1.2

Question 1

Private Sector

Answer 1

Privately owned businesses with main motive of profit. only exists in free economy

Question 2

Public Sector

Answer 2

Owned , funded and controlled by government. Operates for welfare of community and profit is second motive. Provide essential facilities that will be underprovided otherwise . only exists in planned econmy

Question 3

Free Market

Answer 3

Economy where there is no government intervention and resources are allocated based on price mechanism

Question 4

Planned Market

Answer 4

An economy where the government owns all the businesses and resources are allocated based on quotas and rationing

Question 5

Advantages of Public sector (2)

Answer 5

1. Social Objective - society benefits
2. Tax financed - Loss making public services can work

Question 6

Disadvantages of Public sector (2)

Answer 6

1. Inefficient - subsidies reliant
2. Government interference - political favor

Question 7

Sole Trader

Answer 7

A business in which one person provides full control over the finance and in return has full control over the business and is able to keep all the profits

Question 8

Advantages of Sole trader (3)

Answer 8

1. Easy to set up - less legalities
2. Flexible - full control
3. no profit sharing

Question 9

Disadvantages of Sole trader (3)

Answer 9

1. Unlimited Liablity
2. Less invesmnets - no loans
3. Lack of continuity

Question 10

Unlimited Liability

Answer 10

Business owners have full legal responsibilities of the debt of the business

Question 11

Partnership

Answer 11

A business in which two or more people come together to own a business and has shared capital Invesment and shared responsibly

Question 12

Advantages of Partnership (3)

Answer 12

1. Share workload- specialization
2. Additional capital
3. Loss and risk shared - less personal finance burden

Question 13

Disadvantages of Partnership (3)

Answer 13

1. Unlimited liability
2. Prodfits are shared - less return
3. Loose decision making independance- more conflicts

Question 14

Private Limited Company

Answer 14

Business owned by shareholders who are often members of the same family. Company cannot sell shares to the general market

Question 15

Shareholders

Answer 15

Owners in a private or public limited company who have voting rights and get dividends in return for Invesment.

Question 16

Disadvantages of Private Limited Company (4)

Answer 16

1. Serval legal formalities - expensive and time consuming
2. Less capital - cannot sell stock to public
3. No secrecy - public inspection
4. Hard to sell stocks - less desirable

Question 16

Advantages of Private limited company (4)

Answer 16

1. Limited liability - personal assets are safe
2. Separate legal identity - faulty products
3. Continuity
4. Raise capital - more Invesment

Question 17

Public Limited Company

Answer 17

A company whose shares are traded on stock exchange and can be bought and sold publicly

Question 18

Advantages of Public limited company (5)

Answer 18

1. Limited liability
2. Continuity
3. Separate legal identity
4. Lage sums of Capital - stock general public
5. Easy to buy and sell shares - more invesment

Question 19

Disadvantages of Public Limited company (3)

Answer 19

1. No secrecy over accounts - competitors can use
2. Risk of takeover due to availability - another company can assume control
   3.Sevela legal formalities - expensive

Question 20

Co-operatives

Answer 20

Jointly owned business operated by members for their mutual benefit of producing or distributing goods or services. Consumer and framer cooperatives are examples

Question 21

Advantages of co-operatives (3)

Answer 21

1. Economies of Scale
2. Work together - better decision making
3. Motivated - share profit

Question 22

Disadvantages of co-operatives (3)

Answer 22

1. Poor Managment - inefficiency
2. limited finance - no stocks
3. All members need to be consulted - disputes

Question 23

Advantages of franchise (3)

Answer 23

1. Less chances of failure - established brand name
2. Pay for advertising and training
3. Increase business expertise - quality suppliers

Question 23

Disadvantages (4)

Answer 23

1. Initial license fees is expensive - financial pressure 2. Limited control 3. Profits shared 4. Not all costs covered - local promotion

Question 24

Franchise

Answer 24

Legal right to us the name , logo and trading system of an already successful business

Question 25

Joint Venture

Answer 25

Two or more businesses agree to work closely together on a project and create a separate business division to do so

Question 26

Advantages of Joint venture (3)

Answer 26

1. Cost and risk are shared- innovation 2. Different strength and experiences- better products 3. Explore new areas of market - more sales

Question 27

Disadvantages of Joint venture (3)

Answer 27

1. Different culture and managment - conflicts 2. Blame and failure of one is risk 3. Profit are shared

Question 28

Social Enterprise

Answer 28

A business with mainly social objectives that reinvests most of profits into benefiting society rather than maximizing returns to owners

Question 29

Triple bottom line objectives

Answer 29

Economic, Social, Enviromental 1. Economic: Make profit and reinvest in business for growth. Operate in multiple area. 2. Social: Provide jobs for local. 3. Enviromental: sustainable environmental polices

Question 30

Features of social enterprise (4)

Answer 30

1. directly produce or provide goods and services 2. social aims and ethical ways 3. Surplus profit to survive - no charity 4. face competition