IGCSE
Business Studies Notes
isabelle
,Types of Business Organisations
1) Sole trader
Advantages Disadvantages
Freedom to make decisions Unlimited liability
- Resources allocation - Owner take full responsibility of
- Eg. pricing/ operating hours the business
Keep all profit Limited source of finance
- No need to share - banks are reluctant to lend a sole
- more incentive to add capital trader due to risk and lack of
guarantee
2) Partnership
Advantages Disadvantages
Shared responsibility No separate legal identity
- Each partner can take time off, - If one of the partners die it’s over
isabelle
business can operate more
More Ideas Growth limited
- more partners means more - By amount partners are investing
enterprise for the business (can only have 20 partners)
3) Private Limited
Advantages Disadvantages
Shares can be sold Legal Complications
- Can get high capital for expansion - Many procedures need to be
adhered to
Limited Liability Have to publish financial info
- No need to sell own possessions - Less secretive
, 4) Public Limited
Advantages Disadvantages
Raise large amounts of finance Lengthy process to sell shares
- Increase company worth, entice
investors
Easier to get loan from bank Danger of business being taken over
- BIG - Due to public shares
5) Franchise
Franchisor
Advantages Disadvantages
Faster business expansion Risk of image being affected
- w/o worrying about the - Poor management of one
management of the outlets franchised outlets
isabelle
(franchisee’s responsibility)
- Efficient growth
Minimal employee supervision Franchisee keeps the profits
- No need to manage employees - Less possible profit to be earned
directly
Franchisee
Advantages Disadvantages
Lower risk of business failure Less independence
- Local company is better adapted - No freedom to make decisions
Banks more willing to lend Increase business cost
- Lower risk - Franchise fee, royalty fee
, 6) Joint Venture
Advantages Disadvantages
Access to new markets Different management styles
- Increase brand awareness - Conflict
Wider range of contacts / better access Skills & expertise of partners differ
to resources - May have to spend more time on
- Can obtain cheaper materials training for alignment of skills
7) Public Corporation
Advantages Disadvantages
Allow access of essentials to everyone Low efficiency
- Public welfare - Due to lack of competition
Reduce wastage of resources Not flexible
- No overproduction - Profit is not the main aim
isabelle - Cannot satisfy wants
Division of Labour (Specialisation)
Advantages Disadvantages
Increase efficiency Boring
- Increase output, purchasing - Increase labour turnover, high
economies of scale recruitment cost
Skilled workers Employees have to rely on e/o to
- Reduce mistakes produce
- If one absent, production may
stop
- Reduce productivity
Deindustrialisation - causes
1. Depletion of primary resources in home country
2. Cheaper goods by developing countries
3. Ability to spend more income on services
Business Studies Notes
isabelle
,Types of Business Organisations
1) Sole trader
Advantages Disadvantages
Freedom to make decisions Unlimited liability
- Resources allocation - Owner take full responsibility of
- Eg. pricing/ operating hours the business
Keep all profit Limited source of finance
- No need to share - banks are reluctant to lend a sole
- more incentive to add capital trader due to risk and lack of
guarantee
2) Partnership
Advantages Disadvantages
Shared responsibility No separate legal identity
- Each partner can take time off, - If one of the partners die it’s over
isabelle
business can operate more
More Ideas Growth limited
- more partners means more - By amount partners are investing
enterprise for the business (can only have 20 partners)
3) Private Limited
Advantages Disadvantages
Shares can be sold Legal Complications
- Can get high capital for expansion - Many procedures need to be
adhered to
Limited Liability Have to publish financial info
- No need to sell own possessions - Less secretive
, 4) Public Limited
Advantages Disadvantages
Raise large amounts of finance Lengthy process to sell shares
- Increase company worth, entice
investors
Easier to get loan from bank Danger of business being taken over
- BIG - Due to public shares
5) Franchise
Franchisor
Advantages Disadvantages
Faster business expansion Risk of image being affected
- w/o worrying about the - Poor management of one
management of the outlets franchised outlets
isabelle
(franchisee’s responsibility)
- Efficient growth
Minimal employee supervision Franchisee keeps the profits
- No need to manage employees - Less possible profit to be earned
directly
Franchisee
Advantages Disadvantages
Lower risk of business failure Less independence
- Local company is better adapted - No freedom to make decisions
Banks more willing to lend Increase business cost
- Lower risk - Franchise fee, royalty fee
, 6) Joint Venture
Advantages Disadvantages
Access to new markets Different management styles
- Increase brand awareness - Conflict
Wider range of contacts / better access Skills & expertise of partners differ
to resources - May have to spend more time on
- Can obtain cheaper materials training for alignment of skills
7) Public Corporation
Advantages Disadvantages
Allow access of essentials to everyone Low efficiency
- Public welfare - Due to lack of competition
Reduce wastage of resources Not flexible
- No overproduction - Profit is not the main aim
isabelle - Cannot satisfy wants
Division of Labour (Specialisation)
Advantages Disadvantages
Increase efficiency Boring
- Increase output, purchasing - Increase labour turnover, high
economies of scale recruitment cost
Skilled workers Employees have to rely on e/o to
- Reduce mistakes produce
- If one absent, production may
stop
- Reduce productivity
Deindustrialisation - causes
1. Depletion of primary resources in home country
2. Cheaper goods by developing countries
3. Ability to spend more income on services
