Business Structure AOS1

Question 1

Define Business

Answer 1

An organisation where goods and/or services are sold for money.

Question 2

Outline an advantage for businesses

Answer 2

• To make a profit.
• Fill a gap in the market.

Question 3

Define sole trader

Answer 3

Business structure owned and operated by one person.

Question 4

Outline an advantage for sole trader structures

Answer 4

• Simple and easy to set up.
• Owner keeps all the profit.
• Inexpensive to set up.

Question 5

Outline a disadvantage for sole trader structures

Answer 5

• Unlimited liability.
• More difficult to gain finance.

Question 6

Define partnership (Business structure)

Answer 6

Type of business structure owned by between 2 and 20 people.

Question 7

Outline an advantage for partnership structure.

Answer 7

• Simple.
• Workload can be shared.
• Can provide more expertise

Question 8

Outline a disadvantage for a partnership structure.

Answer 8

• Profits need to be shared.
• Unlimited liability.

Question 9

Define company

Answer 9

A business structure, known as an incorporation that is owned by shares (Owners are called shareholders).

Question 10

Define private limited company

Answer 10

An incorporated business owned by between 1 and 50 private shareholders.

Question 11

Outline an advantage for having a private limited company structure

Answer 11

• Limited liability.
• Can control who invests in the company.
• More expertise.
• Separate legal entity.

Question 12

Outline a disadvantage for having private limited company structures

Answer 12

• More complex structure.
• More reporting requirements to the government.
• Shares cannot be traded freely.

Question 13

Define Public Listed company (Business structure).

Answer 13

Incorporated business whose shares are freely listed and traded on a public exchange.

Question 14

Outline an advantage for having a public listed company structure

Answer 14

• Limited liability.
• Easy to raise capital.

Question 15

Outline a disadvantage for having a public listed company structure

Answer 15

• Highly complex structure.
• Takes lots of time and money to establish.

Question 16

Define social enterprise

Answer 16

Business that exists primarily to fulfill a social need that benefits a community not shareholders.

Question 17

Outline an advantage for having a social enterprise structure

Answer 17

• Improve/maintain morale within the business.
• Improve business perception > reputation.

Question 18

Outline a disadvantage for having a social enterprise structure

Answer 18

• Can be difficult to obtain finance (May rely on grants or donations).
• Can be hard to focus on a social need.

Question 19

Define Government Business enterprise (Structure)

Answer 19

Business owned and operated by the government.

Question 20

Outline an advantage for having a government business enterprise structure.

Answer 20

• May invest in areas others are hesitant to.
• Do not need to rely on making profits as the government funds them.

Question 21

Outline a disadvantage for having a government business enterprise structure

Answer 21

• Can be politcal interfaces.
• Strategic directions can change with changing governments.