Business structure Flashcards
(37 cards)
Economic sector
1) Primary
2) Secondary
3) Tertiary
4) Quaternary
Primary
That extracts natural resources such as coal, oil, fishing e.t.c.
Secondary
Firms that process natural resources to make finished goods such as clothes from cotton or leather jacket from leather.
Tertiary
Firms providing services to consumers and other businesses such as transport, banking, hotels e.t.c.
Quaternary
Business providing information services such as web design or information and communication technologies e.t.c.
Private limited company
Business owned by shareholders which are often members of the same family this company shares cannot be sale to general public.
initial public offering(IPO)
An offer to public to but shares in a public limited company.
Public limited company
A company whose shares can be traded on stock exchange and can be bought or sold by general public.
Industrialization benefits
1) GDP increases which increases standard of living
2) Increasing output leads to more export less import.
3) More jobs.
4) Value added to raw materials.
Industrialization problems
1) Manufacturing can lead lot of people to move from country side to town causing housing problems.
2) Raw material can be needed for production which leads to higher import.
3) Increase in multinational companies.
4) Rise in income leads people to spend on services so more focus on industrialization can lower focus on tertiary sector.
5) Rise in imports can take market away from domestic secondary sector firms.
Deindustrialisation
1) Job losses in agriculture or mining.
2) Movement of people from towns to city.
3) Jobs opportunity increases in service industry.
4) Increased need for retraining programmes.
Mixed economy
Economic resources owned by both private and public sectors.
Free market economy
Economic resources largely owned by private sector with very less state intervention.
Command economy
Economic resources controlled, owned and planned by state.
Public cooperation
An entity that operates independently from a government department but carries out its functions at arm’s length from central government.
Advantages of PC
- Focuses more on social objectives rather than only profit.
- loss making products not stopped if social benefit is great.
- Finance mainly provided by government.
Disadvantages of PC
- There can be insufficiency due to strict profit targets.
- Subsidies can also encourage inefficiencies.
- Government may interfere due to political reason for example opening branch in certain area for popularity.
Sole trader
Single owner of business with unlimited liability, Providing full finance and taking all profit.
Disadvantages of Sole trader
1 More risk
2 More competition from bigger firms
3 Difficult to raise additional capital
4 long hours of work to meet profit target
5 lack of continuity
Advantages of sole trader
1 Full control
2 No much legal problems
3 Full profit
4 Can adjust timing and pattern.
5 Can establish close relationship with employees.
6 Business can be based on owners personal skills or interest.
Partnership
Two or more persons carrying business together sharing capital, investment and usually responsibilities
Advantages of partnership
1 Partners may have specialty in different sect.
2 Share of decision making
3 Availability of capital
4 Losses are shared
5 greater privacy fewer legal formalities
Disadvantages of partnerships
1 All partners have unlimited liability so every person with some expectation
2 Profits are shared
3 No continuity as partners to be reformed
4 partners bound by each other decisions
5 cannot raise capital by selling shares
6 No independence in decision making
Limited liability
A form of legal protection for shareholders and owners that prevents individuals from being held personally responsible for their company’s debts or financial losses.
