Business Studies Module 1

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  • Created by: wafflypig
  • Created on: 28-03-16 11:28
Give 3 reasons why someone would go into business?
Be your own boss, develop a hobby, social enterprise, profit motive, ambition
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What is a stakeholder?
Anyone who has an effect on the business
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Give 5 examples of a stakeholder
Owners, employees, customers, unions, suppliers, (and possibly the government)
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What is a sole trader?
A business owned by one person - all the profits go to that one person
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Give 3 advantages of being a sole trader
All the profit, total control, business affairs kept private and not much paperwork
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Give 2 disadvantages of being a sole trader
Unlimited liability, continuity after death and banks won't lend a lot
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What is limited liability?
When there is a distinct separation between company and personal assets. If your business goes bust, you only lose company money, none of your own personal money
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What is a partnership?
A business with 2-20 owners
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Give 2 things a Deed of Partnership has in it
How the profit/losses will be split, amount of starting capital each person will provide, when the partnership should end
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Give 2 advantages of being in a partnership
Spread the risk, 2 heads are better than 1, more starting capital, private accounts
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Give 3 disadvantages of being in a partnership
Unlimited liability, profits have to be shared, less individual control, possibly complicated DoP with solicitor fees
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What is an LTD?
A private limited company, owned by its shareholders and has limited liability.
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How much do you need to float your company on the public stock market?
£50,000
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Why is a LTD private?
Because its shares can only be bought privately, by those invited only
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Who elects the directors in a LTD?
The shareholders
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Give 3 advantages of being a LTD?
Limited liability, easier to get funding, sell shares to get profit, shares sold privately (protects from unwanted takeovers by buying 51%)
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Give 2 disadvantages of being an LTD
Lots of paperwork, accounts not private
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Give 3 aims of a business
Survival, being ethical, growth and profit
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What is a PLC?
A Public Limited Company whose shares are sold on the public stock market
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Give 3 pros of being a PLC
Run by expert directors, limited liability, shares can be sold to increase profit
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Give 3 cons of being a PLC
Accounts are not private, risk of take over (by buying 51% of shares), directors must justify decisions (wastes management time)
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Who owns a PLC?
Shareholders
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What is a franchise?
A type of license/business obtained by a franchisee, allowing them to use the knowledge and trademark of the franchisor
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Give 2 advantages of being a franchisor
Secure profitability (franchisees pay royalties), quick growth, franchisees will work hard
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Give 2 disadvantages of being a franchisor
One bad franchisee gets you a bad reputation, franchisees are hard to manage, have to share profit around the franchise
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Give 2 advantages of being a franchisee
More likely to succeed, banks more likely to loan (because company is already succeeding)
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Give 2 disadvantages of being a franchisee
Have to pay royalties, upfront starting fees to franchisor, franchisor sets rules
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What is a social enterprise?
An organisation that sets out to benefit society
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Give an example of a social enterprise
Local pub, charity shop, SPAR
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What is a cooperative?
A company owned by its customers and workers. Like in LTDs and PLCs, dividends are paid to the owners
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What are dividends?
A sum of money paid to shareholders in a cooperative, LTD and PLC out of a company's profits
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Give 3 characteristics of an entrepreneur
Innovative, organised, risk-taker
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Give 3 reasons why a business should be ethical
Personal beliefs, reputations, large companies have to produce CSRs, business won't survive long,
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Other cards in this set

Card 2

Front

What is a stakeholder?

Back

Anyone who has an effect on the business

Card 3

Front

Give 5 examples of a stakeholder

Back

Preview of the front of card 3

Card 4

Front

What is a sole trader?

Back

Preview of the front of card 4

Card 5

Front

Give 3 advantages of being a sole trader

Back

Preview of the front of card 5
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