Ownership

Question 1

What are the sectors of industry?

Answer 1

Private- owned and controlled by private individuals and investors

Public- owned and controlled by the government

Third- set up to raise money for causes or to provide facilities for their members.

Question 2

What is a sole trader?

Answer 2

A business that is owned and controlled by one person. Usually small businesses and are a popular choice for start ups.

Eg. Newsagents, hairdressing, plumbing

Question 3

Adv of sole trader?

Answer 3

• less legal documents
• can keep all the profits
• can choose when and where to work
• full control over decisions

Question 4

Disadv of sole traders?

Answer 4

• Stress with decision making
• difficult to take time off
• raising capital is difficult
• unlimited liability
• difficult to achieve economies of scale

Question 5

What is a partnership?

Answer 5

A business that is formed by two or more people on the basis of a partnership agreement. The partners provide the capital to start the business

Question 6

What is the max number of partners?

Answer 6

Usually 20, with a few exceptions.

Question 7

Adv of partnership?

Answer 7

• shared workload, responsibility and decision making
• different skills and experience
• finance raised more easily

Question 8

Disadv of partnership?

Answer 8

• Profit must be split
• unlimited liability
• arguments & disagreements
• legal documents must be drafted

Question 9

What is limited liability?

Answer 9

Limited liability is when the owner will not lose more than they have invested into the business (no personal assets will be taken if the business goes bust or in debt)

Question 10

What is unlimited liability?

Answer 10

Unlimited liability means the owners have responsibility for the business’ debt meaning the owner may lose personal assets.

Question 11

What is a private limited company? (Ltd)

Answer 11

An ltd’s owners (usually friends and family) must buy shares in the company. An ltd is controlled by a board of directors appointed by shareholders

Question 12

Adv of an ltd?

Answer 12

• limited liability
• finance can be raised through selling shares
• owners have control over who buy shares in business

Question 13

Disadv of an ltd?

Answer 13

• complicated to set up
• must abide by the companies act
• must publish annual accounts
• costs of set ups can be high

Question 14

What is the minimum amount of shareholders that an ltd can have?

Answer 14

2

Question 15

What is a public limited company? (Plc)

Answer 15

A large company who’s shares can be bought and sold on the stock exchange. Large amounts of capital can be raised by selling shares to investors

Question 16

Who is a plc owned by?

Answer 16

Owned by shareholders who have purchases on the stock market but are run and controlled by a board of directors who are appointed by the shareholders

Question 17

Adv of a plc?

Answer 17

• limited liability
• easier to trade shares
• huge sums of capital can be raised

Question 18

Disadv of plc?

Answer 18

• the must publish annual reports
• growing so large can mean they become inflexible and difficult to manage effectively
• in large plc’s, employees may feel very out of touch from those on top and may be difficult to take a personal approach on customer service
• the legal procedures needed to set them up can be very costly

Question 19

What is a franchise?

Answer 19

An agreement for one party (the franchisee) to trade under the name of another (the franchiser)
Many use franchising as a means of starting up their own business and there is less likelihood of failure as support and guidance is provided by the franchiser to the franchisee.

Question 20

Adv of the franchiser

Answer 20

• quicker growth
• will receive a share of profit
• innovation can be shared
• protection against competitors

Question 21

Disadv of the franchiser

Answer 21

• reputation/ brand may be tarnished

- will not receive 100% of profit

Question 22

Adv of the franchisee

Answer 22

• existing, well-established brand and reputation
• benefit from advertisement
• training may be offered
• shared innovation

Question 23

Disadv of the franchisee

Answer 23

• must abide by structure set

- must contribute % of profit

Question 24

What is a multinational?

Answer 24

Large companies that have branches in more than one country.

Question 25

Characteristics of a Multinational company?

Answer 25

- world wide operation - advanced technology - economies of scale - dominant in the market

Question 26

Adv of the multinational?

Answer 26

- secure cheaper premises and labour - to avoid trade barriers like the EU Common External Tariff - Employment and health legislation in other countries may be more relaxed

Question 27

Disadv of the multinational?

Answer 27

- complex to meet different legislative requirements | - some countries may not respect copyright

Question 28

Adv to the host country?

Answer 28

- provide jobs and income | - improve level of expertise of local workers

Question 29

Disadv to the host country?

Answer 29

- jobs may be only low level skills - profits go back to the home country - cut corners - may exert political muscle - may force out local companies

Question 30

What is a cooperative?

Answer 30

A business/ organisation who is owned and controlled by its members, who receive a share of profits/ benefits.

Question 31

Adv of a cooperative?

Answer 31

- employees have incentive to work hard ad they own part of a business - employees can contribute towards decision making

Question 32

Disadv of a cooperative?

Answer 32

- possibility of conflict | - longer decision making

Question 33

What is the public sector?

Answer 33

The overriding aim of public sector activity is to provide services thought necessary for the general public. It’s often the case that public sector organisations have to operate within an allocated budget.

Question 34

What is central government?

Answer 34

Provides us with services such as NHS, Social Security Defence and are financed by the government in order to carry out their policies in these areas.

Question 35

What are public corporations?

Answer 35

Public corporations are business organisations which are owned and run by the state on behalf of the people.

Question 36

Why do public corporations exist?

Answer 36

To: - set up and run essential services that might not br profitable - poorly managed/ drain on the public purse - make industries more competitive

Question 37

What are local authorities?

Answer 37

Run by elected councillors and provide essential services which might be unprofitable if provided by private firms such as schools.

Question 38

What is the third sector?

Answer 38

Organisations with different aims to private sector enterprises. They are not for profit and very often exist to help a charitable cause

Question 39

What is a charity?

Answer 39

No individual owner of a charity - Controlled/managed by board of trustees (unpaid) - financed by donations, grants, lottery, sales and fund raising - objectives include relieving poverty, advance education and cure cancer

Question 40

What is a voluntary organisation?

Answer 40

Run and staffed by volunteers - controlled/managed by elected members, chairperson - financed by grants, lottery, membership fees - objectives include helping young people? Providing opportunity for activities otherwise not available

Question 41

What is social enterprise?

Answer 41

Operate in a business-like way but also has a main social or environmental aim - controlled/managed by a board of directors on behalf of all stakeholders - financed by grants, loans and equity finance - objectives include to generate an income to tackle a social cause