Syllabus: AQA - AS and A Level Business
Module: 3.1 What is Business?
Lesson: 3.1.2 Understanding Different Business Forms

Introduction

The AQA AS and A Level Business specification opens with the essential foundation: What is Business? Within this, section 3.1.2 Understanding Different Business Forms introduces students to the range of ownership structures businesses can adopt. From sole traders to public limited companies, this topic is crucial for understanding organisational strategy, stakeholder relationships, and commercial impact.

Aligned with the AQA specification, this topic equips students to make links between ownership and business objectives, and to analyse the influence of shareholders, liability, and sector context. It’s a launchpad for building commercial awareness, a skill that underpins both curriculum understanding and real-world career readiness.

Key Concepts

According to AQA 3.1.2, students must understand the following:

• Reasons for choosing different business forms: Start-up needs, access to capital, control, tax implications, liability.

• Forms of business:

  • Sole traders

  • Private limited companies (Ltds)

  • Public limited companies (Plcs)

  • Private and public sector organisations

  • Non-profit organisations and social enterprises

• Ownership implications:

  • Unlimited vs limited liability

  • Ordinary share capital

  • Market capitalisation and dividends

• The role of shareholders: Why individuals invest, shareholder influence.

• Share price influences: Demand/supply dynamics, media, financial performance.

• Impact of ownership on mission and objectives.

These concepts are essential for developing students’ commercial literacy and supporting progression into more complex areas like strategy, finance, and stakeholder management later in the course.

Real-World Relevance

This topic connects seamlessly with real-life business decisions. For example:

• Gymshark began as a sole trader and evolved into a private limited company, allowing it to retain control while attracting investment.

• Royal Mail, as a former public sector organisation turned Plc, offers a high-profile case study in ownership impact, especially relating to public service objectives versus shareholder returns.

• John Lewis Partnership, a unique employee-owned business, helps illustrate alternative models that blend profit with people-centric values.

• During the COVID-19 pandemic, changes in share prices across sectors like travel (e.g., EasyJet) highlighted how external factors influence shareholder confidence and company value.

Bringing these examples into the classroom helps students apply abstract ownership principles to concrete business behaviours.

How It’s Assessed

In the AQA AS and A Level exams, students may encounter this topic across various question types:

• Short-answer knowledge checks (2–4 marks): Define a sole trader, or state a reason a firm might become a Ltd.

• Application questions (6–9 marks): Analyse how choosing a Plc status impacts stakeholder relationships.

• Extended response questions (16–20 marks): Evaluate whether changing from a private to public limited company is the right strategy for a growing firm.

Common command words include: explain, analyse, assess, evaluate, justify. Strong answers must demonstrate knowledge, apply to a real or hypothetical business, and show analytical and evaluative thinking. A focus on commercial consequences is key.

Enterprise Skills Integration

This topic fosters a range of core enterprise competencies:

• Decision-Making: Analysing ownership choices requires weighing up benefits, risks, and impacts on different stakeholders.

• Problem-Solving: Students learn to consider how business form can solve or create challenges around growth, control, and access to finance.

• Stakeholder Awareness: By examining roles of shareholders, students explore conflicting objectives and negotiation.

• Financial Literacy: Concepts like share capital, dividends, and market capitalisation support numeracy and business finance understanding.

These skills align with our core Enterprise Skills Thematic Framework, particularly under Commercial Awareness and Decision-Making & Problem-Solving.

Careers Links

This topic is directly relevant to the Gatsby Benchmarks 4, 5, and 6:

• Benchmark 4: Links curriculum to careers by showing how ownership affects roles across departments (e.g., marketing in a Plc may have different pressures than in a non-profit).

• Benchmark 5: Can be reinforced through guest speakers from local SMEs, start-ups, or social enterprises explaining their ownership choices.

• Benchmark 6: Use of simulations or real-world business plans gives students ‘experience’ of making ownership decisions.

Relevant job roles include:

• Accountant or financial analyst (dealing with shareholder returns)

• Start-up founder (choosing an ownership model)

• Corporate lawyer (advising on liability and business structures)

• Public sector strategist or charity manager (mission-driven organisations)

Teaching Notes

Tips for delivery:

• Use role play to simulate boardroom decisions on converting from Ltd to Plc.

• Explore shareholder views using student debates or case study analysis (e.g. BrewDog’s Equity for Punks).

• Tie into local businesses—students can research their ownership model and rationale.

Common pitfalls:

• Confusing sole traders with sole proprietors (some students assume it means no employees).

• Misunderstanding limited liability—clarify using real-world analogies.

• Overlooking that public sector bodies are businesses too, with missions and resource constraints.

Extension activities:

• Set a homework task to research a local business and identify its form, mission, and ownership rationale.

• Use the Enterprise Skills Business Model Canvas Tool to help students design a new organisation and justify its legal form.

• Integrate Skills Hub simulation tools for experiential learning on ownership decisions.