Business Ownership

    OCR
    GCSE

    Examination of the legal and operational frameworks governing business entities within the UK economy. Analysis focuses on the distinction between unincorporated and incorporated structures, the implications of limited versus unlimited liability, and the strategic transition from private to public ownership. Candidates must evaluate how ownership models influence objectives, access to capital, and decision-making processes under the Companies Act 2006.

    5
    Objectives
    4
    Exam Tips
    4
    Pitfalls
    3
    Key Terms
    4
    Mark Points

    Learning Objectives

    What you need to know and understand

    • Sole Trader: Single owner, unlimited liability, keeps all profits
    • Partnership: 2-20 owners, Deed of Partnership, shared responsibility
    • Private Limited Company (LTD): Incorporated, shares sold privately, limited liability
    • Public Limited Company (PLC): Shares on Stock Exchange, minimum £50k share capital
    • Concept of Incorporation: Legal separation of owner and business identity

    Example Examiner Feedback

    Real feedback patterns examiners use when marking

    • "You have defined the ownership type correctly; now apply it to the business in the case study (AO2)"
    • "Avoid generic phrases like 'more money'; specify 'access to capital through share issues'"
    • "Your analysis of unlimited liability is accurate; extend this to explain the impact on the owner's personal assets"
    • "The recommendation needs to prioritize the owner's specific goal (e.g., retaining control) over general benefits"

    Marking Points

    Key points examiners look for in your answers

    • Award marks for accurate definition of 'unlimited liability' regarding risk to personal assets
    • Credit application (AO2) where ownership choice is directly linked to the specific business size, sector, or owner objectives
    • Analysis must demonstrate the 'chain of consequence' (e.g., moving to LTD reduces risk but increases administrative burden)
    • Evaluation must weigh financial gains of PLCs against the specific threat of hostile takeovers or loss of control

    Examiner Tips

    Expert advice for maximising your marks

    • 💡Always check the case study for the owner's specific objectives (e.g., keeping control vs. rapid growth) before recommending a structure
    • 💡When discussing PLCs, explicitly mention the 'Stock Exchange' to distinguish clearly from LTDs
    • 💡Ensure 'limited liability' is attributed to the shareholders, not the business entity itself
    • 💡For 9/12 mark questions, structure the response with one advantage, one disadvantage, and a supported conclusion based on the context

    Common Mistakes

    Pitfalls to avoid in your exam answers

    • Confusing 'Public Limited Company' (PLC) with public sector government ownership
    • Stating 'unlimited liability' means the business pays debts forever, rather than the owner losing personal assets
    • Asserting PLCs sell shares to 'the government' rather than the general public on the Stock Exchange
    • Generic references to 'more money' without specifying 'capital raised through share issues'

    Key Terminology

    Essential terms to know

    Likely Command Words

    How questions on this topic are typically asked

    State
    Explain
    Analyse
    Discuss
    Evaluate
    Recommend

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