Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

BUSINESS STUDIES > HOW IS BUSINESS ACTIVITY ORGANISED AND FINANCED? > Flashcards

HOW IS BUSINESS ACTIVITY ORGANISED AND FINANCED? Flashcards

(44 cards)

Start Studying
1
Q

WHAT IS A NON-PROFIT ORGANISATION

A
  • AN ORGANISATION FORMED UP FOR CHARITABLE PURPOSES, SOCIAL WELFARE. HOSPITALS, CHURCHES AND FOUNDATIONS
    E.G. LEGAL ASSISTANCE CENTRE AND RED CROSS SOCIETY
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

WHAT IS THE PRUPOSE OF A NON-PROFIT ORGANISATION?

A
  • TO FULFILL A PERCIEVED SOCIAL NEED
  • TO PROVIDE HELP TO A SPECIFIC SECTION OF THE COMMUNITY
  • TO SERVE THE SOCIAL WELL-BEING OF THE COMMUNITY
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

WHAT IS A PRIVATE ENTERPRISE?

A
  • THEY ARE OWNED BY PRIVATE INDIVUALS OR BY A GROUP OF PEOPLE

E.G
- SOLE TRADERS
- PARTNERSHIP
- PRIVATE LIMITED COMPANIES
- PUBLIC LIMTIED COMPANIES
- CO-OPERATIVES
- PUBLIC CORPORATIONS
- CLOSE CORPORATIONS
- JOINT VENTURES
- FRANCHISE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

WHAT IS A NON-PROFIT ORGANISATION?

A
  • AN ORGANISATION FORMED UP FOR CHARITABLE PRUPOSES, SOCIAL WELFARE, HOSPITALS, CHURCHES AND FOUNDATIONS

E.G. LEGAL ASSISTANCE CENTRE AND RED CROSS SOCIETY

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

WHAT IS A PRIVATE ENTERPRISE?

A

-THEY ARE OWEND BY PRIVATE INDIVIDUALS OR BY A GROUP OF PEOPLE

E.G.
- SOLE TRADERS
- PARTNERSHIP
- JOINT VENTURER
- FRANCHISE
- PRIVATE LIMITED COMPANIES
- PUBLIC LIMITED COMPANIES
- CO-OPERATIVES
- CLOSE CORPORATIONS
- PUBLIC CORPORATIONS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

WHAT IS THE PRUPOSE OF A PRIVATE ENTERPRISE?

A

~ MAKING A PROFIT
- PROFIT OF A BUSINESS IS WHEN ITS REVENUE OR INCOME EXCEEDS ITS COST OR EXPENSES.
- NOT ALL PROFIT MADE BELONGS TO THE OWNER
- A PORTION SHOULD BE PAID TO THE GOVERNMENT AS TAX

~SURVIVAL
-ALL PRIVATE ENTERPRISES, ESPECIALLY NEWLY ESTABLISHED ONES, OR VERY MUCH CONCRENED WITH SURVIVAL. AN UNSUSTAINABLE ECONOMY AND NEWCOMPETITIONS CAN THREATEN THE SURVIVAL OF ANY BUSINESS

~GROWTH
- BUSINESSES CAN GROW BY INCREASING SALES. BUSINESSES BREAK INTO NEW MARKETS LOCALLY AND INTERNATIONALLY.
- INTERNAL GROWTH IS WHEN THE OWNER EXPANDS ITS EXISTING OPERATIONS. THIS GROWTH IS OFTEN PAID FOR BY PROFITS FROM EXISTING BUSINESS
- EXTERNAL GROWTH INVOLVES A TAKEOVER OR A MERGER WITH ANOTHER BUSINESS

~ADDING VALUE
- THE BUSINESS ADDS GREATER VALUE TO THE ORODUCT BY ADDING MORE FEATURES IN ORDER TO BE DIFFERENT FROM ITS COMPETITORS’ PRODUCTS

~ PROVISION OF GOODS AND SERVICES
- TO PRODUCE QUALITY GOODS AND SERVICES AND DELIVER AT THE RIGHT TIME AND AT A RIGHT PLACE. THIS WILL ATTRACT MORE CUSTOMERS TO THE BUSINESS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

WHAT IS A PUBLIC LIMITED COMPANY?

A
  • OWNED BY THE STATE OR GOVERNEMNT
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

CHARACTERISTICS OF A PUBLIC LIMITED COMPANY

A
  • MADE UP OF STATE OWNED BUSINESS
  • OWNED BY THE GOVERNMENT
  • TWO TYPES OF PUBLIC SECTORS ORGANISATIONS
    -PROFIT IS NOT ALWAYS THE AIM OF THE BUSINESS BUT TO RENDER SERVICES
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

DEFINE A SOLE TRADER BUSINESS AND GIVE ITS CHARACTERISTICS

A

~ A BUSINESS OWNED AND OPERATED BY ONE PERSON
E.G. A TUCK SHOP OWNER

CHARACTERISTICS
- OWNERS CAN APPOINT WORKERS
- ONWERS PROVIDE ALL THE CAPITAL
- OWNER TAKES DECISIONS ALONE
- LIFETIME OF THE ENTERPRISE IS LINKED TO THAT OF THE OWNER
- NO DIFFERENCE BETWEEN PRIVATE AND BUSINESS PROPERTY
- OTHER PERSONAL ASSETS CAN BE LOST TO CREDITORS DUE TO FAILURE TOPAY DEBTS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

WHAT ARE THE MINIMUM REQUIREMENTS FOR A SOLE TRADER BUSINESS?

A
  • REGEISTER A NAME WITH REGISTRAR BUSINESS NAME
  • OPTAINED LICENSE TO SELL
  • REGISTER WITH GOVERNMENT TAX OFFICE
  • SEND ANNUAL ACCOUNTS TO RECEIVER OF REVENUE
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

WHAT ARE THE ADVANTAGES AND DISADVANTAGES OF A SOLE TRADER BUSINESS?

A

ADVANTAGES:
- EASY TO SET UP AND CLOSE
- FEW GENERATE JOBS AND REDUCE UNEMPLOYMENT
- OWNER HAS VOMPLETE CONTROL
- OWNER MAKES OWN DECISIONS (FASTER)
- NO CONSULTATIONS
- FREEDOM OF HOLIDAYS
- CLOSE CONTACT WITH CUSTOMERS
- KEEPS ALL PROFITS AND INCOMES (NO SHARING)
- INCENTIVE TO WORK HARDER
- SECRECY IN BUSINESS MATTERS
- ITS FUNCTIONING IS SIMPLE
- CHEAP TO SET UP - LESS CAPITAL NEEDED

DISADVANTAGES:
- CAN MAKE WRONG DECISIONS
- INLIMITED LIABILITES ( OWNER’S LIABILITY IS NOT LIMITED TO THE ORIGINAL INVESTMENT)
- LACK OF CAPITAL EXPANSION
- CANNOT AFFORD SPECIALISTS SERVICES
- CANNOT BENEFIT FROM ECONOMIES OF SCALE
- BUSINESS IS NOT A SEPARATE LEGAL UNIT
- NO GOING CONCERN, IF OWNER DIES, BUSINESS DIES AS WELL

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

WHAT IS A PARTNERSHIP? And its characteristics

A
  • A GROUP OR ASSOCIATION OF BETWEEN TWO AND TWENTY PEOPLE WHO AGREE TO OWN AND RUN A BUSINESS TOGETHER

CHARACTERISTICS
- PARTNERS CONTRIBUTE TO THE CAPITAL
- PARTNERS SHARE ANY PROFITS BETWEEN THEMSELVES ACCORDING TO HOW THEY AGREE
- PARTNERSHIP IS USED IN PROFESSION SERVICE TYPE ACTIVITIES
E.G. LAW FIRMS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

WHAT ARE THE MINIMUM LEGAL REQUIREMENTS FOR A PARTNERSHIP?

A
  • IT SHOWS CAPITAL INVESTED
  • INTEREST ON CAPITAL
  • DRAWINGS ALLOWED
  • INTEREST ON DRAWINGS
  • SALARY FOR PARTNERS WHO ARE ALSO WORKING
  • PROFIT SHARE RATIO
  • LENGTH OF PARTNERSHIP
  • PARTNERS TASK
  • NAMES OF PARTNERS, NAME AND NATURE OF BUSINESS
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

WHAT ARE THE ADVANTAGES AND DISAVDANTAGES OF A PARTNERSHIP?

A

ADVANTAGES
- PARTNERS ARE TAXED SEPARATELY
- MORE CAPITAL INVESTED THAN IN A SOLE TRADER
- RESPONSIBILTY IS SHARED
- FEW LEGAL REQUIREMENTS
- DECISIONS SHARED
- JUDGEMENT, SPECIAL CHARACTERSTICS PULLED
- PARTNERS ARE MOTIVATED TO WORK HARD BECAUSE THEY WOULD BOTH BENEFIT FROM PROFITS MADE

DISADVANTAGES
- UNLIMITED LIABLITY
- NO GOING CONCERN
- DISAGREEMENTS MAY ARISE
- GROWTH LIMITED TO 20 PEOPLE
- NOT EASY TO FIND SUITABLE PARTNERS
- PARTNERS JOINTLY LIABLE FOR DEBTS
- A WRONG ACTION BY A PARTNER COSTS EVERYONE
- SOMETIMES DIFFICULT FOR PARTNERS TO WITHDRAW
- LESS CHANCE FOR GETTING LOAN

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

WHAT ARE THE CHARACTERISTICS OF A PRIVATE LIMITED COMPANY?

A
  • A LEGAL PERSON IN ITS OWN RIGHTS
  • IT HAS A LIFE INDEPENDENT ON THE SHAREHOLDERS
  • IT HAS A MAXIMUM OF 50 STAKEHOLDERS
  • MUST BE REGISTERED WITH REGISTRAR OF COMPANIES
  • JIONTLY OWNED BY PEOPLE WHO HAVE INVESTED
  • HAVE TO DRAW MEMORANDUM AND ARTICLE OF ASSOCIATION
  • INVESTORS ARE CALLED SHAREHOLDERS
  • HAS TO PREPARE AUDITED ACCOUNTS
  • HAS TO PREPARE AUDITED ACCOUNTS
  • COMPANY ACCOUNTS KEPT SEPARATE FROM THAT OF THE OWNER
  • ABBREVIATED (PTY) LD AFTER ITS NAME
  • HAVE TO APPOINT A CHARTERED ACCOUNTANT WHO ENSURES THAT TAX RETURNS SUBMITTED
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

WHAT ARE THE ADVANTAGES AND DISADVANTAGES OF A PRIVATE LIMITED COMPANY?

A

ADVANTAGES
- CONTINUES TO EXIST AFTER A PARTNERS’ DEATH
- COMPANY CAN MAKE CONTRACTS
- THE COMPANY AND SHAREHOLDERS TAXED SEPARATELY
- SHARES CAN BE SOLD TO FRIENDS AND FAMILIES
- OWNERSHIP CAN BE TRANSFERRED
- SHAREHOLDERS HAVE LIMITED LIABILITIES
- COMPANY IS A LEGAL PERSON
- ORIGINAL OWNERS CAN CONTINUE TO HAVE CONTROL IF THEY DO NOT SELL THEIR SHARES

DISADVANTAGES
- SHARES SOLD AFTER AGREEMENT WITH OTHER SHAREHOLDERS
- LESS SECRECY, AS ACCOUTNS SHOULD BE REVEALED TO THE REGISTRAR OF COMPANIES AND COMPETITORS
-SHARES CANNOT BE SOLD TO GENERALPUBLIC
- TOO MUCH LEGAL PAPERWORK
- EXTRA COST E.G. FOUNDING COSTS MUST BE MADE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

WHAT ARE THE ADVANTAGES OF A PUBLIC LIMITED COMPANY?

A
  • ACCESS TO MORE FINANCE MORE SHARES ISSUED
  • LIMITED LIABILITY FOR SHAREHOLDERS
  • LARGE SUMS OF CAPITAL CAN BE RAISED
  • NO RESTRICTION OF SELL SHARES
  • HAS HIGH STATUS AND PRESTIGE
  • CONTINUITY
  • GROWTH IN OUTPUT AND SIZE OF COMPANY
  • RAPID EXPANSION DUE TO SPECIALIST MANAGERS
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

WHAT ARE THE CHARACTERISTICS OF A PUBLIC LIMITED COMPSNY

Study These Flashcards
A
  • SUITABLE FOR LARGE BUSINESSES
  • ARE OWNED BY PRIVATE INDIVIDUALS / FIRMS
  • ARE IN PRIVATE SECTOR
  • ABBREVIATED (LTD)
18
Q

WHAT IS A JOINT VENTURE?

Study These Flashcards
A

WHEN TWO OR MORE BUSINESSES AGREE TO SHARE A NEW PROJECT TOGETHER

19
Q

WHAT ARE THE CHARACTERISTICS OF A JOINT VENTURE?

Study These Flashcards
A
  • CAPITAL IS SHARED
  • RISK ARE SHARED
  • PROFITS ARE SHARED
20
Q

WHAT ARE THE ADVANTAGES OF A JOINT VENTURE?

Study These Flashcards
A
  • SHARE COSTS
  • SHARE RISK
21
Q

WHAT ARE THE DISADVANTAGES OF A JOINT VENTURE?

Study These Flashcards
A
  • DISAGREEMENTS
  • DIFFERENT CULTURES
22
Q

WHAT IS A FRANCHISE?

Study These Flashcards
A

A BUSINESS BASED UPON THE USE OF THE BRAND NAMES, PROMOTIONAL LOGOS OF EXISTING SUCCESSFUL BUSINESSES

23
Q

WHAT IS A FRANCHISOR?

Study These Flashcards
A

A BUSINESS WITH A PRODUCT OR SERVICE IDEA THAT DOES NOT WANT TO SELL TO CUSTOMERS DIRECTLY.
- APPOINTS FRANCHISEES TO USE THE IDEA OR PRODUCT AND SELL IT TO CONSUMERS

24
WHAT IS A FRANCHISEE?
BUYS THE LICENSE TO OPERATE HIS BUSINESS FROM FRANCHISOR
25
WHAT IS A CO-OPERATIVE?
GROUP OF PEOPLE WHO AGREE TO WORK TOGETHER
26
WHAT ARE THE CHARACTERISTICS OF A CO-OPERATIVE?
- THEY PULL RESOURCES TOGETHER - MEMBERS HAVE ONE VOTE - MEMBERS RUN THE BUSINESS - DECISION AND WORK SHARED - MANAGER MAY BE APPOINTED - PROFITS SHARED EQUALLY - MEMBERS BUY IN BULK BENEFIT OF ECONOMIES OF SCALE - THEY SELL PRODUCE OF ALL MEMBERS AT GOOD ATTRACTIVE PRICES
27
WHAT ARE THE ADVANTAGES OF A CO-OPERATIVES?
- BUYING IN BULK - MEMBERS WORK TOGETHER TO SOLVE PROBLEMS AND TAKE DECISIONS - GOOD MOTIVATION OF ALL MEMBERS TO WORK HARD AS THEY WILL BENEFIT FROM SHARED PROFITS
28
WHAT ARE THE DISADVANTAGES OF A CO-OPERATIVE?
-THEY MAY EXPERIENCE POOR MANAGEMENT SKILLS UNLESS PROFESSIONAL MANAGERS ARE EMPLOYED TO RUN THE BUSINESS - MAY EXPERIENCE CAPITAL SHORTAGES BECAUSE NO SALE OF SHARES TO THE NON-MEMBERS / GENERAL PUBLIC IS ALLOWED - SLOWE DECISION-MAKING IF ALL MEMBERS ARE TO BE CONSULTED ON IMPORTANT ISSUES
29
WHAT IS A CLOSE CORPORATION?
- A COMPANY WHOSE SHARES ARE HELD BY A SELECT FEW INDIVIDUALS WHO ARE USUALLY CLOSELY ASSOCIATED WITH THE BUSINESS
30
WHAT ARE THE CHARACTERISTICS OF A CLOSE CORPORATION?
- LIMITED TO 10 MEMBERS MAXIMUM - STATEMENT SEND TO REGISTRAR OF COMPANIES - MEMEBERS ARE ALSO MANAGERS - INTEREST IS EXPRESSED AS % - HAVE CONTINUITY - NAME OF BUSINESS ENDS WITH CC -HAVE LIMITED LAIBILTY - ITS NAME, REGISTRATION NUMBER AND NAMES OF MEMBERS APPEAR ON ALL DOCUMENTS - MEMBERS CAN CONTRIBUTE MONEY, ASSETS, SERVICES - A MEMBERS INTERST MAY BE TRANSFERRED TO OTHERS UNDER CERTAIN CONDITIONS
31
WHAT ARE ADVANTAGES OF A CLOSE CORPORATION?
- SIMPLE AND EASY TO COMPLY WITH - MOST DECISIONS TAKEN INFORMALLY - AU MEMBERS PART OF MANAGEMENT - CC HAS LEGAL PERSONALITY - MEMBERS NOT TAXED PERSONALLY FOR DIVIDENDS - NO AUDITORS NEEDED - ANNUAL GENERAL MEETING - HAS CONTINUITY
32
WHAT ARE DISADVANTAGES OF A CLOSE CORPORATIONS?
- DISAGREEMENTS - LIMITED EXPANSION - LIMITED CAPITAL AS MEMBERS ARE ONLY 10 AT MOST - NEED FOR EXPANSION CAUSES A CLOSURE OF CC COMPANY
33
WHAT ARE THE ADVANTAGES TO THE FRANCHISOR?
THE FRANCHISEE BUYS A LICENSE FROM THE FRANCHISORE TO USE THE BRAND NAME - THE EXPANSION OF THE FRANCHISED BUSINESS IS MUCH FASTER THAN IF THE FRANCHISOR HAD TO FINANCE ALL NEW OUTLETS - THE MANAGEMENT OF THE OUTLETS IS THW ONE RESPONSIBILITY OF THE FRANCHISEE - ALL PRODUCTS SOLD MUST BE OBTAINED FROM THE FRANCHISOR
34
WHAT ARE THE DISADVANTAGES TO THE FRANCHISOR?
- POOR MANAGEMENT OF ONE FRANCHISED OUTLET COULD LEAD TO A BAD REPUTATION FOR THE WHOLE BUSINESS - THE FRANCHISEE KEEPS PROFIT FROM THE OUTLETS
35
WHAT ARE THE ADVANTAGES TO THE FRANCHISEE?
- THE CHANCES OF BUSINESS FAILURE ARE MUCH REDUCED BACAUSE A WELL-KNOWN PRODUCT IS BEING SOLD - THE FRANCHISOR PAYS FOR THE ADVERTISING - TRAINING FOR STAFF AND MANAGEMENT IS PROVIDED BY THE FRANCHISOR - BANKS ARE OFTEN WILLING TO LEND MONEY TO FRANCHISES DUE TO THE RELATIVELY LOW WORK - FEWER DECISIONS TO MAKE THAN WITH THE INDEPENDENT BUSINESS
36
WHAT ARE THE DISADVANTAGES TO THE FRANCHISEE?
- LESS INDEPENDENCE THAN WITH OPERATIONG A NON-FRANCHISED BUSINESS - WILL BE UNABLE TO MAKE DECISIONS THAT WOULD SUIT THE LOCAL AREA - LICENSE FEE PAUD TO FRANCHISOR AND POSSIBLY A PERCENTAGE OF THE ANNUAL TURNOVER
37
WHAT ARE THE CHARACTERISTICS OF THE PUBLIC SECTOR?
- MADE UP OF STATE OWNED BUSINESSES - OWNED BY THE GOVERNMENT - TWO TYPES OF PUBLIC SECTOR ORGANISATIONS - PROFIT IS NOT ALWAYS THE AIM OF THE BUSINESS BUT TO RENDER SERVICES
38
WHAT ARE PUBLIC CORPORATIONS / PARASTATALS?
- AN ENTITY THAT IS CREATED BY THE STATE TO CARRY OUT PUBLIC MISSIONS AND SERVICES -ITS SHARES ARE TRADED FREELY ON A STOCK EXCHANGE
39
WHAT ARE THE CHARACTERISTICS OF A PARASTATAL?
- WHOLLY OWNED BY THE STATE - ARE USUALLY NATIONALISED BUSINESSES - FUNDED BY THE STATE - GOVERNMENT MINISTRIES APPOINT BOARD OF DIRECTORS - GOVERNMENT SETS THE OBJECTIVES - DIRECTORS WORK TOWARDS THESE OBJECTIVES
40
WHAT ARE THE OBJECTIVES OF PARASTATALS?
-KEEP PRICES LOW SO THAT SERVICES ARE AVAILABLE - TO EMPLOY AND REDUCE UNEMPLOYMENT - TO OFFER SERVICES CAN BE CHANGED TO: - REDUCE COSTS BY REDUCING WORKERS - INCREASING EFFICIENCY - CLOSE SERVICES MAKING A LOSS
41
WHAT ARE ADVANTAGES OF A PARASTATAL?
- SOME INDUSTRIES ARE TOO IMPORTANT TO BE PRIVATELY OWNED - GOVERNEMTN CAN NATIONALISE INSOLVENT PRIVATE BUSINESSES AND LATER PRIVATISE THEM
42
CHARACTERISTICS OF A MUNICIPAL ENTERPRISE
- PROVIDE SERVICES TO LOCALS - SOME SERVICES ARE FREE - OTHER SERVICES ARE PAID FOR AND SHOULD MAKE A PROFIT
43
DESCRIBE HOW OWNERSHIP CAN BECOME DIVORCED FROM CONTROL AS BUSINESS GROWS
SOLE TRADER, PARTNERSHIP AND CLOSE CORPORATION - OWNERS OWN AND CONTROL LIMITED COMPANIES - PRIVATE LIMITED COMPANY MAJORITY SHAREHOLDERS ARE USUALLY DIRECTORS. THERE MIGTH BE SHAREHOLDER IN A PRIVATE LIMITED COMPANY WHO MIGHT ALSO BE A DIRECTOR WHO MANAGE THE COMPANY - SHAREHOLDER OWN AND CONTROL PUBLIC LIMITED COMPANY - THERE IS A DEFINITE DIVORCE OF OWNERSHIP FROM CONTROL, THERFORE THE SHAREHOLDERS OWN THE COMAPNY BY BUYING SHARES IN THE COMPANY AND THE MANAGERS CONTROL THE COMPANY ON BEHALF OF THE SHAREHOLDERS - SHAREHOLDERS NORMALLY VOTE DIRECTORS REGARDLESS THEIR SHARE CAPITAL DURING THE ANNUAL GENERAL MEETING - DIRECTORS APPOINT MANAGERS TO CONTROL THE BUSINESS. THESE MANAGERS MAY NOT BE SHAREHOLDERS

BUSINESS STUDIES (4 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions