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Flashcards in UB - Types of Business Organisations Deck (23)
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What objectives does a private sector business have? (7)

Profit maximisation
Satisficing - Making enough profit which is sufficient to keep all shareholders happy
Corporate social responsibility - improving public image
Provision of a service - aiming to provide a service in the best way possible
Maximising sales


What objectives does a public sector business have? (5)

Meeting national and local government priorities
Operating to a specified budget
Providing a service that meets the needs of everyone
Being more affordable than the private sector
Using taxes wisely


What objectives does a third sector business have? (5)

Raise awareness of cause being supported
Provide a quality service
Support a specific group of people
Gain more volunteers
Raise more funds


How can a business achieve their CSR? (5)

Making sure raw materials come from sustainable sources
Recycling as much as possible
Trying to reduce its carbon footprint
Making sure suppliers are paid fairly (fair trade)
Encourage employees to improve health by offering activities


What are managerial objectives? (4)

Maximise person salary/bonus
Maximise departmental budgets
Improve status and recognition
Maximise number of employees in their charge


What is the central government?

Houses of parliament and the Scottish parliament that provide the public with a variety of services and allocates spending in the budget to each service.


What is the local government?

Receive majority of their funding from the central government and council tax. Uses money it receives to provide the public with a variety of services for everyday life.


What is privatisation?

Making a public sector organisation turn into a private sector organisation


Who are public sector organisations owned and controlled by?

Owned by central government/local government and run by politicians, civil servants, locally elected councillors and council employees.


Sole trader facts - owned by, run by and size

Owned by one person, run by one person and usually small businesses


Sole trader advantages and disadvantages (4 each)

Minimal legal documents required to set up
Owner can choose when they work
All profits are kept by the owner
All business decisions are made by the owner

No one to share workload with
Raising large start up capital is difficult
Unlimited liability
Ill health/holidays can affect the running of the business


Partnership facts - owned by, run by and size

Owned by and run by 2-20 partners. Usually small to medium size businesses.


Partnership advantages and disadvantages (3 each)

Decision making, responsibility and workload can be shared
Partners can bring different skills and experiences
Finance can be raised more easily
Unlimited liability
Arguments can occur with decision making
If partners come or go, the original partnership must be dissolved and a new one set up


Ltd facts - owned by and run by

Owned by shareholders (minimum of 2), run by a board of directors appointed by shareholders


Ltd advantages and disadvantages (3 adv, 4 disadv)

More capital as more investment
Limited liability for shareholders
Owner retains more control compared to a plc with stocks only being sold to friends/family
Must be registered with registrar of companies - high set up cost
Disagreement between shareholders
Growth may be limited as max shareholders is 50
No privacy as financial information is publicly accessible


PLC facts - owned by, run by and size

Owned by shareholders, run by board of directors and are large companies.


PLC advantages and disadvantages (3 adv, 4 disadv)

Limited liability for shareholders
Shares can be sold on the stock exchange to raise capital quickly
PLCs often dominate the market
Must publish annual accounts which can be expensive
Large amount of legislation is required to set up - expensive
PLCs can grow quickly and uncontrollably making them difficult to manage effectively
High start-up capital - £50,000


Franchise facts - franchiser, franchisee

Franchiser - sells the right to use a business idea in a particular location
Franchisee - buys the right to copy a business format from a franchiser.


Franchiser advantages and disadvantages (2 each)

Quick way to enter geographical markets
They receive a percentage of all the franchisee's profits every year (royalties)

Rely on the franchisee to maintain a good image and reputation. Can affect the entire business.
Only a share of profits is received rather than all of them


Franchisee advantages and disadvantages (2 each)

Well known, already established brand. Reduces failure chance.
Can benefit from new ideas from all franchisees

Royalties have to be paid so not all profits are kept
May not be able to use own initiative
Reputation relies on other franchisees


Multinational facts - PLCs, branches, head office, sales outlets, production facilities.

Many large PLCs operate as MNCs. MNCs have branches called 'subsidiaries' in more than one country. Head office is based in the 'home country'. Countries for sales outlets are called 'host countries'. Production facilities are set up in more than one host country.


MNC advantages and disadvantages (7 adv, 4 disadv)

Skilled labour is more available
Labour can be cheaper
Legislation in other countries may be more relaxed
Corporation tax may be lower
Legislation may be too strict and expensive
The local currency may be weak
There may be a lack of infrastructure
Products may be unpopular in other cultures


Host country advantages and disadvantages (2 adv, 4 disadv)

Increased jobs available
Improves economy