156 Questions
What is the main difference between incorporated and unincorporated companies in the private sector?
Incorporated companies are considered separate from their owners, while unincorporated companies have no legal distinction between the company and its owners
What is the characteristic of a sole trader in an unincorporated business?
Complete financial responsibility and unlimited liability
Why might an unincorporated company be the preferred option for many businesses despite the personal risk?
To have limited liability and reduced financial responsibility
What is the legal distinction between owners and the company in an unincorporated company?
There is no legal distinction between the company and its owners
What is the level of liability for owners in an unincorporated company?
Unlimited liability for any actions or debts of the company
What is the primary advantage of incorporated companies in terms of liability?
Owners are not liable for any debts over and above the amount they have paid for their share of the company
In the United Arab Emirates, what percentage of ownership is allowed for foreign nationals in certain professional services as sole traders?
100%
What is the main difference between private limited and public limited companies in terms of share trading?
Public limited companies can have shares traded on stock exchanges without owner consent, while private limited companies cannot.
What is a key disadvantage of being a sole trader?
Unlimited liability
What is a characteristic of partnerships with limited liability?
Partners have unlimited liability for the business's debts.
What is a defining feature of incorporated companies?
Their name appears on a central register.
What is a common advantage of partnerships?
Shared decision making and complementary skills
What is a potential advantage of incorporation for a business?
Access to larger companies
What is a common challenge faced by MSMEs?
Lack of access to finance
What is a distinguishing feature of SMEs according to the OECD?
Fewer than 50 employees
What is a potential drawback of incorporation for a business?
Public disclosure of owners' personal details
In which sectors are SMEs prevalent?
Wholesale, retail, and business services
What potential impact can technology advancements have on MSMEs?
Reduced importance of economy of scale
What is the true indicator of an organization's financial health?
Cash flow statement
How do investors assess the risk and return of buying shares?
Dividing the dividend per share by the price per share
What do ordinary shares entitle the holder to?
Voting rights and future income if the company continues to make a profit
How is share value determined?
By the future expectation of a dividend payment
What led to panic among speculators during the dot com bust in the late 1990s?
Many small companies becoming worthless overnight
How does the stock market affect the economy?
By inhibiting company growth, future profits, and employment
What percentage of turnover from cross-border sources do manufacturing SMEs receive, according to OECD?
10-40%
What percentage of total sales do direct exports represent for SMEs in developing countries' manufacturing sector?
7.6%
What is the main determinant of business profitability, according to the text?
Market share
What drives economic growth, according to the text?
Private sector
What are the three explanations for the relationship between market share and return on investment?
Economies of scale, market power, and quality of management
What percentage of the world's total trade is accounted for by the top ten traders in merchandise, according to the text?
Over half
What does the Supply Positioning Matrix consider?
Competition degree and ease of supplier substitution
What method is used to communicate sourcing strategy and engage participants?
Situation-Target-Proposal (STP)
What does Porter's Five Forces model assess?
Competition and substitution ease
What does the Market Strategic Positioning Table summarize the strategy based on?
Criticality, competition, and spend value
What is the main focus of the Supply Strategy?
Leveraging purchasing power and competitive tendering
What does the Sourcing Strategy document include?
Business requirements, risk analysis, approach to market, implementation plan, and performance metrics
What is the primary purpose of contract management?
Ensuring delivery compliance with contract terms
What is a crucial consideration in contract design for effective supplier selection?
Outcome-focused specifications
What is essential for a good relationship in contract administration?
Transparent communication of service delivery costs
What is a key aspect of contract evolution as circumstances change?
Both parties agreeing to revisit terms
What does contract performance monitoring rely on?
Key performance indicators
What is a critical element of contract administration?
Risk management
What is an essential factor in contract management?
Clear communication channels
What is necessary to ensure value for money in contracts?
Regular price benchmarking or market testing
What is recommended for managing supplier relationships even after the contract ends?
Ending contracts on good terms
What is a valuable way to achieve continuous improvement and manage supply risk?
Supplier relationship management (SRM)
What varies depending on the size and capability of the organization?
Procurement scope and role
What is the authority of central government according to the OECD?
Imposing taxes on the entire economy
What is the purpose of the Kraljic matrix?
To categorize items based on their importance and commercial supply risk
What is the primary function of the Pareto principle in spend analysis?
To calculate the value of spend and segment purchases into groups
What is the characteristic of tactical profit items in the Kraljic matrix?
Low risk and plenty of suppliers
Why is data collection for spend analysis recommended to be kept to a minimum?
To avoid time conflicts and bottlenecks
What is the purpose of supply positioning analysis?
To assess the importance and commercial supply risk of items purchased
What is the main advantage of bundling for tactical acquisition items?
It can make the buying process more efficient
What type of information does quantitative research provide?
Statistical information
What type of questions should be avoided in field research?
Closed questions
What should be the focus when talking to people in field research?
Their experience and knowledge
What should be avoided when asking questions during field research?
Leading questions
What is the purpose of qualitative research in field research?
Examine people's feelings and attitudes
Why is it important to talk to enough people in field research?
To gain depth and breadth of analysis
What type of questions should be avoided in field research, according to the text?
Leading questions that suggest the answer
What is the primary purpose of qualitative research in field research?
To examine people's feelings and attitudes
What is recommended for managing supplier relationships even after the contract ends?
Continued communication and engagement
What is a crucial consideration in contract design for effective supplier selection?
Alignment with the organization's values
Why should closed questions that elicit only a 'yes' or 'no' answer be avoided in field research?
They limit the depth of responses
What potential impact can technology advancements have on MSMEs, according to the text?
Improved efficiency and productivity
In spend analysis, what is the significance of knowing the details of what you are spending?
It helps in identifying opportunities to make savings
What is the basis for segmenting purchases into groups and developing strategies for each in procurement?
Pareto analysis
What is the key focus for the sourcing strategy in the supply positioning model?
Items in the strategic core quadrant (high risk and high importance)
What is the strategy for items classified as strategic security in the supply positioning model?
Secure continuity of supply
What is the consideration for commercial supply risk in the supply positioning model?
Complexity of buying from that market
What is the significance of the Kraljic matrix in the supply positioning model?
It helps in assessing the importance and commercial supply risk of items
What type of information does quantitative research provide?
Statistical information
What is a key consideration when conducting field research?
Drawing conclusions carefully
What type of questions should be avoided in field research?
Leading questions
What should be ensured when talking to people during field research?
They have the right level of experience and knowledge
What is a potential risk of basing analysis on the views of a limited number of people?
Limited depth and breadth of analysis
What should be avoided in field research to ensure independence of views?
Asking leading questions
Which procedure is designed for items needing modification and involves two stages of response to questions and final tender submission?
Competitive procedure with negotiation
What is the main feature of the innovation partnership procedure?
Acknowledging the need to develop a product, service, or work through innovation
What is a key principle of the competitive dialogue procedure?
Conducting a dialogue with admitted operators
In which procedure are statutory timescales for the negotiation phase not specified?
Competitive procedure with negotiation
What are the two stages of the competitive dialogue procedure?
Structured dialogue and tender submission
Which procedure is used when high interest from the supply market is anticipated, creating a shortlist through a two-stage selection process?
Restricted procedure
What is the formula for determining value in procurement and supply chain management?
Benefits received $\div$ Price paid
What are the key resources required to provide a service in procurement and supply chain management?
Internal and external suppliers
What is a key consideration when analyzing key activities fundamental to providing a service?
Efficiency, waste, and relationship with supporting activities
What is the role of procurement and supply in achieving cost and budget savings in the BMC (business model canvas)?
It can achieve cost and budget savings
What may be necessary if current suppliers cannot meet organizational needs in procurement and supply chain management?
Stimulating the market
What does ethical sourcing involve in procurement and supply chain management?
Treating employees with respect and paying a living wage
What are examples of efficiency savings in procurement activities?
Electronic tendering, self-service purchasing systems, purchasing cards
What is the primary focus of the business model canvas (BMC)?
Understanding how to improve service or reduce costs
What should budget allocation in the public sector be based on?
Importance and cost efficiency of services
What are the key components of the business model canvas (BMC)?
Value proposition, key activities, key resources
What is the primary purpose of the BMC in the public sector?
Focusing on improving value or lowering costs
What should be the focus of strategies in the public sector?
Improving value or lowering costs
What is the specific format for broadcasting the intended tender in the EU/UK public sector procurement?
Publishing a Call for Competition notice in the Official Journal of the European Union (OJEU)
In the private sector and in other territories, the processes for issuing and managing a tender might be:
Different from the EU/UK public sector procurement
When should the open procedure be used for issuing a tender?
When the market is small and there are a relatively small number of suppliers
What is the purpose of publishing a notice with information about the award once the successful tender is selected?
To allow anyone with a grievance about the tender process to make a formal challenge
How many different processes can be used to issue and manage a tender in the EU/UK public sector procurement?
Five
What is the role of the Competitive dialogue procedure in the tendering process?
To engage in dialogue with bidders to develop the best possible solution
What is the primary focus of procurement efficiency savings?
Balancing the cost and outcome
What is the primary purpose of the partnership termination or reduction option in procurement?
To provide flexibility in ending or reducing contracts
What is the key characteristic of assessing value for money in procurement?
Assessing the actual and intended impacts of a service
What is the main focus of economy savings in procurement?
Minimizing the cost of purchases
What is the primary consideration for awarding contracts in procurement?
Best price-quality ratio
What is the significance of the research and development stages in procurement efficiency?
To reflect the progression of research and innovation activities
What is the specific format for broadcasting an intended tender according to EU rules?
Publishing a Call for Competition notice in the Official Journal of the European Union (OJEU)
When must a notice with information about the award be published according to EU rules?
Once the successful tender is selected
In which sectors do the mentioned processes for issuing and managing tenders apply?
EU/UK public sector procurement
When should the open procedure be used for issuing a tender?
When the market is small and there are a relatively small number of suppliers
How many different processes can be used to issue and manage a tender according to the text?
Five
What is the purpose of publishing a Call for Competition notice in the Official Journal of the European Union (OJEU)?
To allow any interested party to decide whether to bid
What is the primary focus of economy savings in procurement?
Minimizing the cost of purchases
What is the key factor in determining payment in the procurement procedure?
Degree of innovation and sequence of research and innovation activities
What is the main objective of procurement efficiency savings?
Maximizing the relationship between cost and outcome
How can the partnership in procurement be affected based on tender documents?
It can be terminated or reduced
What is the basis for awarding contracts in procurement?
Best price-quality ratio
What is an example of assessing value for money in procurement?
A local authority's litter reduction program
What is a key concern regarding regulation, as mentioned in the text?
High levels of scrutiny can lead to unmanageable bureaucracy
Which organisation in the UK provides oversight for public sector accountability?
National Audit Office
What is the role of the Comptroller and Auditor General (CAG) in India?
Providing oversight for public sector organisations
What is the primary characteristic of the 'not-for-profit' sector?
It encompasses various types of organisations
What is the main concern regarding high levels of scrutiny and regulation, as mentioned in the text?
Creation of unmanageable bureaucracy
What is the key responsibility of the National Audit Office in the UK?
Providing oversight for public sector organisations
What is the primary purpose of disclosure statements and reports in governance of Third Sector Organizations?
To demonstrate accountability
What is the main focus of procurement specifications in Third Sector Organizations?
Focus on outcomes and provide suppliers with freedom in choosing materials and processes
What is the role of governance in Third Sector Organizations?
Ensure a clear mission statement to align staff and stakeholders
What is the primary function of performance management systems in Third Sector Organizations?
Setting clear goals, creating strategies, and establishing a culture of performance
What is the primary goal of procurement in Third Sector Organizations?
To procure a range of services and support the organization's objectives
What is the significance of clear and unambiguous communication of requirements in procurement for Third Sector Organizations?
It ensures that suppliers understand the organization's needs
What is the primary focus of the Nundah Community Enterprise Cooperative?
Creating sustainable employment for the long-term unemployed with intellectual and learning difficulties
What distinguishes charities in terms of their objectives, funds, and assets?
Their objectives, funds, and assets must be exclusively charitable
What is the primary purpose of housing associations?
Provide low-cost housing and maintain existing properties
What is the main focus of voluntary groups like trade unions and professional societies?
Deliver specific services to a geographic community
Why do not-for-profit and third sector organizations often receive calls for greater accountability?
To maintain transparency in their operations
What is the essential aspect of accountability for nonprofit organizations?
To maintain trust with stakeholders
What distinguishes social enterprises from traditional businesses?
They generate the majority of their income through trade and reinvest profits into furthering their nonprofit goals
What is a distinguishing feature of co-operatives compared to mutuals?
They are owned by employees and contribute money as share capital
What is a trend in the formation of companies in the UK, according to the text?
The emergence of more social enterprises due to the merging of public services, social enterprises, and businesses
What is a potential alternative to outsourcing part of the public sector to the private sector?
Formation of mutual companies owned by employees
What is a key characteristic of both mutuals and co-operatives?
They have the right to share in any surplus profit the organization makes
What does the future of public services, charities, and private enterprise look like, according to the text?
They are starting to merge, leading to the emergence of more social enterprises
What are the four core components of accountability?
Transparency, answerability, compliance, enforcement
Who are not-for-profit and third sector organizations held accountable to?
Various stakeholders including funders, recipients of services, and internal stakeholders
What are common forms of fraud in the not-for-profit sector?
Misappropriation of assets, corruption, financial statement fraud
What are the responsibilities of governance in the not-for-profit and third sectors?
Providing strategic leadership, ensuring financial sustainability, overseeing performance
What presents challenges in performance management for not-for-profit organizations?
Limited staff, difficulty in demonstrating adequate performance, lack of internal accountability
What does upward accountability involve in not-for-profit organizations?
Transparency towards fund providers and patrons
What are the four core components of accountability?
Transparency, answerability, compliance, enforcement
What is the primary focus of governance in not-for-profit and third sector organizations?
Providing strategic leadership and ensuring financial sustainability
What presents challenges in performance management for not-for-profit organizations?
Limited staff and the difficulty in demonstrating adequate performance
What is the primary difference in defining the mission of a not-for-profit organization compared to commercial organizations?
It may not be solely focused on maximizing shareholder value
What does upward accountability involve in the context of not-for-profit organizations?
Transparency towards fund providers and patrons
What is the scope of accountability in not-for-profit and third sector organizations?
Finances, governance, performance, and mission
Study Notes
Private Sector Organizations and Global Business
- SMEs form networks and clusters to pool resources and access technology and business skills
- OECD finds SMEs increasingly working globally, with manufacturing SMEs receiving 10-40% of turnover from cross-border sources
- Direct exports represent only 7.6% of total sales of SMEs in developing countries' manufacturing sector
- Opportunity for SMEs grows as larger organizations outsource services
- Barriers to entry and exit need to be small for economic growth and business start-ups
- Multi-national corporations have facilities and assets in multiple countries, with at least one-third of revenue from overseas subsidiaries
- 52 of the 100 largest economies are corporations, and the top ten traders in merchandise account for over half of the world's total trade
- Private sector drives economic growth by making a profit, providing financial return to shareholders, and reinvesting in the business
- Profit is an indicator of organization efficiency and helps allocate resources based on consumer demand
- Economic growth is determined by companies' investment in technology and research, which depends on their profit
- Market share is a main determinant of business profitability, with a relationship between market share and return on investment
- Three explanations for the relationship include economies of scale, market power, and quality of management
Contract Performance and Procurement in the Public Sector
- Clear communication channels, including reporting format and frequency, are essential in contract management.
- Regular price benchmarking or market testing is necessary to ensure value for money in contracts.
- Financial penalties for poor performance should be clearly specified in the contract and deducted based on agreed evidence.
- Building a mature and trusting relationship with suppliers allows for mutual challenge and contract improvement ideas.
- Contract completion involves activities at the end of the contract, including renewal triggers, transition plans, and lessons learned.
- Good practice involves ending contracts on good terms and managing supplier relationships even after the contract ends.
- Supplier relationship management (SRM) is a valuable way to achieve continuous improvement and manage supply risk.
- Procurement scope and role vary depending on the size and capability of the organization.
- The public sector provides services to citizens, including education, law enforcement, healthcare, and social services.
- Central government sets minimum standards across public services and may intervene to correct situations.
- The OECD defines central government as having authority over the entire economy and the power to impose taxes.
- Non-ministerial departments, headed by civil servants, may have inspection or regulatory functions.
Sourcing Strategy and Spend Analysis
- Spend analysis is crucial for identifying what an organization buys, who buys it, from whom, in what quantities, and at what price.
- It helps in identifying opportunities for savings and ranking suppliers for preferred status and supplier relationship management.
- Spend analysis enables better decision-making based on facts and helps in identifying off-contract purchases and potential contract savings.
- Data collection for spend analysis should be kept to a minimum to avoid creating time conflicts and bottlenecks.
- A sourcing strategy should include an analysis of supply markets and knowledge of prices and supplier costs.
- The supply positioning analysis involves assessing the importance and commercial supply risk of items purchased.
- The Kraljic matrix is used to categorize items based on their importance and commercial supply risk into strategic security, tactical profit, and tactical acquisition.
- Strategic security items are high-risk, low-spend items, while tactical profit items have low risk and plenty of suppliers.
- Tactical acquisition items have low spend and low risk, and strategies like bundling can make the buying process more efficient.
- The Pareto principle is used to calculate the value of spend and segment purchases into groups to focus procurement resources effectively.
- Spend analysis is essential for identifying opportunities to save money and make informed decisions based on facts rather than opinions or guesses.
- A clear plan for data collection is crucial for effective communication and project management in spend analysis.
Procurement Efficiency and Value for Money
- The procedure addresses the issue of being unable to award a contract for the final product or service to the developer without further competition.
- It involves successive phases reflecting the research and development stages with intermediate targets for payment.
- Payment is based on the degree of innovation and the sequence of research and innovation activities.
- The partnership can be terminated or reduced based on the option to end or reduce contracts, as set out in the tender documents.
- Contracts must be awarded based on the best price-quality ratio.
- Budget savings can be achieved through economy, efficiency, and effectiveness.
- Economy savings focus on minimizing the cost of purchases.
- Efficiency savings measure the relationship between cost and outcome.
- Effectiveness savings measure the relationship between actual and intended impacts of a service.
- An example of assessing value for money is a local authority's litter reduction program.
- Economy savings involve getting lower prices for the same level of service and quality.
- Procurement efficiency savings are not solely about getting the same thing for a lower price.
The Not-for-Profit and Third Sector: Key Points
- Not-for-profit organizations aim to create social wealth rather than monetary wealth and are independent of the public sector.
- Social enterprises use commercial principles to achieve social, environmental, or cultural objectives and reinvest their profits into furthering their nonprofit goals.
- Social enterprises exist in various sectors and contribute significantly to the UK economy, employing nearly a million people.
- Social enterprises must have a clear social or environmental mission, be value-driven, generate the majority of their income through trade, and be autonomous of state government.
- The merging of public services, social enterprises, and charities has led to the emergence of more social enterprises.
- Social Enterprise UK's chief executive notes that the future is hybrid, with public services, charities, and private enterprise starting to merge.
- There is a trend towards the formation of mutual companies, which are owned by employees and can be an alternative to outsourcing part of the public sector to the private sector.
- Mutuals can take various legal structures, such as charitable status or being a community interest company, and are initially single-contract organizations.
- Co-operatives, like mutuals, are owned by employees but differ in that employees in a co-operative must contribute money as share capital.
- Both mutuals and co-operatives have the right to share in any surplus profit the organization makes.
- The merging of public services, social enterprises, and businesses has led to the emergence of more social enterprises.
- The future is hybrid, with public services, charities, and private enterprise starting to merge, leading to the emergence of more social enterprises.
Understanding Accountability in Not-for-Profit and Third Sector Organizations
- Accountability is defined as holding actors responsible for their actions and reporting to recognized authorities.
- Four core components of accountability are transparency, answerability or justification, compliance, and enforcement.
- Accountability is about being accountable to oneself as well as to others.
- Not-for-profit and third sector organizations are held accountable to various stakeholders, including funders, recipients of services, and internal stakeholders.
- Accountability varies based on the type and size of the organization, with membership organizations, service providers, and policy networks having unique accountability structures.
- Finances in the not-for-profit sector are subject to scrutiny, with misappropriation of assets, corruption, and financial statement fraud being common forms of fraud.
- Governance in the not-for-profit and third sectors is responsible for providing strategic leadership, ensuring financial sustainability, and overseeing performance.
- Performance management in not-for-profit organizations presents challenges due to limited staff and the difficulty in demonstrating adequate performance.
- Defining the mission of a not-for-profit organization is more complex than in commercial organizations, as it may not be solely focused on maximizing shareholder value.
- Upward accountability involves transparency towards fund providers and patrons, while client accountability involves providing accountability to the recipients of the service.
- Internal accountability is important for organizations to demonstrate that they are delivering on their mission.
- The scope of accountability in not-for-profit and third sector organizations includes finances, governance, performance, and mission.
Test your knowledge of private sector organizations and global business with this quiz. Explore topics such as SME networking, global trade, multinational corporations, barriers to entry, profitability indicators, and the role of the private sector in driving economic growth.
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