Types of Business

Question 1

What are the sizes of Businesses?

Answer 1

Small, Medium and Large

Question 2

What is an example of a small business?

Answer 2

Corner store, local mechanic, or hairdresser.

Question 3

What is the typical number of employees for a small-sized business?

Answer 3

Less than 20

Question 4

What is the legal structure of small businesses?

Answer 4

Soletrader/
partnership

Question 5

What is the market share of a small business?

Answer 5

Small - local area, not so dominant in the industry

Question 6

What kind of ownership does a small business have?

Answer 6

Independant, 1 or 2 people

Question 7

What is an example of a medium business?

Answer 7

Services club Motel/hotel Engineering factory

Question 8

What is the typical number of employees for a medium-sized business?

Answer 8

20-199 employees.

Question 9

What is the legal structure of medium businesses?

Answer 9

Partnership/
private company

Question 10

What is the market share of a medium business?

Answer 10

Medium - dominance within a geographic region

Question 11

What type of ownership is a medium business?

Answer 11

Owned & operated by a few people/and or shareholders

Question 12

What is an example of a large business?

Answer 12

Woolworths Qantas
National Australia Bank

Question 13

What is the typical number of employees for a large-sized business?

Answer 13

200+

Question 14

What is the legal structure of large businesses?

Answer 14

Public Company

Question 15

What is the market share of a large business?

Answer 15

Large - especially for multinational corporations that dominate the markets of many countries

Question 16

What kind of ownership does a large business have?

Answer 16

Thousands of public shareholders

Question 17

What defines a local business as well as an example?

Answer 17

It operates services in a local community, like a bakery or butcher.

Question 18

What defines a National Business as well as an example?

Answer 18

Operates within only 1 country
such as Commonwealth Bank

Question 19

What defines a global Business as well as an example?

Answer 19

Operates on a worldwide scale, partially owned in other countries such as McDonald, Starbucks

Question 20

What is a Primary Industry?

Answer 20

Extraction of natural, raw materials/resources

Question 21

What is a secondary Industry?

Answer 21

Manufacturing and production of products from raw materials

Question 22

What is the Tertiary Industry?

Answer 22

The provision of services to consumers

Question 23

What is a Quaternary Industry?

Answer 23

Provision of information/intellectual services and knowledge

Question 24

What is a Quinary Industry?

Answer 24

Domestic services provided to others

Question 25

What does a Primary industry provide?

Answer 25

Mining, Agriculture

Question 26

What does a Secondary industry provide?

Answer 26

Food processing, Oil refining

Question 27

What does a Quaternary industry provide?

Answer 27

Intellectual services Journalism, Teaching, Banking

Question 28

What does a Quinary industry provide?

Answer 28

Domestic services like cleaning and restaurants.

Question 29

What is a liability in a business context?

Answer 29

The financial responsibility of owners for any debt created by their business.

Question 30

What is the main difference between incorporated and unincorporated businesses?

Answer 30

Unincorporated businesses (sole trader/partnership) have unlimited liability, while incorporated businesses (private/public company) have limited liability.

Question 31

What is limited liability (LTD)?

Answer 31

Business assets and owner’s personal assets are separate (separate entities) Personal assets do not have to be sold in order to pay business debt

Question 32

What is unlimited liability

Answer 32

The owner’s assets are linked to the business assets (one entity) Personal assets must be used in order to pay business debt

Question 33

What does a Tertiary industry provide?

Answer 33

Retail, healthcare, finance, retail, transportation, hospitality, and entertainment

Question 34

How many owners does a sole trader business have?

Answer 34

One owner.

Question 35

List three advantages of being a sole trader.

Answer 35

Low start-up costs Full control over decisions Majority of profit goes to the owner

Question 36

List three disadvantages of being a sole trader.

Answer 36

Unlimited liability Limited ability to raise money Hard to take holidays

Question 37

How many owners can a partnership have?

Answer 37

2-20 owners.

Question 38

List three advantages of a partnership.

Answer 38

Low start-up costs Shared responsibilities More capital can be raised

Question 39

List three disadvantages of a partnership.

Answer 39

Unlimited liability Risk of disagreements Profits must be shared

Question 40

What happens to a partnership if one of the partners dies?

Answer 40

The partnership may cease to exist.

Question 41

How many owners can a private company have?

Answer 41

1-50 owners.

Question 42

List three advantages of a private company.

Answer 42

Separate legal entity Limited liability Perpetual succession

Question 43

List three disadvantages of a private company.

Answer 43

Cannot trade shares on ASX Higher administration costs Limited personal control over decisions

Question 44

How many owners can a public company have?

Answer 44

Unlimited number of shareholders.

Question 45

List three advantages of a public company.

Answer 45

Can raise capital by selling shares High borrowing capacity Growth and expansion opportunities

Question 46

List three disadvantages of a public company.

Answer 46

More legal requirements Transparency (all details kept public) Higher initial financial commitment

Question 47

What is a government enterprise?

Answer 47

A government-owned and operated business that provides essential services.

Question 48

Give two examples of government enterprises.

Answer 48

Australia Post Service NSW

Question 49

What type of legal structure do small businesses usually have?

Answer 49

Sole trader or partnership.

Question 50

Why do larger businesses tend to have more complex legal structures?

Answer 50

They require more employees, more owners, and greater financial investment.

Question 51

What must happen to a business’s legal structure as it expands?

Answer 51

It must change to accommodate more employees and owners.

Question 52

Which business structure allows the owner full control?

Answer 52

Sole trader.

Question 53

How does control change in a partnership?

Answer 53

Control is shared between partners

Question 54

What happens to ownership when a company goes public?

Answer 54

Ownership is divided among thousands of shareholders, and control is lost.

Question 55

How can original owners maintain control of a public company?

Answer 55

By holding more than 50% of all shares.

Question 56

How does business expansion impact owner control?

Answer 56

Owners have less control as the business grows.

Question 57

Why do sole traders and partnerships struggle to obtain debt finance?

Answer 57

They are considered high-risk businesses.

Question 58

What type of finance do sole traders mainly rely on?

Answer 58

Equity finance (their own capital).

Question 59

Why do private and public companies find it easier to obtain loans?

Answer 59

They have lower risk and greater financial backing.

Question 60

How can a public company raise capital easily?

Answer 60

By selling shares to investors.

Question 61

Why do expanding businesses need more capital?

Answer 61

To support increased operations, hiring, and production.