LO1

Question 1

What are the 3 types of business activities

Answer 1

Primary
Secondary
Tertiary

Question 2

What is the key purpose of the primary sector

Answer 2

It the source and extracting of raw materials which ranges from mining to gas extraction

Question 3

What countries are suitable for the primary activity

Answer 3

Early stages of industrial development

Question 4

What is the purpose of the secondary activity

Answer 4

Manufacture products. These can be finished products sold to retail customers or components sold to business customers and used in production for other products

Question 5

What is a retail customer

Answer 5

Customers who buy finished products e.g frozen peas from a super market

Question 6

What are business customers

Answer 6

Businesses that purchase products or services from another business

Question 7

What counties suit secondary activities

Answer 7

Countries that are becoming more industrialised

Question 8

What is the purpose of the tertiary activity

Answer 8

The provision of services. These can be to the public such as hairdressing, schools etc

Question 9

What countries suit tertiary activity

Answer 9

More industrialised which have a demand for services which leads to growth in provision

Question 10

What is the private sector

Answer 10

Businesses that operate and aim to make a profit. They range from large to small businesses

Question 11

What is the third sector

Answer 11

Do not aim to make a profit and are not government owned. They rely on donations , fundraising & grants and they are to help people

Question 12

What is a sole trader

Answer 12

Owned by one person, the owner can employ others to work along side and most common form of ownership in the UK

Question 13

What are the advantages of a sole trader?(6)

Answer 13

• often start a business with limited finance
• few legal requirement when’s starting up
• solely responsible for decision making
• choose own working hours and holidays
• likely relation is built with customers as they deal with them directly
• do not have to share profits with other owners

Question 14

What are the disadvantages of a sole trader?(4)

Answer 14

• have unlimited liability
• do not have co owners to discuss decisions with
• work long hours and take few holidays
• lack of finance may effect business

Question 15

Who is a sole trader most suitable for?

Answer 15

Individuals who have an entreprinising business idea or people wishing to start a business along employed work.

Question 16

What is a partnership?

Answer 16

A business with a minimum of two partners, best set up using a deed of partnership. Different partners have different liabilities

Question 17

What are the advantages of a partnership?(4)

Answer 17

• others to discuss making decisions with and cover sickness/holidays
• more finance available
• partners have different areas of expertise which is beneficial to the business.
• few legal requirements for starting a business

Question 18

What are the disadvantages of a partnership?(6)

Answer 18

• decision making may take longer
• disagreements could cause arguments which effect service
• all profits shared
• unlimited liability
• unequal work time / holidays may call resentment
• business does not have a separate legal identity so if a partner dies the partnership would end

Question 19

What is a partnership most suited for?

Answer 19

Commonly used for professional services such as doctors surgeries & solicitors

Question 20

What is a ltd?

Answer 20

Private limited company

Question 21

What is a plc

Answer 21

Public limited company

Question 22

What is a private limited company

Answer 22

Separate legal identity to owners. Shares in the business are sold to raise finance. People purchasing friends are either family or friends of the business

Question 23

What are the advantages of a private limited company?(4)

Answer 23

• company is separate legal identity so owners and shareholders have limited liability
• shares can be sold to raise additional fund
• owners can choose to whom shares are sold
• owner can keep in control of business as long as they limit the number of shares sold to others

Question 24

What are the disadvantages of a private limited company?(3)

Answer 24

• becoming a limited company can be expensive and lengthly by processing the legal documents and sent to registrar of companies who issue a certificate of incorporation
• shares cannot be sold to the general public which limits finance
• shares cannot be transferred or sold unless permission gained from other shareholders

Question 25

Who is a private limited company most suited to?

Answer 25

A small business becoming a limited company which provides less risk to the owners. Some big businesses such as Coca Cola are still a private limited company taking the benefits of limited liability and control over decision making

Question 26

What is a public limited company?

Answer 26

Separate legal identity and shares are sold publicly via the stock market. Business must have a share capital of more than £50.000, at least 2 directors, at least two share holders and a qualified secretary

Question 27

What are the advantages of a public limited company?(4)

Answer 27

- shareholders benefit from limited liability - as shares can be sold on the stock market large amounts of capital can be raised if required - shares can be bought, sold and transferred easily - a plc has a high profile so may find it easier to attract new customers and reliable suppliers and banks may be willing to lend them more money

Question 28

What are the disadvantages of a public limited company?(6)

Answer 28

- accounts are in public domain so anyone even competitors can view them - decision making may be lengthly - legal process is lengthly and costly - issuing further shares can be costly and includes legal costs - original owners are unlikely to retain full control over decision making - greater risk of take over

Question 29

What are public limited company’s most appropriate for?

Answer 29

Businesses that raise large amounts of capital

Question 30

What is a state/government is owned business?(public sector)

Answer 30

Owned by government such as BBC, and government identifies its aims and objectives and appoints a board of directors to run it.

Question 31

What are the advantages of state/government owned businesses?(3)

Answer 31

- support from the government ensures they survive - some industries would be inefficient to have more than one provider - government can support large businesses struggling to survive e.g northern rock

Question 32

What are the disadvantages of state/government owned businesses?(2)

Answer 32

- businesses that are not answerable to shareholders to regarding profits therefore don’t prioritise cost control - these businesses can be used for political gain which increase cost and inefficiency

Question 33

What is best suitable for state/government owned businesses?

Answer 33

Large organisations that provide a vital product or service to the population

Question 34

What is a charity / non profitable business?

Answer 34

This is voluntary work and community groups. They have charitable aims , they make a profit but invest it into supporting their cause

Question 35

What are the advantages of charities?(3)

Answer 35

- the same as sole traders - quick and easy to set up - same advantages as limited company

Question 36

What are the disadvantages of a charity?(6)

Answer 36

- same disadvantage of sole trader - depend on volunteers - same disadvantages as limited company - expensive to set up - annual accounts must be provided - some use aggressive commercial tactics

Question 37

What is a community interest company?(CIC)

Answer 37

A limited company that aims to benefit the communities or trade with a social purpose rather than high profits

Question 38

What are the advantages of a CIC?(2)

Answer 38

- company has its own separate legal identity | - reputation of the business may be enhanced

Question 39

What are the disadvantages of a CIC?(2)

Answer 39

- Documents must be completed and sent to registrar of companies - tax must be paid on profits

Question 40

What is a CIC best suited for?

Answer 40

Companies of all sizes that social/communal benefits at heart

Question 41

What is having a separate legal identity to owners and who has it?

Answer 41

It means the business rather than the owner would be sued therefore it will be for limited companies or charities not sole traders and partnerships

Question 42

What do a public limited company do to control decision making?

Answer 42

Shareholders elect a board of directors

Question 43

What Happens when a PLC is set up what needs to be done legal administrative wise?

Answer 43

PLC must produce and publish audited accounts and submit them to companies house

Question 44

What happens administrative wise once a sole trader is set up and trading?

Answer 44

They complete an income tax self assessment form

Question 45

What are the main 5 business aims and objectives

Answer 45

``` Financial Growth Survival Reputation Being enterprising ```

Question 46

What is the difference between an aim and a objective?

Answer 46

Aims are long term targets | Objectives will help you achieve your aim

Question 47

What helps a business have a good reputation?

Answer 47

Having a USP

Question 48

What is it meant by being enterprising?

Answer 48

Try and identify gaps in the market and remain competitive