Mindset For Examination BUS CH2 (Eng)
Mindset For Examination BUS CH2 (Eng)
Mindset For Examination BUS CH2 (Eng)
D. The profits tax rates for all limited companies is the same.
Option (A) is not correct. A limited partnership is not a type of limited company.
Option (B) is not correct. A private limited company does not need to publish its
financial statements.
Option (C) is not correct. A joint venture can operate in forms Joint venture has nothing to do
with whether a company is a
of a limited company. limited company.
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Company
Mindset for Examination
A. Forming a joint venture would increase the risk of leaking the trade secret.
Students may have a misunderstanding that partners Students should have a good understanding
of the characteristics of a joint venture.
in partnership and joint venture have to share the profits
equally as they have to contribute the same amount of resources into the businesses.
Option (A) is correct. The risk of leaking trade secrets increases when sharing product
information with partners.
Option (B) is not correct. A joint venture is applicable to different industries, such as
property development and food manufacturing.
Option (C) is not correct. An agreement would be formed with the partners to decide on
how profits should be shared.
Option (D) is not correct. Only franchisees have to pay monthly royalties.
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Company
Mindset for Examination
B. The shareholders of a public limited company are responsible for managing the
company.
Students may think that the upper limit for the number in owners of a partnership is 20,
while in a private limited company it is 50.
Students may think that a limited partnership is similar to a limited company. They
think they are both legal entities.
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Company
Mindset for Examination
4. Alice, Bob and Cathy have set up a business with the following features:
The maximum losses of every owner are limited to the amount they have
invested in the company.
The transfer of ownership requires the consent of all owners.
The financial information does not need to be disclosed to the public.
(a) Identify which form of business ownership this business belongs to.(1 mark)
(b) State TWO advantages and TWO disadvantages to the owners of this type of
ownership over sole proprietorship. (4 marks)
5. Amazing Car is a United States car manufacturer, listed on the Hong Kong Stock
Exchange. Rex, the chairman of the board of directors, has suggested forming a joint
venture with a mainland China car manufacturer in order to enter the China market.
However, a business consultant is worried that the production technology will be
leaked to other parties.
(a) What is a joint venture? (1 mark)
(b) Explain one advantage of forming a joint venture when entering the China
market. (2 marks)
(c) List two factors that are considered when forming a joint venture. (2 marks)
(a) A joint venture refers to a business that is operated by two or more businesses
jointly.
(b) Advantage:
- Lower tax rates than a limited company A joint venture can be established in forms of sole
(c) Factors: proprietorship, partnership or even a limited company.
(a) A joint venture is an agreement between two or more businesses to form another
entity for the production and / or sale of a product or service.
(b) Advantage:
- Lower risk: less capital investment is required compared to forming a
business.
(c) Factors:
- Conflict over the operation
- Coordination problems due to different cultural backgrounds
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Company
Mindset for Examination
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Company