Sole Trader & Partnership
Define sole trader
A sole trader is a business owned and operated by one person
Define a private limited company
An incorporated business that has a minimum of one shareholder and a maximum of 50 non-employee shareholders, and whose shares are offered only to those people whom the business wishes to have as part owners
Define an 'objective'
An objective is a desired outcome or specific result that a business intends to achieve
Define a stakeholder
Groups and individuals who interact with the business and have a vested interest in its activities
Define Corporate Social Responsibility
The obligations a business has over and above its legal responsibilities to the wellbeing of employees and customers, shareholders and the community as well as the environment
How many partners can a partnership business have (min-max)
2-20
What is the maximum number of shareholders for a public listed company
There is not maximum
Name 3 typical business objectives
- to make a profit
- to increase market share
- to fulfill a market need
- to fulfill a social need
- to meet shareholder expectations
List 3 internal stakeholders
- owners
- shareholders
- directors
- management
- employees
Why does conflict arise between two stakeholders
By satisfying one set of stakeholders will most probably result in other stakeholders being dissatisfied.
Identify three advantages of a sole trader
- low cost entry
- simplest form
- complete control
- no partner disputes
- owner's right to keep all profits
- less government regulation
- profit is taxed as personal income
Businesses which have begun as sole traders or partnerships may find that, as their business grows, there are advantages in changing the ownership structure to that of a company.
What is the process of changing this type of business
Incorporation
This objective involves the production and/or selling of goods and services for the purpose of making the world a better place. A
Name 3 external stakeholders
- Government
- Competitors
- Interest Groups
- Customer
- Suppliers
- Members of the community
What conflict arises between employees and shareholders?
Employees require safe working conditions and reasonable wages, but this will reduce the business’s profit and dividends to shareholders.
What are two advantages of a partnership that are not included in an advantage of a sole trader
- shared responsibility and workload
- pooled funds and talent
- on death one partner, business can keep going
What does Pty Ltd stand for?
Proprietary Limited
A marketing objective might be to increase market share by 10 %. What are two strategies that could be used to achieve this
targeting a new group of customers
increasing sales by using a new promotional campaign
increasing the number of distribution outlets
improving the performance or quality of the existing product
more answers if logically explained
What interests does management have with a business
Want the business to perform financially, and in return, expect to be fairly remunerated
Will typically want the business to be socially responsible as this is likely to lead to increased sales
Need to satisfy as many stakeholder expectations as possible while making sure that their position in the business is secure
Other than being environmentally friendly, how could a business be more socially responsible in regards to their operations
- sourcing locally
- outplacement services
More if explained well
Veterinarians, architects and chemists are able to have a maximum of ______ partners
100
A public company has a minimum requirement of ______ directors
3
Businesses develop objectives to provide direction to stakeholders. What are the three steps of implementing objectives
1) Set objectives
2) Develop Strategies
3) Analyse performance
What interests does the government with a business
Make or change laws that have an impact on businesses
Want the business to do well because this is good for the economy — the government also benefits from successful business by receiving a portion of their profits through its collection of taxation revenue
What is the potential conflict between management and members of the community?
Management might decide to cut costs by neglecting maintenance, which could possibly put members of the community in danger.