A-Level Business: Business Structures

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Questions and Answers

Which of the following is NOT typically considered a characteristic of a sole trader?

Unlimited liability
Directly receiving all profits
Limited liability (correct)
Full control over decisions

What is a primary advantage of a private limited company (Ltd) compared to a sole trader?

Is subject to more government control
Is generally easier to set up
Offers limited liability to its owners (correct)
Requires less paperwork

Which type of business structure allows its shares to be freely bought and sold on the stock exchange?

Public Limited Company (PLC) (correct)
Sole trader
Partnership
Private Limited Company (Ltd)

What best describes a franchisee?

Someone who owns and operates a branch of an established franchise (A) Signup and view all the answers

Which type of business structure is characterized by having members rather than shareholders and often prioritizes serving its members' needs over profit maximization?

Cooperative (D) Signup and view all the answers

Briefly explain two advantages and two disadvantages of forming a partnership business structure.

Advantages include pooling resources and shared decision-making. Disadvantages include potential for disagreements and unlimited liability in some cases. Signup and view all the answers

How does limited liability protect business owners, whether in a private or public limited company?

Limited liability protects personal assets of business owners from business debts or legal issues, limiting their liability to the amount of their investment in the company. Signup and view all the answers

A involves two or more parties agreeing to pool their resources for the purpose of accomplishing a specific task, while a is a collaborative agreement designed to achieve a set of goals.

joint venture, strategic alliance Signup and view all the answers

Describe a key reason why a business might choose to expand by becoming a franchise rather than expanding independently.

Franchising reduces the risk of expansion by leveraging an established brand, proven operational system, and support from the franchisor. Signup and view all the answers

Public sector businesses are owned and operated by the government for the benefit of the public, while private sector businesses are owned and operated by individuals or private groups for profit.

True (A) Signup and view all the answers

Flashcards

Sole Trader

A business owned and controlled by one person who receives all the profits but is also personally liable for all the business's debts.

Limited Liability

The advantage where the owners are not personally responsible for business debts; their liability is limited to the amount of their investment.

Public Limited Company (PLC)

A company structure where shares can be sold to the general public, allowing for raising capital from a wide range of investors.

Franchisee

An individual or company that operates a business under an existing brand name and system, paying fees to the franchisor.