Business Entities and Evaluation Criteria Quiz

Types of Business Entities: Public and Private Sectors, Sole Traders, Partnerships, and Evaluation Criteria

• There are four sectors of ownership in an economy: public sector (government-owned businesses), private sector (individually or group-owned businesses), primary sector (agriculture, forestry, mining), secondary sector (manufacturing), tertiary sector (services), and quaternary sector (information and technology).

• Public sectors provide public services and protection to citizens, funded by tax revenue, and aim to care about people. Examples of public sector businesses include BBC, USPS, and NASA.

• Private sectors aim to earn profits to compensate their owners, prioritize efficiency, and compete with other businesses. Examples of private sector businesses include Coca-Cola, Netflix, and Google.

• Public sectors are socially oriented but often less efficient than private sectors due to monopolies and lack of competition. Private sectors are efficient but less socially oriented than public sectors.

• Sole traders are unincorporated businesses with unlimited liability, meaning the owner is personally responsible for all the debts and losses. They have limited financing but no one to share profits with.

• Partnerships are businesses with two or more people, with some partners running the business and others investing with no involvement. Partners share the risks and profits.

• Sleeping partners or silent partners are partners who invest but do not run the business.

• Private limited companies are privately owned businesses with limited liability, separate legal identity, and shares distributed among a limited number of shareholders. Public limited companies are publicly owned businesses with shares available for purchase by the public.

• Liability refers to the extent to which an individual is responsible for a business's debts and losses, and can be limited (constrained to initial investment) or unlimited (personal responsibility for all debts and losses).

• Legal identity refers to whether a business has a separate legal existence from its owner(s).

• Transparency refers to the extent to which a business makes its financial information public.

• Set up cost refers to the amount of money required to start a business in a particular form of entity. Sole traders are the least expensive to set up, while public limited companies are the most expensive.Types of Business Entities: Sole Traders, Partnerships, Companies, and Social Enterprises

• Sole traders have unlimited liability, meaning they are personally responsible for all debts and losses of the business.

• Partnerships have unlimited liability and decision-making takes longer due to the need for agreement between partners, but partnerships have greater access to finance and continuity.

• Companies have limited liability, meaning the biggest risk is losing the initial investment, and have their own legal identity separate from their owners.

• Privately held companies are not publicly traded and have a small number of shareholders, making it difficult to cash out or lose control to outsiders.

• Publicly held companies sell shares on the stock exchange and have access to greater capital, but may lose control to shareholders.

• The three most important documents for a company are the memorandum of association, articles of association, and certificate of incorporation.

• Social enterprises use profits as a tool to achieve socially important aims.

• Private sector companies, public sector companies, and cooperatives are all types of for-profit social enterprises.

• Public sector companies provide public services and are run and funded by the government.

• Cooperatives are owned and democratically controlled by their members and exist to benefit their owners or members.

• NGOs are non-profit organizations that usually have public trust and no fixed definition.

• The evaluation of social enterprises involves making judgments about their effectiveness in achieving their social aims and using profits as a tool.Evaluation of Business Organizations and Social Enterprises

• NGOs are defined as not-for-profit voluntary citizens groups organized to address issues in support of the public good, but examples can vary widely.

• NGOs are non-governmental organizations and are not supposed to be involved in running by the government.

• Examples of NGOs include Greenpeace, Amnesty International, and Oxfam.

• Social enterprises can benefit from increased customer loyalty and repeat purchases due to the feel-good factor.

• Social enterprises are socially and ecologically sustainable and can promote positive change.

• Compliance costs or costs of being ethical can be high, which can make social enterprises economically unsustainable.

• Financing may be an issue for social enterprises due to their reliance on donations and sponsors.

• Transparency can lead to prolonged decision-making processes, which can be challenging for social enterprises.

• Inspiring people for positive change is one of the main benefits of running a social enterprise.

• Traditional promotion and targeting do not work for social enterprises, and personal approaches are necessary.

• Income is hard to forecast for social enterprises due to reliance on donations and sponsors.

• People are not always happy to pay for good deeds, and convincing them of the importance of positive change can be a challenge for social enterprises.

Are you curious about the different types of business entities and how they operate? Do you want to learn about the differences between public and private sectors, sole traders, partnerships, and companies? Or maybe you're interested in social enterprises and how they operate differently from traditional for-profit businesses? Take this quiz and test your knowledge of business organizations and evaluation criteria. With questions covering topics such as legal identity, financing, and transparency, this quiz is perfect for anyone looking to expand their understanding of the business world.