Business Concepts and Forms

Study Notes

Business Concepts

Customer Need: The problem a product or service solves for a customer.
Customer Group: The specific type of customer the business targets.
Product Idea: The solution to the customer need.
Resources: The inputs (human capital, natural resources, real capital, economic capital, entrepreneurs) needed to create and deliver the product or service.
Factors of Production: Inputs comprising human capital (people's abilities), natural resources (raw materials), real capital (created assets), economic capital (money), and enterprises (entrepreneurs).
Scarcity: When demand for a resource outstrips its supply (e.g., fossil fuels).
External Business Idea: Focuses on market presentation, needs addressed, and target customer group. Success hinges on product demand by that group. Efficiency and low cost production are key to success.

Forms of Business

Manufacturing Companies: Process raw materials to create goods.
Service Companies: Sell services.
Trading Companies: Sell other companies' goods.

Legal Forms of Enterprise

Sole Trader: One owner with unlimited liability. No minimum capital.
Partnership: Two or more owners with unlimited and joint liability. No minimum capital.
Limited Liability Partnership (LLP): Limited liability for partners; general partners retain unlimited liability. No minimum capital.
Limited Company (Public): Shares sold publicly; limited liability for shareholders; minimum 500,000 SEK capital.
Limited Company (Private): Shares not publicly traded; limited liability for shareholders; minimum 25,000 SEK capital.
Co-operative/Economic Association: Owned collectively; limited liability for members. Capital requirements depend on structure.
Franchise: Franchisee owns individual location; profit shared with franchisor. Capital defined by franchisor.

Legal Forms: Liability and Ownership

Sole Trader: Unlimited liability; sole owner; owner receives all profits; not a legal person.
Partnership: Unlimited and joint liability; shared ownership and profit amongst partners; not a legal person.
LLP: Limited liability for limited partners, unlimited for general partners; shared ownership and profit amongst partners; not a legal person.
Limited Company (Public & Private): Limited liability for shareholders; publicly or privately owned; profits distributed as dividends to shareholders; legal person.
Co-operative: Limited liability for members; owned collectively; profits shared based on contribution; not a legal person.
Franchise: Depends on agreement; franchisee owns individual location; profits shared with franchisor; not a legal person.

Legal Forms: Advantages and Disadvantages

Sole Trader: Advantages: Simple, full control, keeps all profits, low start-up cost. Disadvantages: Unlimited liability, limited capital raising, taxed as personal income.
Partnership: Advantages: Relatively easy to form, shared responsibility, shared decision-making, no minimum capital. Disadvantages: Unlimited and joint liability, potential conflict, difficult exit.
LLP: Advantages: Limited liability for limited partners, no minimum capital, flexibility. Disadvantages: General partner has unlimited liability, more complex structure.
Limited Company (Public): Advantages: Limited liability, ability to raise capital, perpetual existence. Disadvantages: High start-up cost, complex to manage, stricter regulations, double taxation.
Limited Company (Private): Advantages: Limited liability, easier capital raising than sole traders/partnerships, separate legal entity. Disadvantages: Minimum start-up capital, more administration, complex to operate.
Co-operative: Advantages: Mutual benefits, democratic control, shared resources and profits, encourages sustainability. Disadvantages: Complex to establish and administer, shared control may complicate decision-making.

Description

Explore essential business concepts and forms through this quiz. Understand customer needs, factors of production, and the significance of manufacturing companies. This quiz is designed to deepen your knowledge about the foundational principles of business.