topic 2 Flashcards
(10 cards)
What is a Sole Trader?
A business owned and operated by one person.
Advantages: Easy to set up, keeps all profits, full control.
Disadvantages: Unlimited liability, hard to raise capital, limited expertise.
What is a Partnership?
A business owned by 2 to 20 people who share profits and responsibilities.
Advantages: More capital than a sole trader, shared responsibilities, wider range of skills.
Disadvantages: Shared profits, possible disagreements, unlimited liability.
What is a Private Limited Company (Ltd)?
A business owned by shareholders with limited liability; shares are not available to the public.
Advantages: Limited liability, more capital than partnerships, ownership retained.
Disadvantages: More complex to set up, legal obligations, shares not easily transferred.
What is a Public Limited Company (PLC)?
A company whose shares are traded on the stock exchange and can be bought by the public.
Advantages: Access to large capital, increased status, limited liability.
Disadvantages: Risk of takeovers, expensive to set up, strict regulations.
What is a Franchise?
A business model where an individual (franchisee) buys the rights to operate using another company’s brand (franchisor).
Advantages: Less risk, existing customer base, training and support.
Disadvantages: Initial fees and royalties, less control over operations.
What is a Joint Venture?
Two or more businesses agree to work together on a project and share resources, risks, and profits.
Advantages: Shared risk, combined skills and capital.
Disadvantages: Profits shared, disagreements between partners.
What is the Public Sector?
Businesses and organisations owned and controlled by the government.
Advantages: Provides essential services, can focus on social welfare over profit.
Disadvantages: Can be inefficient, lack of competition, political influence.
What is the Private Sector?
Businesses owned and controlled by private individuals or groups.
Advantages: Usually more efficient and profit-driven, more innovation.
Disadvantages: May not provide unprofitable but essential services.
What is a Non-Profit Organisation?
An organisation aiming to help people or support a cause, not make profit (e.g., charities).
Advantages: Can focus on social objectives, exempt from certain taxes.
Disadvantages: Relies on donations, may lack funds and expertise.
What is a Co-operative?
A business owned and run by a group of people for their mutual benefit (e.g., farmers, workers).
Advantages: Profits shared fairly, members have a say, ethical image.
Disadvantages: Slower decision-making, less incentive for investment.
