LO1- Understand Different Types Of Business And Their Objectives

Question 1

Business Activities Definition

Answer 1

Any events that have been taken which lets them achieve their objectives

Question 2

Retail Customers Definition

Answer 2

Physical form of customers that buy a finished product

Question 3

Business Customers Definition

Answer 3

Businesses that purchase products from other businesses to make a different product

Question 4

Primary Activity Definition

Answer 4

The extraction and harvesting of raw materials

Question 5

Secondary Activity Definition

Answer 5

They take raw products to manufacture products

Question 6

Tertiary Activity Definition

Answer 6

The provision of services

Question 7

Private Sector Definition

Answer 7

Businesses not owned by the government, aim to make a profit

Question 8

Public Sector Definition

Answer 8

Businesses owned by the government, wide rang of services

Question 9

Third Sector Definition

Answer 9

Do not aim to make a profit and are not owned by the government

Question 10

Liability Definition

Answer 10

A liability is something a company, business or person owns. It is usually a sum of money. Meaning they are responsible for it.

Question 11

Centralized Structure Definition

Answer 11

A structure where decisions making is kept at the top of the hierarchy. Suits small businesses best.

Question 12

Decentralised Structure Definition

Answer 12

A structure where decision making is more spread out and filtered down the hierarchy. Suits big businesses like certain supermarket chains to make the best decisions for the locals’ needs.

Question 13

What are the advantages of centralized structure?

Answer 13

Easier to implement policies,
decision making is quicker,
strong leadership is required

Question 14

What are the disadvantage of centralized structure?

Answer 14

Employees do not have a say,
cost,
communication of messages

Question 15

What are the advantages of a decentralised structure?

Answer 15

decision making is shared, 
improved level of customer service, 
decision making is based on other factors like location, age and etc, 
good way to train managers, 
employees have more power.

Question 16

What are the disadvantages of a decentralised structure?

Answer 16

Decision making is shared,

more arguments between employees.

Question 17

Unlimited Liability Definition

Answer 17

responsible for debt, owner is the business.

Question 18

Limited Liability Definition

Answer 18

you only lose what you put in and the owner is not the business.

Question 19

List Public Limited company features

Answer 19

• multiple owners(shareholders)
• run by board of directors
• funded by retained profits
• funded by shares
• unlimited members
• shares available to public
• limited liability
• centralized
• chain of commands
• international

Question 20

List Private Limited company features

Answer 20

• multiple owners(shareholders)
• run by board of directors
• funded by retained profits
• funded by shares
• maximum members 200
• shareholder invited

Question 21

List Government features

Answer 21

• owned by the government
• run by board directors
• funded by taxation
• limited liability
• centralized
• chain of commands
• national

Question 22

List Charity features

Answer 22

• funded by grants (lottery)
• fundraising and donations
• not for profits
• limited liability
• quick to setup
• tax relief

Question 23

List Community Interest Company (CNC) features

Answer 23

• Funded by grants
• Fundraising and donations
• Not for profit
• Limited liability
• Decentralized
• Can pay dividends

Question 24

List Sole trader features

Answer 24

• one owner,
• unlimited liability,
• scope= local,
• no structure,
• easy to make decisions,
• can have employees but it is only one owner.

Question 25

List Partnership features

Answer 25

* more than one owner, * profits shared, * unlimited liability, * possible conflicts, * Decentralized, * few functional areas.

Question 26

Aims Definition

Answer 26

long term goals which a business works to achieve in about a year

Question 27

Objectives Definition

Answer 27

short and specific which is used to support or help the business achieve their aim.

Question 28

Why do businesses set aims and objectives?

Answer 28

* To show progression in the business | * To have an idea of how much they have achieved in that time which can boast confidence.

Question 29

What is a sole traders?

Answer 29

Owned by one person, although the owner may decide to employ others to work alongside them.

Question 30

What is a partnership?

Answer 30

A business with a minimum of two partners. It can be straightforward to set up, although a Deed of partnership is advisable. This summaries the details of the owners, e.g the capital each has invested and how profits will be shared.

Question 31

What is a Private Limited Company?

Answer 31

A company is a separate legal entity to the owners. It is a form of ownership where shares in the business are sold to raise finance. Those who purchase the shares are legal owners. The people who set up the business will have most of the shares and also invite people to invest in the business hence why it is private.

Question 32

What is a Public Limited Company?

Answer 32

A separate legal entity from its owners, the shareholders. These shares can be bought in the stock market which makes it public to all people. The business has limited liability and it must have share capital of more than 50k, at least two shareholders, two directors and etc.

Question 33

What is a Government owned?

Answer 33

A business owned and funded by the government

Question 34

What is a Charity?

Answer 34

Includes voluntary and community groups. They have charitable aims other than making money. They make profit sometimes but that will go into the cause they are helping.

Question 35

What is a Community interest company (CIC)?

Answer 35

Limited company that aim to benefit the community or trade with a social purpose rather than earning high profits for shareholders. Although shareholders get a small return, most profits are invested into community or a social enterprise.

Question 36

What is revenue?

Answer 36

Total income generated by the sales of goods or services.

Question 37

What does booming mean?

Answer 37

Term used to show that the economy is doing well

Question 38

What does recession mean?

Answer 38

Term used to show that the economy is not doing well where demand and output fall

Question 39

What is legal status?

Answer 39

The form of ownership as some forms will result in the business being separate legal entity from the owner.

Question 40

What does liability mean?

Answer 40

These are legal responsibilities or obligations. Amounts owed like loans, mortgages and etc can be considered to be liabilities.

Question 41

What is funding?

Answer 41

Funding the the amount of money needed to start a business. Business ownerships like sole trader or partnerships need less money to start and run than a public limited company for example.

Question 42

What is decision making?

Answer 42

The form of ownership chosen will influence the level of control the owners have with regard to decision making.

Question 43

What is survival?

Answer 43

Survival is important for business, especially new businesses. The chances of survival can be influenced by finance, the economy and failure to survive a recession.

Question 44

What financial aims could a business have?

Answer 44

Break even, increased revenue, reduce cost, make a profit

Question 45

How can growth be measured?

Answer 45

In terms of number of employees, increasing the value of sales or increasing output.

Question 46

How can a business improve their reputation?

Answer 46

Produce good quality products, provide excellent customer service and act in a ethical and socially responsible manner.