2 Business Structure Flashcards
Private Limited Company
A business that is owned by shareholders often members of the same family. This company cannot sell their shares to general public.
Primary sector business activity
Firms or all other industries that extract natural resources to be used and processed such as fishing, mining, oil extraction & farming.
Secondary sector business activity
Firms that manufactures and process products from natural resources such as clothes-making & construction.
Tertiary sector business activity
Firms who provide services to other consumers or other businesses such as retailing, hotels & tourism.
Public Sector
Organisations accountable & controlled by the central or local governments.
Private Sector
Businesses owned and controlled by individuals or groups of individuals.
Mixed Economy
Economic resources that are owned and controlled in by both public and private sector.
Free-market Economy
Economic resources that are owned ad controlled by mainly the private sector with little government intervention.
Controlled Economy
Economic resources that are owned and controlled by the state.
Sole Trader
A business in which one person provides the permanent finance, in return, has full control of the business and gets to keep all of the profits. All sole traders have unlimited liability.
Unlimited liability
Business owners have full legal responsibility for the debts of the business.
Advantages of sole trader
- Owner keeps all of the profits
- Owners have complete control, they do not have to answer or listen to anybody else
Disadvantages of sole trader
- Unlimited liability, all of the owners assets are potentially at risk
- Difficult to raise additional capital
Partnership
A business formed by two or more people that carry on the business together with shared capital investment and usually shared responsibilities.
Disadvantages of partnership
- Shared profits
- Both/more partners have to agree when it comes to decision making which might take some time
