WHAT IS A BUSINESS?: Unit 2

?
What are private-sector organisations?
Owned and financed; run by private individuals; large number are non-profitable e.g. charities (MOST BUSINESSES ARE IN THE PRIVATE SECTOR)
1 of 26
What are public-sector organisations?
state-owned/government organisations; owned by the government; provide services e.g. healthcare and education
2 of 26
Unincorporated Organisations
have no distinction in law between the business and owner, unlimited liability, e.g. sole traders and partnerships
3 of 26
Incorporated Organisations
have a distinction in law between business and owner, limited liability, e.g. private limited company and public limited company
4 of 26
Unlimited Liability
found in unincorporated organisations and is when owners are liable for all debts of a business and can have their personal assets taken
5 of 26
Limited Liability
found in incorporated organisations and shareholders have no responsibility for further payments if they'd fully paid their share and personal assets can't be used to pay debts
6 of 26
Sold Traders
unincorporated organisation, unlimited liability, owned by one person, e.g. newsagents, hairdressers
7 of 26
Advantages of Sole Traders
easy and cheap to set up; few legal formalities; owner takes profit; independence and more privacy
8 of 26
Disadvantages of Sole Traders
unlimited liability; limited capital for expansion; difficulty if owner is ill/on holiday; limited skills as owner needs to be a jack of all trades
9 of 26
Partnerships (NOT INCLUDED IN AQA SPEC)
A form of unincorporated organisation where two partners operate with the same goal of making profit
10 of 26
Private Limited Companies (ltd)
usually run by families; can keep finances private; funded by shares; can't list on stock exchange; capital may be less than £50,000
11 of 26
Advantages of a private limited company?
limited liability; access to more capital than unincorporated businesses; more privacy than a plc; more flexible than a plc
12 of 26
Disadvantages of a private limited company?
shares are less attractive as can't be exchanged on Stock Exchange; finances difficult to raise; more legal formalities than unincorporated organisation
13 of 26
Public Limited Companies (plc)
limited liability; share capital over £50,000; two shareholders; two directors; qualified secretary; listed on Stock Exchange
14 of 26
Advantages of a public limited company?
limited liability; easier to raise finance; greater scope for new investment; positive publicity on stock exchange; suppliers more willing to offers credit
15 of 26
Disadvantages of a public limited company?
must publish great deal of financial information; greater scrutiny of activities from press; founders of firm may lose control; stock exchange listing means pressure from investors
16 of 26
Institutional Investors
pension funds, insurance companies, banks etc that invest huge sums of money in the shares of a plc quoted on the stock exchange. They invest on behalf of others and are huge influencers on companies
17 of 26
Ordinary Share Capital
money given to a company by shareholders in return for a share certificate that gives them part ownership of the company. This is permanent and a business won't be required to repay the value of these shares
18 of 26
Dividend
a payment made by a company to its shareholders out of profits earned. These are allocated as fixed amounts per share
19 of 26
Market Capitalisation
the value of outstanding shares in a plc. Outstanding shares are the total of all ordinary share issued and fully paid up/
20 of 26
Shareholders
the owner of a limited company; any person, company that owns at least one share in a company.
21 of 26
How do you calculate market capitalisation?
market capitalisation = total outstanding shares x current market price of an individual share
22 of 26
Share Price
the price of a single share in a company; share prices are usually determined by supply and demand
23 of 26
Factors that affect supply and demand for shares?
state of the economy; performance of the company; competition in the market; proposed takeovers
24 of 26
What factors would help decide what form a business should take?
need for finance; size of the business; type of investment required; degree of control desired by the original owners; level or risk; nature of business
25 of 26
Non-profit Organisations
known as the third sector - aren't part of the profitable private or public sector. This includes voluntary/community organisations, trade unions, pressure groups and charities etc.
26 of 26

Other cards in this set

Card 2

Front

What are public-sector organisations?

Back

state-owned/government organisations; owned by the government; provide services e.g. healthcare and education

Card 3

Front

Unincorporated Organisations

Back

Preview of the front of card 3

Card 4

Front

Incorporated Organisations

Back

Preview of the front of card 4

Card 5

Front

Unlimited Liability

Back

Preview of the front of card 5
View more cards

Comments

No comments have yet been made

Similar Business resources:

See all Business resources »See all What is a Business? resources »