Chapter 4

Question 1

What is the Primary Sector?

Answer 1

The Primary Sector includes activities that exploit natural resources, such as agriculture, mining, and fishing.

Question 2

What is the Tertiary Sector?

Answer 2

The Tertiary Sector consists of businesses that provide various services to consumers or other businesses, such as hotel accommodation and banking.

Question 3

What is the Quaternary Sector?

Answer 3

The Quaternary Sector is based on economic activities associated with the intellectual or knowledge-based economy, including information technology and research & development.

Question 4

What is the Public Sector?

Answer 4

The Public Sector comprises organizations accountable to and controlled by central or local government, with the main motive being welfare rather than profit.

Question 5

What is the Private Sector?

Answer 5

The Private Sector consists of businesses owned and controlled by individuals or groups, with the main motive being profit maximization.

Question 6

What is a Sole Trader?

Answer 6

A Sole Trader is an individual who owns and runs a business, taking all responsibility for final decisions, with unlimited liability.

Question 7

What are the advantages of being a Sole Trader?

Answer 7

1. Cheap and quick to set up.
2. Owner keeps all the profit.
3. Close ties with customers.

Question 8

What are the disadvantages of being a Sole Trader?

Answer 8

1. Unlimited liability.
2. Difficult to raise finance.
3. Business shuts down if the owner dies.

Question 9

What is a Partnership?

Answer 9

A Partnership is when two or more people own and run a business, generally with unlimited liability.

Question 10

What are the advantages of a Partnership?

Answer 10

1. Easy and cheap to set up.
2. More capital raising ability.
3. Shared responsibility.

Question 11

What are the disadvantages of a Partnership?

Answer 11

1. Unlimited liability.
2. Slower decision making.
3. Shared profit.

Question 13

What is a Private Limited Company?

Answer 13

A small to medium-sized business whose owners or shareholders are often members of the same family. Shares can be sold to family members or close friends.

Question 14

What are the advantages of a Private Limited Company?

Answer 14

1. Cheaper to set up compared to a Public Limited Company. 2. Limited liability. 3. Easier to increase capital.

Question 15

What are the disadvantages of a Private Limited Company?

Answer 15

1. More paperwork. 2. Cannot sell shares to the public. 3. Strict legal requirements.

Question 16

What is a Public Limited Company?

Answer 16

A large business that has the legal right to sell shares to the general public. Share prices are quoted on the stock exchange.

Question 17

What are the advantages of a Public Limited Company?

Answer 17

1. Limited liability for shareholders. 2. Easier to buy and sell shares. 3. Greater company status.

Question 18

What are the disadvantages of a Public Limited Company?

Answer 18

1. Huge legal formalities. 2. High costs/expenses. 3. Risk of takeover.

Question 19

What is a Cooperative?

Answer 19

An association of people united voluntarily to meet their common economic, social, and cultural needs through a jointly owned and controlled business.

Question 20

What are the advantages of a Cooperative?

Answer 20

1. All members contribute knowledge and expertise. 2. Profits are shared equally.

Question 21

What are the disadvantages of a Cooperative?

Answer 21

1. Members may not be skilled. 2. Slow decision-making.

Question 22

What is a Franchise?

Answer 22

A legal agreement to use the brand name and logo of a larger, well-established business (franchisor) in return for payment.

Question 23

What are the advantages of a Franchise?

Answer 23

1. Fewer chances of failure. 2. Advice and training provided. 3. Supplies are provided.

Question 24

What are the disadvantages of a Franchise?

Answer 24

1. Huge initial fee paid. 2. Royalty has to be paid. 3. Strict rules over pricing and suppliers.

Question 26

What is a Joint Venture?

Answer 26

A Joint Venture is when two or more businesses work together on a particular project or set up a jointly owned business for the purpose of carrying out projects.

Question 27

What are the advantages of a Joint Venture?

Answer 27

Advantages include access to new segments and distribution networks, increased capacity and scale of production, sharing of risk and costs, and an increase in productivity and profit.

Question 28

What are the disadvantages of a Joint Venture?

Answer 28

Disadvantages include unclear objectives, communication barriers, unequal distribution of work and resources, potential conflicts, and delayed operations.

Question 29

What is the Star Alliance?

Answer 29

Star Alliance is a group of major airlines that work together to make travel easier, founded in 1997. It includes airlines such as Lufthansa, United Airlines, Air Canada, and Singapore Airlines.

Question 30

What are the advantages of the Star Alliance?

Answer 30

Advantages include a wide network and shared resources like airport lounges.

Question 31

What are the disadvantages of the Star Alliance?

Answer 31

Disadvantages include different working methods, challenges, disagreements, and conflicts.

Question 32

What is a Holding Company?

Answer 32

A Holding Company is a type of business that owns enough voting stock in other companies to control their policies and management.

Question 33

What are the advantages of a Holding Company?

Answer 33

Advantages include the ability to own a company with small resources, potential tax advantages, and the ability to offset losses in one subsidiary against profits in another.

Question 34

What are the disadvantages of a Holding Company?

Answer 34

Disadvantages include high costs, increased regulatory scrutiny, and limitations in day-to-day operations.

Question 35

What is a Social Enterprise?

Answer 35

A Social Enterprise is a business whose profits are reinvested to achieve social goals in ethical ways rather than maximizing gains for shareholders.

Question 36

What are the three aims of a Social Enterprise?

Answer 36

The three aims are improving the environment, increasing employment for women, and providing low-cost services.