower decisions
Ads and disads of plc
-all shareholders have limited liability
-more p market power due to larger size
-huge amount of money from shareholders capital
-economies of scale as business grows
-expensive to set up can be millions
-outside interest can take control
-accounts inspected by public and competition
Reasons for going from ltd to plc
-large amount of money from shares
-gain economies of scale
-easier to raise finance
-more capital for investing in products
-gain greater presence in market-brand loyalty
-set up is expensive
-lose control even takeovers could occur
-inflexible due to size
-more shareholders means even longer decisions
-diseconomies of scale
What is a charity
non profit organisation established with aim of collecting money from individuals and spending it on a cause
Two features of charities
not established to make profit but can earn surpluses
narrow focus on single issue
usually raise from donations but many also have retail outlets
What is a social enterprise
trade for social and environmental purposes but do seek to survive, make profit and grow.
Advantages of private sector
provide employment
some private sectors provide health care snd education
lots more innovation in private sector
schools and nhs now run like private sector businesses
pay tax to goverment
key features of social enterprise
primarly social objectives
use profit to benefit society
can be profit or not for profit
