Business Ownership: A-Level Revision Notes
Business Studies
A-Level Revision Notes
Business Ownership
A. Reasons for Owning a Business Advantages • Enjoy higher flexibility and autonomy • Entitled to give orders to employees • Higher profit potential B. Ways to start a business ■ Buying an Existing Business Advantages • Save effort and time in planning, analyzing, recruiting.. • Avoid look for a location and design plant layout • Provide a network of existing customers, suppliers and distributors • Availability of business information (sales record, cost, competition) ■ Starting from Scratch Advantages • • • • Control over your own destiny Ability to reach full potential Unlimited profits Recognition of your own effort • • • • Disadvantages Uncertainty of income High level of stress Heavy workload Higher risk of losing entire invesment • • • • Disadvantages Deal with the existing problems Less flexibility Difficult and costly to make changes Resistance from the existing employees • Bias from customers against new products or changes Disadvantages • Have the risk of losing the capital and effort • Heavy workload
■ Franchise Advantages • • • • • • Setup assistance Managerial assistance Financial assistance ( bank loans) Potential customers available Help in marketing (EOS) Lower risk • • • • • • Disadvantages Low flexibility/ autonomy High setup cost Sharing profit (loyalty payment) Low personal satisfaction Chain effect (other franchisees) Market saturation → competitive
C. Basic Forms of Business ■ Types • Sole proprietorship • Partnership • Limited company (listed/ private)
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■ Factors affecting choice of forms: • Degree of control • Secrecy (reveal financial records) • Continuity • Source of capital • Willingness to take risk (liability) D. Other Forms of Business ■ Joint Venture Advantages • Synergy effect • Lower risk • Favourable treatment by the host country (local vs foreign) • Local expertise and assistance (customers' preference/ culture) • Technology transfer ■ Franchise
A-Level Revision Notes
Business Ownership
A. Reasons for Owning a Business Advantages • Enjoy higher flexibility and autonomy • Entitled to give orders to employees • Higher profit potential B. Ways to start a business ■ Buying an Existing Business Advantages • Save effort and time in planning, analyzing, recruiting.. • Avoid look for a location and design plant layout • Provide a network of existing customers, suppliers and distributors • Availability of business information (sales record, cost, competition) ■ Starting from Scratch Advantages • • • • Control over your own destiny Ability to reach full potential Unlimited profits Recognition of your own effort • • • • Disadvantages Uncertainty of income High level of stress Heavy workload Higher risk of losing entire invesment • • • • Disadvantages Deal with the existing problems Less flexibility Difficult and costly to make changes Resistance from the existing employees • Bias from customers against new products or changes Disadvantages • Have the risk of losing the capital and effort • Heavy workload
■ Franchise Advantages • • • • • • Setup assistance Managerial assistance Financial assistance ( bank loans) Potential customers available Help in marketing (EOS) Lower risk • • • • • • Disadvantages Low flexibility/ autonomy High setup cost Sharing profit (loyalty payment) Low personal satisfaction Chain effect (other franchisees) Market saturation → competitive
C. Basic Forms of Business ■ Types • Sole proprietorship • Partnership • Limited company (listed/ private)
1
■ Factors affecting choice of forms: • Degree of control • Secrecy (reveal financial records) • Continuity • Source of capital • Willingness to take risk (liability) D. Other Forms of Business ■ Joint Venture Advantages • Synergy effect • Lower risk • Favourable treatment by the host country (local vs foreign) • Local expertise and assistance (customers' preference/ culture) • Technology transfer ■ Franchise