Creating a Business + Business Ownership Flashcards
(21 cards)
What are the 4 main Business Objectives?
• Profit Maximisation
• Survival
• Producing a Service
• Growth
What is meant by producing a service?
Businesses that focus on the quality of a service (eg. Schools + Quality of Education) whilst controlling finances.
Why might Businesses change their objectives? (3 reasons)
1) Previous objective achieved
2) Changes in the Competitive Environment
3) Changing Environment
What type of Business might focus on Survival?
Small or New Businesses
Why could a business choose to focus on Growth?
• To establish themselves in the market (dominant presence)
• To maximises sales and improve the company reputation
What are some typical characteristics of entrepreneurs?
• Spotting opportunities in the market
• Creativity and Innovation
• Taking Risks
• Determination and Confidence
• Satisfying customer needs
What factors must you consider when planning to create a business?
• Target Market
• Competitors (Market Research)
• Budgeting finances
• Employees and Specialists
• Business Objective
Define Unincorporated and Incorporated Businesses
Unincorporated: A type of business which has unlimited liability.
Incorporated: A business with a separate legal identity, limited liability and is owned by shareholders.
What are the 8 types of Business Ownership?
- Sole Trader
- Partnership
- Private Limited Company (Ltd.)
- Public Limited Company (PLC)
- Franchise
- Co-operative
- Public Sector Business
- Not for profit
Characteristics of Sole Traders
- Owned by one person
- Can employ others
- Keep all taxes profits
- Unlimited Liability
- Owner makes all decisions (work long hours + difficult to take time off)
- Lack of continuity (successors)
Characteristics of Partnerships
- Owned by 2-20 people
- Unlimited Liability
- Deed of Partnership
- More people that contribute the less risk with decisions (shared decisions)
Characteristics of Private Limited Companies (Ltd)
- Limited Liability
- Shares bought by family, friends and business associates
- Shares can only be sold with consent of all shareholders
- Shareholders receive dividends
Characteristics of Public Limited Companies (PLC)
- Large Companies (£50,000 share capital, expensive to set up)
- Registered Office
- Public Accounts
- Limited Liability
- Varied shareholders, often around the globe
Characteristics of Franchises
- Franchisee pays large companies to use their name (follow franchiser’s rules)
- Employees have uniforms and follow standard procedures
- Franchiser pays for marketing
- Franchiser takes % of profits
- Likely to be successful (already established businesses)
What are the two kinds of a Co-operative business?
• Worker co-operative
• Consumer co-operative
Characteristics of Worker Co-operatives
- Workers own the business (eg. John Lewis)
- Workers are well-motivated and receive shares of profit
- Difficult decision making
Characteristics of Consumer Co-operatives
- Users of the business own the business (eg. Co-op Bank)
- Loyal customers
- Need a board of customers to run the business
Characteristics of Public Sector Businesses
- Businesses ran by the government on behalf of the public
- No profits made
- Often focus on providing services (eg. Schools, Hospitals or BBC)
Characteristics of Not for Profit Businesses
- The charitable sector (eg. NSPCC)
- Organisations managed by trustees (volunteers, non-profit)
- They exist for:
1) Religion
2) Relieving Suffering
3) Helping disadvantaged people and animals
4) Supporting good causes
Define a Stakeholder
Anybody with an interest in a business (Individuals, groups or organisations that are affected by business activity).
What are some potential stakeholders?
- Owners
- Workers + Managers
- Customers
- Suppliers
- The Government
- Banks
- Pressure groups
- Local Communities
