1) When Salah lost his job with a fruit and vegetable shop that closed down, he decided to

open his own store. He had good contacts with suppliers. They said they would give him 1
month’s credit before he paid for supplies. Salah had $5000 (35,000LE) in savings to invest in
the shop. He thought this would be sufficient to start the business. He is an independent man,
he never liked taking the manager’s orders in the shop. He wanted to operate the new
business as a sole trader.
a) What is meant by ‘sole trader’? [2]
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b) Identify two other types of business organisation. [2]
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c) Identify and explain two benefits to Salah of operating his business as a sole trader. [4]
Benefit 1 - ____________________________________________________________________
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Benefit 2 - ____________________________________________________________________
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d) Identify and explain two drawbacks to Salah of operating his business as a sole trader. [6]
Drawback 1 - __________________________________________________________________
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Drawback 2 - __________________________________________________________________
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e) Do you think Salah should open new branches of his business by selling franchises? Justify
your answer. [6]
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2) Amel and Nouran set up N and A Partnership 10 years ago, specialising in handmade
footwear. The business now employs around 20 people and demand is increasing rapidly. The
partners need to invest much more capital in the business but want to avoid a lot of risk as
they both have families dependent on the income from the business. Their main competitor
ShoesForU plc, which has a much larger market share than N and A, and can afford expensive
advertising.
a) What is meant by ‘partnership’? [2]
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b) Identify two possible benefits to Amel and Nouran to the partnership legal structure. [2]
Benefit 1 - ____________________________________________________________________
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Benefit 2 - ____________________________________________________________________
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c) Identify two possible benefits to ShoesForU plc of being a public limited company. [6]
Benefit 1 - ____________________________________________________________________
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Benefit 2 - ____________________________________________________________________
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d) Identify two possible drawbacks to Amel and Nouran to the partnership form of legal
structure. [6]
Drawback 1 - __________________________________________________________________
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Drawback 2 - __________________________________________________________________
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_____________________________________________________________________________
e) If the N and A Partnership business continues, recommend whether a private limited
company is a suitable form of legal structure for this business. Justify your answer by
considering the advantages and disadvantages of a private limited company. [6]
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© Enderoth