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21 Cards in this Set
- Front
- Back
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Types of buisnesses |
- sole traders - partnerships - ltd (private) - plc (public) |
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What is a sole trader |
- one owner - most common type of business - e.g. plumber/ hairdresser/ street seller |
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Advatages of being a sole trader |
- Ensured a job - gets all profits - job satisfaction - you are your own boss - easy to set up- only have to tell HMRC |
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What are the disadvantages of being a sole trader? |
- Have to work every hour you can - runs the business on their own - Have to use own money to get the buisness of the ground - Have to take out loans - If you can't pay bills you are our of work and in lots of debt - overwhelming : limited scope for devision of labour |
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What is the deed of partnerships? |
It sets out how profits are shared and the different responsibilities of each partner |
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Advantages of partnerships |
- one person doesn't have as many responsibilities - More people to contribute money into making the buisness grow- financial help - more partners bring more skills - Possibly a wider range of services to sell |
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Disadvantages of partnerships |
- Any ideas must be discussed and agreed upon (lots of dissagrement) - profits must be shared - need to compeimise - unlimited liability (mostly) |
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What are the key features of limited companies? (Private (ltd) and public (plc)) |
- They are owned by share holders - shareholders receive dividends - shareholders have limited liability- you are only liable for the money YOU have invested in the buisness - the company has a separate legal identity to the shareholders |
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What do limited companies have to do? |
- apply to companies house to get limited company stakes - keep detailed records about their finances and publish them - hold an AGM - Pay tax on its profits and shareholders must pay tax on dividend |
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What are stock exchanges? |
- organisations hat help companies to sell thei shares to people and other organizations that want to buy them - traders are people who buy and sell shares - the stock market is the global market for buying and selling first and second hand goods |
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What are the advantages of being a shareholder? |
- you get a dividend of the profit - can sell your shares to make a profit - you have limited liability- only have to pay back the value of your share id the company crashes - share price may increase and you can get profit |
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What are the disadvantages of being a shareholder? |
- there is a risk that the share price may go down and you will lose money - opportunity cost |
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What is a ltd? |
An ltd is a private company. They are generally small and family run. To own shares you can only buy hem with permission of the board of directors so they are not sold on the stock exchange, you must approach them. There must be at least 2 shareholders but there can be no limit. To set up a ltd you must register it with the register of companies. To raise finance, an ltd can receive finance from shareholders, borrow money from banks and other lenders. The finance from shareholders is call equity. |
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What is a plc and what are the advantages and disadvantages? |
A plc is a public company who sells their charges on the stock exchange. The advantage to this is that large sums of money can be raised very quickly. But a disadvantage is that businesses can be fought and sold by takeover bids that are beyond control of the original owners. Some more disadvantages include: - there is a lot of paper work involved in setting up the business. - public companies can be taken over -public companies often concentrate on paying short term dividends to shareholders rather than building up the business over time- they spend all the money paying dividends rather than investing on capital for the company. |
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What are multinationals and what are the advantages and disadvantages of operating in so many countries and for the host country? |
Multinationals are companies that produce in sell products in many countries. Benefits for the company: access to natural ressources that may be in limited supply in their own domestic market. Cheaper labour. The opportunity for a global market. Disadvantages include: different tastes, requirements and legal standards are different. This could lead to a more costly production for different models and variety of products (which links to acceding T.O) Advantages for host county: bring employment, new products and new technologies. The presence of multinationals can speed up development. Disadvantages for the host country: multinationals do not pay enough for raw materials or for their employees, cause pollution and environmental damage. |
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What is a farming co-operative and what is its advantages and disadvantages? |
Farming co-operatives help farmers to sell their goods at the best possible price by selling them throughout the year instead of still at once. They do this by producing storage units and advertising the goods and deals with the customers. Advantages: -goods are sold for the best price/- the co-ops advertise their goods for them and deal with customers/ the co-ops can store the goods so they can be sold of season Disadvantages: -have to pay the co-op to be a member/- have to trust the co-op that they will sell for the best price/- opportunity cost |
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What is a workers/producers co-operative and what are the advantages and disadvantages? |
A workers co-operative employ most of their members. The members share responsibility for success or failure of enterprise. Members make decisions and work together. They also get a share of the profits. Advantages: -members own a share of company/- workers nominate other to represent them in the board who manages an go to meetings to discuss decisions Disadvantages: -decision making can be slower because of inclusion of members. |
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What is a retail co-operative and what are the advantages and disadvantages? |
Workers put money into the central fund to buy stocks of goods to sell in their own shop. Profits of the shop are shared depending on the amount the shoppers have put in. Advantages: -members who own the co-operative pay subscription to get cheaper goods and working rights Disadvantages: -more decision makers mean slower decision making/ - as they have strong social principles, they buy from producers which give fair prices to growers. This means that goods may be expensive. |
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What is a public corporations and what are the disadvantages? |
Public corporations at are businesses owned by the government. Although the government is the owners, the controllers are given considerable freedom to make their own decisions. They are often created to make sure that important activities that affect the whole nation are carried out well. Some public corporations are set out to preserve jobs. Government involvement in a particular industry can also reduce wasteful competition. The disadvantages include: -public corporations can become to large and difficult to manage/- the lack of competition can lead to high prices and wasteful use of ressources (although they can cut wasteful duplication). |
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What happens when there is an increase/decrease in demand for factors of production? |
The demand for factors of production is derived for the demand for the products that these factors produce. An increase in demand for ,let’s say, uranium leads to a rise in the supply and price of uranium and the demand curve shifts upwards along the supply curve. This shows the price of that factor going up, for example an increase for the demand of uranium would cause the demand for miners to go up, therefore increasing their wages. |
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Demand for factors of production |
The demand for factors of production is derived from the demand of the products they produced. An increase in demand is the same as an increase in demand on a graph |
