Business Management Unit 3 Exam Revision Questions and Answers ( Certified solutions)

Business Management Unit 3 Exam Revision Questions and Answers ( Certified solutions) Business - ANS- An organisation that aims to produce goods/services to satisfy the needs and wants of consumers Sole trader - ANS- Business that is owned and operated by one person Advantages sole trader - ANS- Simple and inexpensive to set up Complete control No disputes Keeps all profits Disadvantages sole trader - ANS- Unlimited liability Burden of managing whole business Required to perform many different tasks Partnership - ANS- A business that is owned and operated by 2-20 people Advantages partnership - ANS- Simple and inexpensive to set up shared workload shared debt Pooled capital easier to take holidays Disadvantages partnership - ANS- Unlimited liability potential for disputes liability for debts incurred by partners shared profits Incorporation - ANS- The process a business goes through to become a registered company Private limited company - ANS- An incorporated business that is owned by up to 50 shareholders selected by the directors Advantages private limited company - ANS- limited liability company can live on after death of owner easier to attract capital compared to partnerships and sole trader can chose partners pay company tax rates Disadvantages private limited company - ANS- complex and expensive to set up more reporting requirements shares cannot be traded freely Public listed company - ANS- A larger company with unlimited number of shareholders; shares can be freely traded on the stock exchange; has the word 'Limited' (Ltd) after its name Advantages public listed company - ANS- Limited liability easier to gain more capital by making more shares available to public company lives on after death of owner pay company tax rates Disadvantages public listed company - ANS- complex, time consuming and expensive to set up possible loss of control more accountability and compliance Unlimited liability - ANS- The owner is personally and fully responsible for all losses and debts of the business Limited liability - ANS- Shareholders are legally responsible for the debts of a company only to the extent of the nominal value of their shares Social enterprise - ANS- A business that exists primarily to fulfill a vision that benefits the community rather than shareholders Advantages social enterprise - ANS- encourage community support improved morale within the business as employees value the work they are doing Disadvantages social enterprise - ANS- Difficult to gain finance to begin difficult to focus on social and financial objectives Government enterprise business - ANS- A business that is owned and operated by the government Advantages GEB - ANS- may invest in areas that the private sector may not provides healthy competition for the private sector Disadvantages GEB - ANS- Strategic direction may change with a change in government political interference may not be as productive as the private sector Business objectives - ANS- The goals the business is aiming to achieve in the future Increase market share (objective) - ANS- The proportion of the total sales the business has in an industry for a particular good/service expressed as a percentage Make a profit (objective) - ANS- The amount of money remaining after expenses have been deducted from revenue Fulfill a market need (objective) - ANS- A market is a specific group that have similar characteristics that a business focuses selling its goods and/or services to A need is the groups desires for a particular product or benefit Fulfill a social need (objective) - ANS- Where the business focuses on improving the lives of others Meet shareholder expectations (objective) - ANS- Shareholders are those that own the business. They expect to make a return on their investment through capital gains and dividends Stakeholders - ANS- Those that have a vested interest in the business Shareholders - ANS- Those that own part of a company Shareholder interests - ANS- Return on investment through capital or dividends