TYPES OF BUSINESS ACTIVITY Flashcards
(16 cards)
DEFINE A SHAREHOLDER
- OWNERS OF A LIMITED SOMPANY, WHO HAEV BOUGHT SHARES IN THE BUSINESS WHICH REPRESENT PART OWNERSHIP OF A COMPANY
EXPLAIN THE PUBLIC SECTOR
INDUSTRIES OR ORGANISATION OWNED AND CONTROLLED BY LOCAL AND CENTRAL GOVERNMENT, EITHER WHOLLY OWNED BY THE GOVERNEMNT OR THE GOVERNMENT IS THE MAJOR SHAREHOLDER
WHAT ARE THE AIMS OF A PUBLIC SECTOR BUSINESS
- TO PROVIDE ESSENTIAL GOODS AND SERVICES THAT CANNOT BE LEFT TO PRIVATE SECTOR BUSINESSES
- TO PROVIDE EMPLOYMENT
- TO KEEP PRICES LOW THAY EVERYBODY CAN AFFORD THE SERVICES AND PROVIDE SERVICES TO THE PUBLIC IN ALL AREAS OF THE CONUTRY
EXAMPLES OF PUBLIC SECTOR BUSINESS ORGANISATIONS
-PUBLIC CORPORATIONS
- GOVERNMENT-OWNED COMPANIES
- STATUARY INSTITUTIONS
- CENTRAL GOVERNEMENT UNDERTAKINGS
- LOCAL GOVERNEMENT UNDERTAKINGS
- REGIONAL GOVERNMENT UNDERTAKINGS
EXPLAIN THE PRIVATE SECTOR
- BUSINESSES THAT ARE OWNED AND CONTROL BY PRIVATE INDIVIDUALS OR GROUPS OF PEOPLE WITH THE MAIN AIM OF PROFIT MAXIMISATION, SURVIVAL IN ORDER TO KEEP THEM RUNNING THEIR BUSINESSES IN TIMES OF DIFFICULTY AND GROWTH TO INCREASE THEIR MARKET SHARES
DEFINE A MARKET SHARE
- THE AMOUNT OF MOENT CONTRIBUTED BY EACH SHAREHOLDER, WHICH ENTITLES HIM/HER TO A SHARE IN THE PROFITS OF THE COMPANY
EXAMPLES OF PRIVATE SECTOR BUSINESSES
- SOLE TRADERS
- PARTNERSHIPS
- PRIVATE AND PUBLIC BUSINESSES
- CLOSE CORPORATIONS
- MULTINATIONALS
- JOINT VENTURES
- FRANCHISERS
DISTINGUISH BETWEEN NATIONALISATION AND PRIVATISATION
NATIONALISATION
- THE PROCESS BY WHICH THE PRIVATELY OWNED BUSINESSES ARE SOLD TO THE GOVERNMENT
PRIVATISATION
- THE PROCESS OF TRANSFORMING OWNERSHIP OF BUSINESSES OR INDUSTRIES FROM THE STATE TO THE PRVIATE SECTOR
REASONS FOR NATIONALISATION
- ESSENTIAL SERVICES TOWARDS THE SOCIETY CAN BECOME TOO EXPENSIVE TO AFFORD IF LEFT IN THE HANDS OF THE PRIVATE SECTOR
- THE NATIONAL SECURITY, SUCH AS DEFENSE AND TRANSPORT MAY BE TOO IMPORTANT TO BE LEFT TO PRIVATE ENTERPRISES
- UNPORDUCTIVE INDUSTRIES MAY BE NATIONALISED IN ORDER TO INCREASE THE LEVELS OF EFFICIENCY AND INVESTMENT, TO MAINTAIN FULL EMPLOYMENT AND GROWTH
ARGUMENTS IN FAVOUR OF PRIVATISATION
-NEW OWNERS OPERATE THE BUSINESS WITH PROFIT AS A MAIN AIM
-INDUSTRIES THAT ARE NATIONALISED HAVE TOO MUCH POWER
- NATIONALISED INDUSTRIES MAY SUFFER LACK OF FINANCE DUE TO LIMITED BUDGETS ALLOCATIONS BY THE GOVERNEMNT
ARGUMENTS AGAINST PRIVATISATION
- AS NEW OWNERS ARE INTERESTED MAINLY IN PROFITS, SERVICES THAT ARE RUN AT A LOSS MAY BE DISCONTINUED
- JOBS COULD BE LOST AS THE NEW OWNERS ATTEMPT TO INCREASE EFFICIENCY IN ORDER TO RAISE PROFITS
- THE BUSINESS MIGHT BE SOLD TO ONE OWNER WHO MAY RUN IT AS A MONOPOLY. THIS COULD LEAD TO HIGH PRISES FOR THE CONSUMERS
- ONLY FEW PEOPLE, GENERALLY THE OWNER, WILL BENEFIT THE BUSINESS COMPARED TO WHEN IT WAS OWNED BY THE STATE
DIFFERENTIATE WITH EXAMPLES BETWEEN THE PRIMARY, SECONDARY AND TERTIARY SECTORS
PRIMARY SECTOR
- REFER TO THE INDUSTRIES THAT ARE INMVOLVED IN THE EXTRACTION OF NATURAL RESOURCES FROM THE EARTH.
E.G. FISH, MILK, WOOL, OIL, COAL
SECONDARY SECTOR
- THE INDUSTRIES THAT ARE INVLOVED IN THE PROCESSING AND CONVERTING OF RAW MATERIALS INTO SEMI FINISHED OR FINISHED GOODS
E.G. FISH PROCESSING, POLISHING RAW MATERIALS, WOOL PROCESSING
TERTIARY SECTOR
- THE INDUSTRIES THAT ARE INVOLVED IN THE DISTRIBUTION OF GOODS AND PROVISION OF SERVICES TO CUSTOMERS AND OTHER BUSINESSES
E.G. BANKS AND RESTAURANTS
STATE THE MAIN METHODS OF MEASURING THE SIXE OF THE BUSINESS
- LEGAL FORM OF OWNERSHIP
- THE NUMBER OF EMPLOYEES
- NATURE OF THE BUSINESS
- NATURE OF THE PRODUCTS
- VALUE OF CAPITAL EMPLOYED
- VALUE OF SALES TURNOVER
- MARKET SHARES
- LEVEL OF TECHNOLOGY
- VALUE OF OUTPUT
- TOTAL ASSETS
- PROFITABILTY
EXPLAIN THE PURPOSE OF THE CLASSIFICATION AND MEASUREMENTS OF BUSINESS UNITS
- BUSINESSES ARE CLASSIFIED IN CERTAIN CATEGORIES FOR THE PURPOSE OF TAX INCIDENCE BY THE GOVERNMENT
- IN THE PRIVATE SECTOR, BUSINESSES SPECIALISE IN TERMS OF THE DELIVERING OF SERVICES TRADING OR THE PRODUCTION OF GOODS
- BUSINESSES ARE CLASSIFIED INTO CERTAIN CATEGORIES IN ORDER TO SERVICE A PARTICULAR SEGMENT OF THE MARKET
- BUSINESS OWNERS LIKE TO KNOW WHETHER THERE IS GROWTH IN THE BUSINESS IN TERMS OF THE PROFITABILITY RATIO AND CAPITAL EMPLOYED
- BUSINESS UNITS SHOULD BE MAESURED TIMELY IN ORDER TO DETERMINE WHETHER THE BUSINESS ATTAINED TO ITS OPTIMUM LEVEL
EXPLAIN THE SURVIVAL OF SMALL BUSINESSES
-MOST SMALL FIRMS RENDER A SPECIALISED PESONALISED SERVICE
- SMALL FRISM MUST SSTRIVE TOWARDS PROFESSIONAL CUSTOMER CARE SERVICES
E.G WORKERS SHOULD BE TRAINED IN CUSTOMER CARE - PROFESSIONAL SERVICES AND ADVICES ARE IMPORTANT
- PROFESSIONAL AND EFFICIENT AFTER SALE SERVICES CAN BE A KEY FACTOR TOWARDS THE SURVIVAL OF SMALL FIRMS
- SMALL FIRMS CAN EASILY MAKE CHANGES AND DO INNOVATIONS THAN LARGE FIRMS
WHY DO SOME BUSINESSES STAY SMALL?
- THE SIXE OF THE MARKET
- THE AVAILABILITY OF CAPITAL
- THE WISHES OF THE OWNER (OWNER OBJECTIVES)
- THE TYPE OF INDUSTRIES
