Business Y4 T1 CT.docx

Business Y4 T1 CT

Types of organisations, Organisational objectives, Stakeholder objectives

Types of organisations

Q1. Define ‘sole trader’. [3]

A commercial for-profit business owned by a single person. The owner contributes the capital, takes all profits, and bears all losses.

Q2. State 4 advantages and disadvantages of being a sole trader. [2]

Few legal requirements, can keep all profits, complete control, and personalised

Unlimited liability, long hours of work, difficult to raise finance, no continuity.

Q3. Define ‘partnership’. [1]

A commercial for-profit business owned by two to twenty people, with shared responsibilities such as decision-making and capital investment.

Q4. State 3 advantages and disadvantages of partnerships. [2]

Raise more finance, bring in different skills, share workload

Unlimited liability, disagreements and arguments, shared profit.

Q5. Define ‘companies’. [1]

Commercial for-profit businesses owned by shareholders

Q6. State 2 features, advantages, and disadvantages of privately held companies. [6]

The shares cannot be advertised for sale or via a stock exchange. Shares are typically owned by family and friends.

Continuity of existence and a higher scope of expansion

More expensive to operate, shares cannot be advertised for sale or via a stock exchange

Q7. State 2 features, advantages, and disadvantages of publicly held companies. [6]

Shares can be bought and sold by the general public via a stock exchange without the need for prior approval. They are strictly regulated and required to publish their annual financial accounts.

Continuity of existence and a higher scope of expansion

Threat of takeover, lack of privacy as annual financial accounts are publicly published

Q8. Define ‘social enterprise’ and state 4 features. [2]

Revenue-generating business entities that aim to achieve social or environmental objectives while generating revenue.

Purpose-driven, funded by internal and external sources, return surplus for social gains instead of personal gains, focus on social impact and financial gains.

Q10. Define ‘for-profit social enterprise’ and state 4 features. [2]

Revenue-generating business entities that use ethical business practices to achieve their aim of social or environmental objectives while generating revenue. Purpose-driven, funded by internal and external sources, reinvest profits back into their missions rather than maximising for owners, focus on social impact and financial gains.

Q11. Define ‘cooperative’. [2]

For-profit social enterprises owned and run by their members with the common goal of creating value for their members by operating in a socially responsible way.

Q12. Define ‘not-for-profit social enterprise’ and state 4 features. [2]

Organisation that combines the characteristics of both a non-profit organisation and a social enterprise.

Purpose-driven, funded by internal and external sources, reinvest 100% of profits back into their mission, focus on social benefits

Q13. Define ‘charities’. [1]

Charities primarily rely on donations from individuals, corporations and governments and often actively fundraise and engage in campaigns to attract donations.

Organisational objectives

Q14. Define ‘ethics’, and ‘CSR’[2]

The rights or wrongs of making a strategic decision that is beyond legal requirements. It is the morla principles that guide decision-making and strategy. Business ethics are the actions of people and organisations that are considered to be morally correct.

The obligations of a business are to act in an ethical and socially responsible manner with good moral values towards all its stakeholders like workers, customers, shareholders, and the natural environment.

Q15. State 3 advantages and disadvantages of adopting ethics and CSR. [3]

Positive brand image and loyalty, highly motivated employees, higher profitability in the long run due to increased customer loyalty

Higher compliance costs, lower profitability in the short run, may lose some customers if prices are higher

Q16. State 3 reasons for implementing ethical/CSR objectives. [3]

Promote a positive public image and perception, avoid legal prosecutions such as labour laws, they usually attract long-term loyalty from employees and customers.

Stakeholder objectives

Q17. Define ‘stakeholder’. [1]

Individuals or groups who have a direct interest in the business or involved in its operations because they are directly affected by the performance of the business.

Q18. Define ‘internal’ and ‘external’ stakeholders. [2]

People or groups who work for the business or own the business.

People or groups from outside the business who can be affected by, and therefore have an interest in, any action by an organisation.

Q19. Define ‘shareholders’ and state 2 objectives. [2]

The main risk takers of the business who invest capital to set up and expand it.

Profit maximisation as they are entitled to a rate of return of the capital they have invested. Business growth to increase the value of shares

Q20. Define ‘employees’ and state 2 objectives. [2]

People employed by the business and are directly involved in its activities.

Regular payment for the work done and job security

Q21. Define ‘managers’ and state 2 objectives. [2]

Employees who control the work of others

Higher salaries due to their jobs requiring more skill and effort, job security

Q22. Define ‘customers’ and state 2 objectives. [2]

They purchase and consume the goods and services that the business produces or provides.

A price that reflects the quality of the good. The products must be reliable and safe

Q23. Define the role of government in businesses and state 2 objectives. [2]

Protect the workers and customers from the business’ activities and safeguard their interests.

For the business to grow and survive, helping to increase employment, government revenue, and the total output of the economy.

Firms to stay within the rules and regulations set by them

Q24. Define the role of banks in businesses and state 1 objective. [2]

Provide financial help for the business’ operations.

Business liquidity and expecting the business to repay the loan

Q25. Define the role of communities in business and state 2 objectives. [2]

This consists of all the stakeholder groups, especially the third parties that are affected by the business’ activities.

The business must offer jobs and employ local employees

The production process of the business must in no way harm the environment

Q26. Define ‘suppliers’ and state 1 objective. [2]

They provide raw materials, components, or finished goods to businesses.

Faster payments and consistent or increasing level and regularity of orders.