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Types Of Business Flashcards

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1
Q

What is a sole trader?

A

A business that is owned by one person. Individuals who provide specialist services like a hairdresser or plumber are usually sole traders

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2
Q

What is unlimited liability?

A

The owner is personally responsible for the firms debts and may have to pay for the businesses losses out of their own pocket. They don’t have a separate legal existence from the business

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3
Q

What are the advantages of sole traders?

A
  • easy to set up
  • Small capital investment means reduced start-up costs
  • Freedom to make decisions
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4
Q

What are the disadvantages of sole traders?

A
  • Responsibility
  • Long hours
  • Unlimited liability
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5
Q

What are partnerships?

A

A business owned by two or more people

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6
Q

What are the advantages of partnerships?

A

There is someone to consult on business decisions

Each partner has different range of skills to offer

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7
Q

What are the disadvantages of partnerships?

A

Disputes can arise over decisions that have to be made, or about the effort one partner is putting into the firm compared with another

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8
Q

What is limited liability?

A

These types of company are incorporated, which means they have their own legal identity and can sue or own assets in their own right.

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9
Q

What is a shareholder?

A

The ownership of a limited company is divided up into equal parts called shares. Whoever owns one or more of these is called a shareholder.i

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10
Q

What’s an advantage of limited liability?

A

Because limited companies have their own legal identity, their owners are not personally liable for the firm’s debts.

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11
Q

What is franchising?

A

Buying into an existing business and acquire the right to use an existing business idea.

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12
Q

Advantages of a franchise?

A

Less risky than setting up as an independent retailer

Gets product to market quickly and relatively cheaply

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13
Q

Disadvantage of franchise ?

A

Franchisee can’t be as entrepreneurial

A large amount of initial capital may be required

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14
Q

What are Royalty payments?

A

A payment made to the franchisors based on the sales revenue or profits of the franchise

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15
Q

What type of liability does a public corporation have?

A

Limited liability

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16
Q

Who is a public corporation owned by?

A

National or local government

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17
Q

What is a stakeholder?

A

An individual or group of people who have an interest in a business and its activities

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18
Q

What is the definition of business objectives?

A

What the business is trying to achieve

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19
Q

What are the main types of business objectives (PIGSS)?

A 
Profit
Increase market share
Growth 
Survival 
Service
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20
Q

What is the meaning own legal identity?

A

That the business has a separate legal identity to the owners. Legal action can only be taken against the business

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21
Q

What is meant by the private sector?

A

Owned by private individuals. All sole traders, partnerships and limited companies are in the private sector as they are owned by people as opposed to the government

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22
Q

What is meant by the public sector?

A

Controlled by the government. This includes health, education, police, fire service

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23
Q

What is an entrepreneur ?

A

Someone who identifies a need and fills it.

Individual who has the skills and knowledge to set up and run their own business and is willing to take risks

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24
Q

Why do businesses fail?

A 
Lack of demand for product
Wrong location 
Poor cash flow 
Bad management 
Competition 
Poor customer service 
Poor quality products
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25
What does insolvency mean?
A firm that cannot meet its financial commitments eg it cannot cover its costs with its revenue
26
What is a merger?
Where two companies that to form a new larger business
27
What are economies of scale?
When unit costs fall as output rises
28
What is a takeover?
Where control of another company is achieved by buying a majority of its shares
29
What are the sectors of a business?
Primary sector Secondary sector Tertiary sector
30
What is the primary sector?
First stage of production | Produce raw materials for other businesses to use e.g farming and fishing
31
What is the secondary sector?
Use the raw materials to manufacture products e.g car manufactures
32
What is the tertiary sector?
Involves providing a service e.g retailing and entertainment
33
Reasons for changes in the primary sector?
Raw materials been used up Machinery replaces jobs Foreign competition
34
Reasons for changes in the secondary sector?
Use of machinery replacing jobs | Foreign competition
35
What are the types of integration?
Backwards vertical Diversification Horizontal Forwards vertical
36
What is horizontal integration?
When an organisation is in the same industry and the same stage of production merge/ takeover
37
What's backwards vertical integration?
When an organisation will merge/takeover another in a different stage of production below their current operation
38
What is forwards vertical integration?
When an organisation will merge/take over another in a different stage of production that is in front of the their current one
39
What is diversification?
When you merge/takeover a business in unrelated business activity
40
1 advantage and 1 disadvantage of horizontal integration?
Advantage- enables increased economies of scale | Disadvantage- customer has less choice over which company in that industry to choose
41
1 advantage and 1 disadvantage of backwards vertical?
Advantage- reduced unit costs | Disadvantage- reduces choice for the customer
42
1 advantage and 1 disadvantage of forwards vertical?
Advantage- provides an outlet for your product, increases sales Disadvantage- reduces choice for customers
43
1 advantage and 1 disadvantage of diversification?
Advantage- reduces dependency | Disadvantage- might have a lack of understanding of the new market
44
What does inter-dependence mean?
Way in which businesses in different sectors depend upon each other
45
What are 4 factors affecting the location of a business?
Climate Access to materials Access for customers Cost of location
46
What is a job description?
Document that describes the duties of a worker e.g write letters and answer the telephone
47
What is a person specification ?
A profile of the type of person needed for a job- their skills and qualifications . E.g friendly persona and English language grade B
48
What is internal recruitment ?
When a vacancy is filled with someone who already works in the organisation
49
What is external recruitment?
When the organisation fills a post with someone from outside of the organisation
50
What is an advantage of internal recruitment?
Cheaper than external recruitment | Quicker to employ someone who is already in the organisation
51
What is an advantage of external recruitment?
Someone with new ideas will come into the business
52
What are the methods of selection?
Cv's Application forms References
53
What is a CV?
A written document by the candidate with qualifications and written statements
54
Advantages of a CV?
- shows the ability of a candidate to organise information | - easy to see essential information at a glance
55
Disadvantages of a CV?
- candidates may exaggerate the truth | - CV can be too long and won't be read by employer
56
Advantages of application forms?
- applicant can only provide information directed by employer - more likely to get up to date information
57
Advantage of a reference?
Referees will describe how well they did at their private job
58
Disadvantage of references?
Employer can refuse to give a reference
59
What is psychometric testing?
Help to identify a candidates skills, knowledge and personality
60
What are the two types of psychometric testing?t
Personality tests - analyse how your personality fits with the business Aptitude tests- assess whether you've got the right skill set for the role
61
What is a recruitment agency?
Acts as a middle man between and organisation that is looking to employ someone and an individual who is looking for a job.
62
What does a recruitment agency do?
- draws up a job description and person specification for the employer - advertises the post - reviews the applications - short lists the candidates - send shortlisted candidates to employer or interview candidates themselves
63
Advantages of recruitment agencies?
- saves time reviewing applications - only best candidates sent to interview - access to large pool of candidates
64
Disadvantages of a recruitment agency?
- cost of using agency - may be communication problem between agency and employer - agency might not use application that employer would
65
What is profit?
Money left over from sales after all costs have been paid
66
What is revenue?
The amount of money which a business receives from selling what it produces/provides
67
What is a sleeping partner( limited partners)?
Partners that do not take an active part in the running of the business but contribute capital to it.
68
What are multinationals?
A company that is based in one country but manufactures and sells products in a variety of other countries
69
Advantages of multinationals?
- manufacturing bass can be spread around the world nearer to markets they serve - economies of large scale production can be obtained
70
Disadvantages of multinationals?
- communication problems between different countries | - fluctuating exchange rates for different countries

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