3.1.1 Types of businesses 3.1.2 Business objectives

How many types of businesses are on the study design?

• 4

• 5

• 6

• 7

Answer explanation

Stakeholders are those with a vested interest in the business

On the study design this includes:

- owners

- managers

- employees

- customers

- suppliers

- the general community

Sole traders have unlimited liability

• True

• False

Answer explanation

Unlimited liability menas that the owner is not separate from the business and are held responsible for debts incurred by the business.

e.g. if the business is sued, the owner is sued.

Sole trader disadvantages

• Limited Liability

• More difficult to gain finance

• Minimal government regulation

• Heavy reliance on the owner's skilsl

What is true about partnerships?

• Partnerships are expensive to set up

• Partners do not have unlimited liability

• It's harder to raise capital as a partner than sole trader

• Can have 2-20 partners/owners

Private Limited Company has it's name because ...

• "Private", shares/ownership of the business is not open to the public to purchase.

• "Limited" the owners have limited liability (i.e. if the business is sued they are sued)

How many owners can private limited companies have?

• There can only be one CEO #boss

• 2-20 shareholders

• 1-50 shareholders

• 20-100 shareholders

Advantages of a private limited company

• Expensive to set up

• Shares cannot be traded freely

• Unlimited liability

• Easier to attract capital

Public listed companies...

• Can have up to 200 owners

• have limited liability

• die when their CEO dies.

• are cheap and easy to set up

Answer explanation

Public listed companies can have unlimited number of shareholders.

Social enterprises...

• Don't try to make a profit

• exist to meet a social need rather than shareholder expectations

• benefit the community and rely on donations to operate

• find it easy to obtain finances to start their business

Government Business Enterprises

• can't have shareholders

• don't aim to make a profit

• are privately owned

• are owned and operated by the government