Business 1.4.1 - 4.4

• What are the types of business ownership?


  Sole trader - single person owns business

  Partnership - when 2 or more people own a business

  Limited company - business owned by shareholders
• what are advantages & disadvantages of a sole trader?


  Advantages:

  • sole trader can be their own boss
  • easiest type of business to set up

  Disadvantages:

  • Unlimited liability means no legal distinction between assets
  • Harder to retain good employees
• What are advantages & disadvantages of a partnership?


  Advantages:

  • More people = more experience & ideas
  • Good employees can be made into partners

  Disadvantages:

  • Unlimited liability
  • Partners may disagree about business decisions
• What are advantages & disadvantages of a limited company?


  Advantages:

  • Profits are only shared between shareholders
  • Able to raise money via borrowing & through the share issue of ordinary shares

  Disadvantages:

  • Harder to motivate & control workers
  • High set up costs
• What are the 2 types of ownership?

  Private limited company (Ltd) - where ownership of shares is restricted

  Public limited company - sell shares on stock exchange to public
• What are the advantages & disadvantages of Private limited companies?

  Advantages:

  • limited liability
  • Shareholders must agree to sell shares
  • Easier to get a loan

  Disadvantages:

  • Finance
  • Obliged to publish their accounts each year which competitors can use to become more competitive
• What are the advantages & disadvantages of Public limited companies?


  Advantages:

  • Can raise money for investments
  • Easier to raise capital

  Disadvantages:

  • anyone can take over company
  • owners have very little say over business
• What is limited & unlimited liability?


  Limited - where owners are not responsible for a business' debts

  Unlimited - where the owners are personally responsible for all debts of the business
• What are Not-For-Profit organisations and what are some examples?


  Organisations where any profit made is reinvested in the business

  E.g. Charities, social enterprises & unincorporated association
• What is franchising?


  A business model where a franchisor grants a franchisee the right to operate a business under their established brand and business system.
• What are the advantages & disadvantages of franchising?

  Advantages:

  • Increases brand awareness of the firm's products or services
  • Business can expand without needing large amounts of investment

  Disadvantages:

  • Franchiser does not have complete control over how they operate
  • If a franchise is run badly, then a single franchise or store can negatively affect the brand image
• What are factors that influence a business' chosen location?

  The availability of raw materials, cost of labour, competition, rent and location of the market
• What factors influence the nature of business activity?

  • Price competition
  • Low labour costs
• What is the impact of the internet on location decisions?


  E-commerce: if deliveries can be made nationally or even internationally, then the company's location may be less important.
• What is the marketing mix?


  Product, Price, Place, Promotion

  A successfully integrated marketing mix can lead to a competitive advantage.
• How does each element in the marketing mix work together?

  The 4 factors are like ingredients in a cake. Every cake (business) has different ingredients and different combinations to produce different results
• What does a business plan provide a business?


  Detailed info about the costs and expected revenue for a company
• What are the 4 key reasons for creating a business plan?


  Setting objectives, raising finance, important for new businesses & business organisation
• What are the main parts of a business plan?


  Mission statement: says what a company wants to achieve

  Executive summary: a concise overview of the entire business plan

  Production details: outlines how a firm will produce its products or provide its services

  Market analysis: in-depth analysis of different aspects of the business' environment