Marketing and people

4 forms of business ownership

-sole trader

-partnership

-limited companies

-franchising

define sole trader

-business setup with no shares (small independent/lifestyle business)

benefits and limitations of sole traders

-personal income-have no business bank account

-have to prepare tax return at end of year

define partnership

-sole trader with multiple people

-split profit and liability (financial responsibility)

define limited companies

-when company has responsibility and liability

-shareholders dont pay personally

-if company is in debt, shareholder is NOT in debt

public=sharers trade on stock exchange

private=sharers do NOT

strength of public company

-more investors

-can increase price in shares

limitation of public company

-all info has to be public

-reporting

-risk of take over by buying shares

define IPO

going from private to public company

define dividends

shares of the profit of the company

define equity

owning shares of a business

define shares

how business spread ownership-gives rights and strategy of business

define board of directors

-represent shareholders to share their ideas with product interests

-elected by shareholders

how do u have control over company

if you have the majority of share/ more than 50%

define franchise

when company sells product to someone else who sells it on their behalf-instant brand so low risk of failure bc well known

3 reasons why companies franchise

-to grow business

-source of cash revenue

-more branches=bigger global footprint

limitation of franchising

can loose control of business and can impact hpw brand is percieved-can ruin reputation

define Memorandum of Association

a document setting out the constitution and states key external details about a limited company

define primary sector

production involving extraction of raw materials

define secondary sector

production involving the conversion of raw materials into finished and semi finished goods

define sleeping partner

a partner that contributes capital and enjoys a share of the profit without taking an active role in running the business

define social enterprise

a business that trades with the objective of improving human and environmental wellbeing like charities

define tertiary sector

the production of services in the economy