Key Idea: At HL, Topic 1.2 is about comparing forms of ownership in a more analytical way. Students must go beyond basic features and explain how ownership affects control, liability, continuity, finance, risk and growth potential in specific business contexts.
👤 Smaller ownership forms: **Sole trader —** fast decisions and full control. **Partnership —** more capital and skills than a sole trader. Often easier to set up. Usually less access to large-scale finance.
🏢 Company ownership forms: **Ltd / PLC —** separate legal identity. **Limited liability —** owners protect personal assets. Usually stronger continuity and growth potential. Can involve more legal formalities and less direct owner control.
✅ What ownership affects: Control and decision-making. Access to finance. Level of risk for owners. Growth potential. Continuity of the business.
⚠️ Common HL traps: Confusing **features** with **advantages**. Forgetting that partnerships may still involve unlimited liability. Assuming all cooperatives are employee-owned. Explaining when the command term is only **state**.
HL students need to respect the command term carefully. On feature questions such as cooperatives, markschemes often accept named features only and explicitly state that no description is required.
In compare or explain questions, focus on business impact: for example, limited liability may encourage investment because owners face lower personal financial risk.
Important: Common HL trap: students write everything they know about a business type instead of selecting the point most relevant to control, finance, liability or growth.
- Identify the ownership form
- Check the command term: state, define, explain or compare
- Use precise ownership vocabulary
- Apply the point to control, risk, finance or growth
- Compare directly if more than one form is involved