Business Studies 4

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Semester 2 SY 2012-2013
Revision Worksheet # 4- Types of Business Organizations

Name:
Tuesday

Due: Jan. 22,

Part A: Types of Business Organizations

Which form of business organization do you think is most suitable for each of the
following businesses? Explain your answer. (3 marks each)
A) A number of workers have been made redundant (lost their jobs) following a
business failure. They agree to put some of their savings together to buy an old
factory. They plan to make bicycles for export. They want everybody to have equal
rights in running the business.

B) A business with many hotels is planning to expand abroad. A substantial

sum of money will be needed to finance this expansion. Expert managers will
be needed to run the business.

C) A young student is planning to offer his services to neighbours as a

gardener. He will purchase only cheap tools to start with.

D) A TV and radio broadcasting business aims to provide services to the

whole population regardless of their ability to pay.

E) A small group of lawyers wish to set up in business together. Their

professional association does not allow lawyers to have limited liability.

F) The Managing Director of a small garage business is planning to retire. He

hopes that his son will be able to take over the business at this time.

Part B:
1. Explain two disadvantages of a partnership. (4 marks)

2. Explain two benefits to a sole trader of converting to private limited

status. (4 marks)

3. State three possible drawbacks to converting a private limited company

into a public limited company. (3 marks)

4. Explain the difference between the public corporations and public limited
companies. (2 marks)

5. State two reasons why two businesses might decide to set up a joint
venture. (2 marks)

6. What is limited liability? How does not having limited liability disadvantage
many sole traders and partnerships? (4 marks)

7. Fast-food franchises such as McDonalds are found in many countries.

What would be the advantages to a local franchisee of working with
McDonalds rather than setting up their own food business? (3 marks)

8. Explain why the result profits increase by 15% may lead to an increase in
the stock exchange price of a public company. (4 marks)