1.1 - 1.2
What is the main difference between a sole trader and a partnership?
A sole trader is owned and operated by one person while a partnership involves two or more owners.
Which part of the economy consists of organizations controlled by a regional and or national government with the main aim to provide essential goods and services for the general public?
The public sector
What is the main difference between a mission statement and a vision statement?
Vision statement is looking in the distant future while mission statement defines the purpose and everyday declaration of the organization.
Who are the main internal stakeholders of a company?
Employees, managers, and shareholders
True or false, large multinational companies can account for a significant number of job opportunities in the host country
True
What is the primary sector involved in?
Extracting raw materials
What is the name for an inactive partner not involved in daily running of a business but is eligible for a portion of any profits earned by partnership.
Silent partner
A formal documented policy that sets out the way a business believes it should behave, including how to respond to situations that challenge its integrity of social responsibilities.
Ethical code of practice
What is the primary interest of shareholders?
Maximizing profits and receiving dividends.
What do you call the nation that allows a multinational company to set up in its country?
host country
What is a primary characteristic of a cooperative?
Owned and operated by a group of members for mutual benefit
What is the main difference between privately held companies and publicly held companies?
Privately held company shares cannot be traded on a public Stock Exchange.
Name one external factor that can influence a business’s operations
state of the economy, government constraints, the presence and power of pressure groups, new technologies
Name 2 types of internal economies of scale
Technical, financial, managerial, specialization, marketing, purchasing, risk-bearing
Name one benefit that multinational companies can have on their host country
Job creation, higher national income (GDP), Knowledge and technology transfer, Increased competition
Name one advantage of a private limited liability company
limited liability for shareholders
What term describes: If the sole proprietorship fails, the sole trader is held responsible for all these debts of the business. There is no limit to the amount of losses a sole trader can incur.
Unlimited liability
What external stakeholder is typically interested in a business following legal and regulatory standards?
The government
The amount of excessive administration and company policies that is likely to increase as a business grows refers to what kind of internal diseconomies of scale?
Bureaucracy
What is one negative impact of MNCs on host countries?
job losses, repatriation of profits, vulnerability, social responsibilities, competitive pressures.
What does the tertiary sector focus on?
Providing services.
Name three challenges for starting a business
Lack of finance, unestablished customer base, cash flow problems, marketing problems, people management problems, production
Give an example of possible conflict between different stakeholders’ interests
What is the main difference between a strategic alliance and a joint venture.
With a joint venture, two or more companies create a single legal entity in which each owns a share. By contrast, with a strategic alliance, each company works together but no new legal entity is created.
Name three reasons a business might choose to stay small.
Cost control, loss of control, financial risks, government aid, local monopoly power, personalized services, flexibility, small market size.