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30 Cards in this Set
- Front
- Back
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Private sector |
Businesses owned, financed and run by private individuals |
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Public sector |
Businesses run by the government in order to provide a service, they are financed for by taxes |
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Influences on share price |
- proposed takeovers - revenue - performance of competitors - revenue - inflation - ethical activity - investors expectations and their response to rumours - publicity - performance of the company - economic environment |
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Role of a shareholder |
- vote on some company matters - entitled to share in profits - hope to see an increase in share price |
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Market capitalisation |
- the value of a company - share pride X no. Of shares issued |
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Dividends |
Share of profits paid out by a company to shareholders |
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Ordinary shares |
Not guaranteed a dividend payment |
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Preferred shares |
Guaranteed a fixed dividend payment |
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Sole trader |
A business run and owned by one individual, it is the most common form of business ownership |
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Advantages of being a sole trader |
- be our own boss - work your own hours - make your own decisions - go on holiday when you want - easy to set up; register through HMRC - keep all the profits - little accounts |
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Disadvantages of being a sole trader |
- unlimited liability - high workload - difficult to raise capital - no other opinion in the decision making - diseconomies of scale |
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Partnership |
Business run by 2-20 partners |
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Advantages of being a partnership |
- easier to raise start up capital - flexible; easy to form, manage and run - shared responsibility - gain more expertise - shared workload - share decision making |
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Disadvantages of being a partnership |
- disagreements - unlimited liability - taxation - share profits |
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Private limited company |
A company run by its board of directors who have shares in the business |
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Advantages of being a private limited company |
- introduction of shares - remain in control of the business - limited liability - taxation(only taxed on profits) - quick and easy decisions - you choose the shareholders - can raise more capital easier - stable structure - more privacy of information compared to public limited companies - long term shareholders |
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Disadvantages of being a private limited company |
- complex accounts - expensive to set up - public disclosure of company information - separation between management and ownership can cause conflict |
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Public limited company |
Large scale company run by its shareholders |
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Advantages of being a public limited company |
- better access to capital; as shares float on the stock exchange -liquidity; shareholders can buy and sell their shares - value of shares can increase - limited liability - creates the impression of a reputable business - can take advantage of economies of scale; can by in bulk at a cheaper price |
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Disadvantages of being a public limited company |
- can lose of control of the business easily - greater public scrutiny - accounts can be viewed by the public - hard to set up( register through companies house) - value of shares can decrease - conflict between directors and shareholders |
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Franchise |
Where a business sells to the franchisee the business name and the ability to trade under their instructions and rules |
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Advantages of a franchise |
- franchisee inherits a winning formula - offers independence of small business ownership supported by the benefits of a big business network - easier to secure finance - higher success rate than start-up business - established reputation - provides training for the franchisee - already established market share - risk of failure reduced - no prior experience needed - limited liability |
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Disadvantages of a franchise |
- Little say for the franchisee in the running of the business - share profits with franchisor - bad performance from other franchises damage your reputation - franchisor monitoring - difficult to sell your franchise - strict rules |
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Non-profit organisation/charity |
A business set up to provide help others and isn't designed to prioritise making a profit |
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Advantages of being a charity |
- no taxes - protection from personal liability - employee benefits - help others - more goodwill from customers - private and public donations |
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Disadvantages of being a charity |
- lots of paperwork - some expense - shared control - public scrutiny |
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Advantages of private sector business |
- offer lots of jobs - offer services - essential at providing everyday needs - provide raw materials |
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Disadvantages of private sector business |
- have to raise capital |
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Advantages of public sector business |
- run by government - offer essential services - payed for by taxes - planning and co-ordination is easier - decisions based on the full costs and benefits involved - don't abuse market power - provide basic industries |
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Disadvantages of public sector business |
- significant pressure on services - difficult to manage and control - can become inefficient - need to be subsidised if making a loss |
