a) Define ‘partnership’

Is a form of business in which 2 or more people agree to jointly own a business, they each invest
capital into business and share profits. {2 marks}

b) Identify 2 features of a private limited company.

 Shareholders have limited liability.
 Business continues even if one or more shareholders die.
 Company can raise finance by selling shares.
 Profit belongs to ordinary shareholders. {2 marks}

c) 2 advantages to Suki of initially setting up her business as a sole trader.

 She gets to make all decisions. Like; working hours, employees, holidays.
 She’s her own boss and keeps profits to herself. {4 marks}

d) Explain 2 advantages of CFK of forming a joint venture with CCC.

If 2 business decide to joint ventures, naturally it would have benefits. In this example, if CFK and CCC
were to join together it would;
reduce the risk for each business and cuts costs. Instead of CFK paying for all costs themselves they’ll
have CCC to split it, which may help lowering risk of failure.

Bring different expertise in, and share market & product knowledge to benefit business. Combining
together each businesses strength and where they are best at would definitely increase their chances of
success and expand their market size, making them gain more profit than they would’ve individually
(without joint venture). {6 marks}
Q1) Do you think a partnership should convert the business into a private limited company?

In my opinion, a partnership business should convert to a private limited company instead. This is
because, partnerships are unincorporated businesses. Meaning, the owners are held responsible for the
debts of the business, they have unlimited liability (their liability isn’t limited to the investments they
made in the business). However, a private limited company is of limited liability; this is where
shareholders only risk losing the amount they have invested in their company (and not any of their
personal wealth). Also, in a partnership there is no continuity. {6 marks}

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1) 2 ways in which Yasmin has contributed to the success of her business.

- She works 6 days a week, meaning she’s open for almost the entire week. This may have helped
with her success because probably during those 6 days she may be the only bakery that’s open
and serving. If there are other bakeries they may have fewer or opposite working days,
therefore, many more customers would stop by or know about the bakery.
- The several recipes of bread and cake which she has gotten famous for creating are also part of
her success. Because the recipes are very popular with her customers, they most certainly come
back for more which increases her customers, popularity, and reputation. {6 marks)

2) Do you think the manufacturer should take over another similar business that is for sale? Justify
your answer.

I don’t think Yasmin should take over the bakery near her. Yes, she should take over another similar
bakery and expand horizontally. However, maybe another location which would be farther away from
her (already established) bakery would be wiser. Taking over a bakery that’s farther away would mean
exposure to new/more customers, popularity would increase, maybe even more profit gained thanks to
increase in market size. For example, with the money she’s loaned, she could take over a larger bakery
in a town/city where there aren’t many bakeries to compete with. This would attract many customer
maybe because of lack of fresh bakeries in area. {6 marks}
1) Outline 2 advantages of having a business partner.
Advantages of having a business partner include; shared management and split workload. Instead of
doing everything alone, you’ll have someone else too and less time consumed.
Along with greater access to finance, as it’s not only one person investing capital in business but
two. {4 marks}

2) Explain 2 disadvantages to Ony of buying a franchise.

If buying a franchisee, there are disadvantages present. In this example, Ony won’t be as independent if
he were to run a non-franchise business. Along with that, he may be unable to make his own decisions
that would suit local area more than instructions sent from franchisor. Another disadvantage is the
mandatory license fee to franchisor & possibly a percentage of the annual turnover. {6 marks}