Project 1 advantage and disadvantage

Question 1

Give advantages to sole trader?

Answer 1

Keep all the profits, 100% control, low start up costs, easy to set up.

Question 2

Disadvantages of sole trader?

Answer 2

Unlimited liability, no cover if you are ill, 100% responsibility, long working hours.

Question 3

Advantages of a partnership?

Answer 3

Shared responsibility, cover if you are ill, someone to share decisions, shared expertise.

Question 4

Disadvantages of a partnership?

Answer 4

Have to share the profits, unlimited liability, possible disagreements, documents required to setup.

Question 5

Advantages of a private limited company?

Answer 5

Unlimited liability, more expertise available, seen as more professional, difficult for hostile takeovers, more sources of finance.

Question 6

Disadvantages of a private limited company?

Answer 6

Competitors can see financial information, difficult to sell shares for individual shareholders, can’t sell shares to public, more legal constraints, complex to setup.

Question 7

Advantages of a public limited company?

Answer 7

Offers limited liability to shareholders, is an incorporated company, very large capital sums to invest into the business, no restriction on the buying, selling or transfer of shares, high status, easier to attract suppliers.

Question 8

Disadvantage of a public limited company?

Answer 8

Hostile takeovers can happen easily, public scrutiny of business and its account, value of the company can change quickly, large numbers of shareholders whose the company is accountable to.

Question 9

Advantage of co-operatives?

Answer 9

Impossible for one person to run the business (democracy), controlled/owned by members, not based on profits rather than service rendering, members have the same goal and needs.

Question 10

Disadvantage of co-operatives?

Answer 10

Conflict between members, participation is required, extensive record keeping necessary, less incentive to invest capital, requires complex objectives.

Question 11

Advantages of a franchise?

Answer 11

All systems provided such as IT suppliers, training, you still own your own business, tried and tested model, reputable brand name, easier to raise finance.

Question 12

Disadvantage of franchise?

Answer 12

Expensive to buy into, have to give away a share of the profits, have to use their suppliers, difficult to expand, stuck to their business model.