IGCSE Enterprise: Specimen Questions with Answers 13 - 14 of 49

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Case Study -1

Starting a business in Haiti takes 12 procedures and more than three months. Formal registration of a company is so complicated that the process cannot be completed without using the services of third parties — lawyers and notaries. Company statutes are often drafted by an attorney, then need to be certified by a notary before being submitted for incorporation. The result is an additional cost burden for entrepreneurs trying to navigate the complex process to enter the formal sector. In New Zealand, by contrast, an entrepreneur can complete the entire process of company formation in just a few hours through a single online procedure. The burdensome nature of these entry regulations is surely one of many reasons underlying the fact that Haiti has far fewer registered companies relative to population size — only 4 per 100,000 people in 2012, compared with 1,020 per 100,000 people in New Zealand. Formalization has many benefits. Formally registered companies tend to have greater profits, investments, and productivity, while their employees benefit from social security and other legal protections. Yet, in many economies around the world, entrepreneurs continue to face excessively burdensome entry regulation. Formalizing a business may involve multiple interactions with government agencies and with third-party private professionals whose services are either required by law or desirable because of regulatory complexity.

Main Findings

  • Most of the cost of starting a business comes from the fees of third-party professionals such as lawyers and notaries.
  • Entrepreneurs use third-party services in business start-up mostly because the process is too complex.
  • Economies with greater third-party involvement in business incorporation tend to have more businesses operating in the informal sector. They also tend to have less accessible laws and regulations and less efficient systems of civil justice.
  • Notary services are used in business start-up in 76 of the 189 economies covered by Doing Business.
  • Latin America and the Caribbean has the largest share of economies where legal services are used in the start-up process.

Question 13 (12 of 12 Based on Passage)

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Short Answer▾

Formalizing a business may involve multiple interactions with government agencies and with third-party private professionals. What are the essentials of starting a business?

Explanation

Starting of business requires various essentials like motivation, determination, and know-how.

Three Essentials for Starting up a Business Are

  • Identify business opportunity: Choosing the type of business to start can be a tedious task with multiple opportunities available. It is important to determine the skills and passions to choose a business of your type.
  • Build a business plan: A plan allows better understanding of the business and industry structure. It helps in gaining knowledge and understanding of the requirements of starting a business.
  • Find start-up capital: Investment is required in business whether big or small. Finding of start-up funds will be different for different business.
Three Essentials for Starting up a Business

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Case Study: 4

Jones and Little (2000) present a critical analysis of the role of partnership in new public management in the UK, in a paper called Rural challenges: partnership and new rural governance. The authors note that: “whatever definition is favored, partnerships or networks between the public, private and voluntary sectors are an important part of what constitutes novel forms of governance” in the UK. The authors question the uncritical promotion of this form of governance, which emerged from the “traumatic neo-liberal restructuring of urban politics in the 1980՚s” and its transfer to rural areas, where it brings the requirement for rural organizations and In the field of public policy, partnership is often viewed as the second generation of efforts to bring competitive market discipline to bear on government operations (after the first generation efforts of privatization) . The authors argue that contemporary discussions of partnership approaches lead to submergence of key issues about power relations, accountability, public spending levels, and equitable resource allocation in the systematic addressing of the needs of rural communities. They question the culture of partnership and its suitability as a means of securing effective rural regeneration, arguing for greater scrutiny to be paid to its increased political currency and practical applications.

In Government – non-profit partnership: A defining framework, Brinkerhoff (2002a) notes that partnership has emerged as an increasingly popular approach to privatization and government – non-profit relations. However, there is no consensus on what partnership means, and its practice varies. The author provides a useful review of partnership literatures and refines the definition of partnership using the concepts of ‘mutuality’ and ‘organizational identity.’ These concepts are used as the two axes of an inter-organizational relationship matrix, in which partnership is distinguished from three other basic relationship types: contracting, extension, and co-option or gradual absorption.

Question 14 (1 of 12 Based on Passage)

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Partnership has emerged as an increasingly popular approach to privatization and government – non-profit relations. Based on this statement answer the following questions-

Explain the statement public-private partnership.

Explanation

United Nations defines PPP as “innovative methods used by the public sector to contract with the private sector who bring their capital and their ability to deliver projects on time and to budget, while the public sector retains the responsibility to provide these services to the public in a way that benefits the public and delivers economic development and improvement in the quality of life.”

PPP is an arrangement where private parties participate in or provide support for the provision of infrastructure. PPP describes a government service or private business venture which is funded and operated through a partnership of government and one or more private sector company. PPP is not procurement of an asset but the payment of a stream of services under specified terms and conditions.

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