Exercise - private sector businesses
Yvonne Harvey, Contributor

Students of Frome Technical High School play a game of chess during break, recently. - Claudine Housen/Staff Photographer

As promised, this week's lesson will begin by looking at the advantages and disadvantages of co-operative societies. You can compare these with what you found out in your research.

Advantages

• Open membership
• The form of management is democratic.
• Guaranteed markets are available for members.
• Co-operatives incur little or no advertising costs.
• Members benefit from economies in bulk-buying.
• Employment is created within the organisation.
• They benefit from advantages in taxation.
• Many co-operatives are useful as agents of the Government.

Disadvantages

• Management is often poor and inexperienced.
• Over-democratisation may lead to inefficiency.
• Lack of capital hampers the progress of co-operatives.
• Conflicts sometimes arise because in some instances, members are both employers and employees.

Now, here are your questions on the businesses in the private sector of the mixed economy.

1. (a) Distinguish between a partnership and a sole trader. (4 marks)

(b) Identify TWO advantages and TWO disadvantages of operating as a sole trader. (4 marks)

(c) Give TWO reasons why you would want to be a member of a partnership. (2 marks)

Total: 10 marks

2. Multinational corporations are often criticised for having a negative effect on a country's economic development.

(a) Give TWO reasons why you would agree with the above statement, and TWO reasons why you would disagree. (4 marks)

(b) (i) Define the term 'nationalisation'. (2 marks)

(ii) Discuss TWO reasons for nationalisation. (4 marks)

Total: 10 marks

3. (a) Distinguish between the following:

(i) A conglomerate and a multinational company

(ii) Preference shares and debentures

(iii) Limited liability and unlimited liability. (6 marks)

(b)List THREE sources from which a private limited company may obtain financial capital. (3 marks)

(c) Explain any THREE co-operative principles. (6 marks)

(d) (i) What is meant by the term, 'limited liability' ? (2 marks)

(ii) Name THREE types of business enterprise to which the concept in (d)(i) applies. (3 marks)

Total: (20 marks)

4. 'Franchising is one of the fastest-growing sectors of an economy. Over 20 per cent of retail sales are accounted for by this form of trading, and the trend is growing each year.'

(a)(i) What is a franchise? (2 marks)

(ii) Give TWO examples of this type of business from your own country. (2 marks)

(iii) Outline THREE features of a franchise. (6 marks)

(c) Outline TWO of the contents of EACH of the following documents:

(i)Memorandum of Association

(ii)Articles of Association

(c)(i) What do you understand by the phrase 'lack of continuity'? (2 marks)

(ii) Name TWO types of business which display this feature. (2 marks)

June Palmer holds majority shares in Electronics and More plc. The company has been using the Stock Exchange for over five years.

(d)(i) What do the letters plc at the end of the company's name stand for?
(1 mark)

(ii) For what purpose has the business been using the Stock Exchange? (1 mark)

Total: 20 marks

Next week's lesson will consist of multiple-choice questions on the same area as the questions above. In the following weeks, we will cover the forms of businesses that exist in the public sector of a mixed economy. See you next week.

Yvonne Harvey teaches at Glenmuir High School.