Sole Traders Overview
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Questions and Answers

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.

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?

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?

<p>Companies must adhere to more rules and regulations than sole traders.</p> Signup and view all the answers

Explain how STEEPLE factors can impact a business.

<p>STEEPLE factors help analyze external influences like social, technological, economic, environmental, political, legal, and ethical aspects.</p> Signup and view all the answers

What does the acronym STEEP stand for in relation to business analysis?

<p>STEEP stands for Social, Technological, Economic, Environmental, Political.</p> Signup and view all the answers

Name two benefits of using sampling methods in research.

<p>Sampling methods are cost-effective and time-saving.</p> Signup and view all the answers

What is a primary disadvantage of primary research?

<p>Primary research can be expensive and time-consuming.</p> Signup and view all the answers

List one advantage and one disadvantage of secondary research.

<p>An advantage is that it's cost-effective; a disadvantage is that the data might be outdated.</p> Signup and view all the answers

How can technological factors in STEEP analysis impact a business?

<p>Technological factors can introduce new tools that enhance efficiency or create risks that disrupt operations.</p> Signup and view all the answers

What does ethical consideration in STEEP entail for a business?

<p>Ethical considerations involve ensuring fair treatment of workers and customers.</p> Signup and view all the answers

Explain why bias is a concern in sampling methods.

<p>Bias can occur if the sample is not randomly selected, leading to misleading results.</p> Signup and view all the answers

Identify two societal changes that could affect a business's STEEP analysis.

<p>Changes in demographics and cultural trends can affect consumer behavior.</p> Signup and view all the answers

What type of data does primary research provide that secondary research might not?

<p>Primary research provides specific and current data tailored to the research needs.</p> Signup and view all the answers

In what way might environmental factors influence business strategy?

<p>Environmental factors, like climate change, can affect resources and operational practices.</p> Signup and view all the answers

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.

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