| what is an unincorporated business? | does not exist independently from their owners |
| what is an incorporated business? | set up as legal entities |
| what is a limited company? | they are incorporated businesses, they are legal entities in their own right and exist independently from the owners. |
| what are the owners of a limited company called? | shareholders, each owns a share of the company |
| what is a private limited company? | they are usually smaller businesses, the number of shares may be limited, can't be owned by general public |
| what is a public limited company? | larger than private limited businesses, shares in the company can be sold to general public and sold on the stock market |
| what is the stock market? | The stock market broadly refers to the collection of exchanges and other venues where the buying, selling, and issuance of shares of publicly held companies take place. |
| what is memorandum of association? | a legal statement signed by all initial shareholders or guarantors agreeing to form the company |
| what are both public and private limited companies also knowns as? | borides corporate |
| what are articles of association? | written rules about running the company agreed by the shareholders or guarantors, directors and the company secretary. |
| what does registration involve? | the requirement for firms to deposit their accounts with the registrar. these must include the balance sheet and reports from the auditors and directors. |
| what is a dividend? | the part of any profits paid to a shareholder |
| what is controlling interest? | if a shareholder owns more than half of the company's shares |
| what is divorce of ownership from control? | when shareholders of limited companies appoint one or more directors to run the company for them, so this creates separation between ownership and control |
| what is the board of directors? | the directors that are responsible to the shareholders for long term planning and day to day running of the business |
| what is a company secretary? | people who deal with legal aspects of the company. |
| sources of finance for limited companies? | borrow from banks and other financial institutions |
| are the shareholders, directors or anyone else connected with the company personally liable for the companies debts in a limited company? | no. |
| what is a creditor? | the people or organizations it owes money to |
| what happens if the official receiver appointed to find a way for the company to pay its debts and solve the problem? | the company will go into liquidation |
| advantages of a limited company? | owners have limited liability, business can approach more sources for finance, borrowing money is easier, business exists independently from its owners |
| dissadvantages of limited companies? | few legal formalities, separation of ownership and control can lead to conflicts of interest, larger companies need more admgsitntration so it can be slow and costly |
| what is a franchise? | an agreement allowing one business to trade under the name of another and sell its products |
| examples of franchises? | McDonalds, wimpy, Wendys |
| what does the franchisee do? | own and run the business |
| what is a franchiser? | An individual or company that sells or grants a franchise for the sale of goods or the operation of a service. |
| what is the franchiser in control of? | the franchiser usually controls product design, logos, the brand name for ads. |
| what can a franchise be set up as? | an unincorporated business by a sole trader or partnership, or incorporated business as a private limited company with limited liability. |
| sources of finance for a franchise? | they're similar to sole trader, partnership and limited company.
the franchiser can help the franchisee with start up costs or provide equipment and materials. |
| advantages of franchise? | good franchisers ask questions this helps to eliminate the other optimistic person.
trading under the franchisers name and logo will gives the franchisee a greater chance at success.
franchiser may provide equipment, materials, training etc
banks can be more willing to loan to franchisers as they're considered as more reliable.
franchises can benefit from some of the advantages of larger businesses.
franchiser can expand without having to commit too much of its own resources
risk is shared. |
| disadvantages of franchises? | franchiser success depends on that of the franchise.
franchisee has less control over the business
franchisee succes depends on franchisers product
criticism
franchisee must pay annual fee to franchiser
over succes, low demand
franchisee can't diversify in the ways other firms do to get over problems
bulk purchasing agreements cane be restricting if the franchisee is restricted under contract to buying a certain range of products from agreed suppliers |
| principles of a social enterprise? | 1. have a clear social and/or environmental mission to set out in their governing documents
2. generate the majority of their income through trade
3. reinvest most of there profits
4. be autonomous of state
5. be majority controlled in the interest of the social mission
6. be accountable and transparent |
| what is a not for profit organisation? | an organisation whom making profit is not the primary objective |
| what do nfpo include? | charities and trusts |
| what is a charity? | an organisation that is set up to help people in need and is for a specific cause. |
| what is a trust? | A trust, is in law, an arrangement whereby a person (a trustee) holds property as its nominal owner for the good of one or more beneficiaries. |
| what is a social enterprise | Some businesses have social objectives but are not classed as charities; these are known as social enterprises. |
| what is a objective of a social enterprise? | Although profit will be a key business objective, this type of organisation will reinvest most of the profit gained and use its assets to expand the business activities or benefit the surrounding community. |
| what is a multinational? | any large business with operations and markets in a range of different countries is known as multinational. |
| these types of organisations are likely to be... | incorporated with limited liability. |
| what can a multinational firm do? | A multinational firm can gain a range of benefits from undertaking global operations, including low operating costs due to economies of scale, cheaper resources and the power gained over suppliers. |
| what is a home country? | this is where the business is formed and established. |
| what is a host country? | Other countries then become hosts for the business. Host countries benefits from the foreign investment of multinational companies. |
| what can a host country do? | the host country can get more choice from a wider range of cheaper products. |
| what can host countries benefit off? | Host economies can benefit from an increase in tax revenue and technology transfers. In addition, host countries can see a rise in employment and a growth in enterprise; locals may set up new businesses to supply the multinational firm. |
| what does winding up mean? | the final stages of a business |
| what are the main ways in which a company can be wound up? | compulsory liquidation
Voluntary liquidation
Winding up under the supervision of a court. |
| what does insolvent mean? | Companies are usually wound up when they are unable to pay debts when they are due. |
| what does liquidation mean? | Liquidation is the process of selling off the assets of an insolvent business. |
| what is voluntary liquidation? | When creditors believe they are never going to be paid, they can press the company into voluntary liquidation. An official receiver will be appointed to try to realise the company’s assets will distribute them fairly. |
| what is compulsory liquidation? | Compulsory liquidation is solely in the hands of the court, not the company concerned.
This is similar to the bankruptcy of individuals and there is a set order for payment of creditors, starting with taxman. |
| what does monopoly mean? | when one company and its product dominate an entire industry whereby there is little to no competition and consumers must purchase that specific good or service from the one company |
| what is a creditor? | people they owe money to. |
| what happens with public sector businesses? | organisations are usually in a monopoly position of the uk, they were protected from any competition from the private sector and it would have of been difficult for private businesses to compete against them. |
| why are such organisations not under the same pressure to make profit? | osses were often acceptable because they were seen to provide valuable services to the public and a great deal of employment. |
| what does Over bureaucratic mean? | involving complicated rules and processes that make something slow and difficult |
| what does re-nationalised mean? | (taken back into state ownership) |
| what does a trading arm mean? | way to generate income on a more substantial or permanent basis, which is a non-charitable trading company. |
| what do privatisations mean? | he transfer of a business, industry, or service from public to private ownership and control. |
| what does a social enterprise do with most its profits? | it will reinvest most of the profits gained and use its assets to expand the business activities or benefit the community |
| Advantages of limited liability? | owners have limited liability for debts, more sources of finance, borrowing money is easier, business exists separately from its owners so if owner changes business still carries on. |
| types of private ownership of a business? | private limited companies, franchises, sole trader, partnerships |
| ways in which a business can be wound up? | voluntary liquidation, compulsory liquidation, winding up under supervision of court. |
| advantages of a franchise to a franchisee? | franchiser will ask relevant questions, trading under franchiser's name gives greater chance of success, franchiser may provide equipment, banks are more willing to give out loans to franchisees, franchises can benefit from some advantages enjoyed by a larger business. |
| disadvantages to a franchiser? | franchisers success depends on success of franchisee, some franchisers have been criticised for lack of concern for environment. |
| benefits of a multinational? | cheaper recourses, low operating costs due to economies of scale. |
| how can a multinational exploit its host country? | environmental damage |
| what's the different between a public limited company and private limited company? | their size, private is usually smaller.
private can't sell shares to public.
shares of public can be sold on stock market to general public. |
