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Questions and Answers
What is a primary advantage of operating as a sole trader?
What is a primary advantage of operating as a sole trader?
A primary advantage is having full control over business decisions.
Identify one significant disadvantage of partnerships.
Identify one significant disadvantage of partnerships.
A significant disadvantage is the potential for disagreements among partners.
How does a company's legal identity differ from that of sole traders or partnerships?
How does a company's legal identity differ from that of sole traders or partnerships?
A company has a separate legal identity, meaning it exists independently of its owners.
What is one limitation that companies face compared to sole traders?
What is one limitation that companies face compared to sole traders?
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Explain how STEEPLE factors can impact a business.
Explain how STEEPLE factors can impact a business.
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What does the acronym STEEP stand for in relation to business analysis?
What does the acronym STEEP stand for in relation to business analysis?
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Name two benefits of using sampling methods in research.
Name two benefits of using sampling methods in research.
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What is a primary disadvantage of primary research?
What is a primary disadvantage of primary research?
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List one advantage and one disadvantage of secondary research.
List one advantage and one disadvantage of secondary research.
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How can technological factors in STEEP analysis impact a business?
How can technological factors in STEEP analysis impact a business?
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What does ethical consideration in STEEP entail for a business?
What does ethical consideration in STEEP entail for a business?
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Explain why bias is a concern in sampling methods.
Explain why bias is a concern in sampling methods.
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Identify two societal changes that could affect a business's STEEP analysis.
Identify two societal changes that could affect a business's STEEP analysis.
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What type of data does primary research provide that secondary research might not?
What type of data does primary research provide that secondary research might not?
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In what way might environmental factors influence business strategy?
In what way might environmental factors influence business strategy?
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Study Notes
Sole Traders
- A sole trader operates a business independently.
- Advantages include having full control over decisions and keeping all profits.
- Starting a sole trader business is simple and cost-effective.
- Major drawbacks involve complete responsibility for debts and a high workload, limiting growth potential.
Partnerships
- A partnership consists of two or more individuals who co-own a business.
- Benefits include shared responsibilities, diverse skills and ideas, and shared operating costs.
- Challenges include profit sharing, potential disagreements, and joint liability for debts.
Companies
- Companies are distinct legal entities separate from their owners.
- Owners (shareholders) benefit from limited liability, protecting personal assets from company debts.
- Companies can raise funds more easily by selling shares and can continue functioning despite changes in ownership.
- Disadvantages include stricter regulations, complex and expensive setup processes, and reduced personal control in decision-making.
STEEPLE Factors
- STEEPLE is an acronym representing external factors impacting business.
- Social: Refers to societal changes like demographics and cultural trends.
- Technological: Involves new technologies that can benefit or hinder businesses.
- Economic: Concerns overall economic conditions like inflation and unemployment.
- Environmental: Focuses on issues like climate change affecting operations.
- Political: Pertains to government policies and the political landscape.
- Legal: Encompasses laws businesses must comply with.
- Ethical: Addresses moral considerations in treatment of stakeholders.
Sampling Methods
- Sampling methods select a small group for study from a larger population.
- Benefits include cost-effectiveness and quicker information gathering.
- Challenges comprise potential inaccuracies and bias risks if the sample isn't representative.
Primary Research
- Primary research involves gathering new data directly from sources.
- This method provides specific, current information tailored to research needs.
- However, it may be costly and time-intensive to conduct.
Secondary Research
- Secondary research utilizes previously collected data found from other sources.
- It is usually cost-effective and allows for rapid access to information.
- Limitations include less specificity and the possibility of using outdated data.
Economies and Diseconomies of Scale
- Economies of Scale: Describe cost reduction benefits as production increases.
- Larger businesses can operate more efficiently, leading to lower costs per unit.
- However, as scale grows, management complexity can increase.
- Diseconomies of Scale: Occur when businesses become too large, causing per-unit costs to rise.
- Inefficiencies and slower decision-making are possible downsides in large operations.
Production Methods
- Various approaches dictate how goods or services are produced:
- Job Production: Custom, one-at-a-time production, often costly (e.g., handmade items).
- Batch Production: Producing groups of items at once (e.g., cookies).
- Mass Production: Large-scale, uniform production (e.g., automobiles).
- Advantages include efficiency, especially in mass production and customization in job production.
- Limitations involve high costs and inflexibility in changing mass production processes.
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Description
Explore the concept of sole traders, including their definitions, benefits, and limitations. This quiz will help you understand the implications of running a business as a sole trader. Test your knowledge on the responsibilities and advantages of this business model.