Types Of Business Organizations

Question 1

Sole trader advantages

Answer 1

• few legal formalities
• flexibility
• receive all profits

Question 2

Sole trader disadvantages

Answer 2

• limited start up capital
• risk of business failure
• lack of continuity

Question 3

Partnership advantages

Answer 3

• more capital
• share risks
• benefit from all profit

Question 4

Partnership disadv

Answer 4

• conflict
• share profits
• unlimited liability

Question 5

Private limited adv

Answer 5

• separate legal identity
• shares can be sold to relatives
• can keep control of business

Question 6

Private limited disadv

Answer 6

• cannot sell shares to public
• difficult to transfer shares
• many legal formalities

Question 7

Public limited adv

Answer 7

• limited liability
• separate legal unit
• can sell shares go public

Question 8

Public limited disadv

Answer 8

• expensive to sell shares to public
• many legal formalities
• divorce between ownership and control

Question 9

Franchise adv

Answer 9

• fast expansion
• management of outlet is franchised responsibility
• all products from franchisor
• business failure low
• fewer decisions to make

Question 10

Franchise disadv

Answer 10

• poor management of outlet affect business reputation
• franchisee keep profits
• license fee paid

Question 11

Joint venture adv

Answer 11

• share risks
• local knowledge acquired

Question 12

Joint venture disadv

Answer 12

• share profits
• conflict
• diff ways of running business

Question 13

Public corporations (bought by gov) adv

Answer 13

• some industries so important that gov must own
• important business failing, gov nationalize it

Question 14

Public corporations disadv

Answer 14

• gov use business for political reason, not profit
• business manager think gov will help if making losses, inefficiency