1.1 Sectors Of Industry- Understanding Business

Question 1

Primary

Answer 1

They involve taking natural resources from the land or sea, e.g. agriculture, forestry, mining and fishing. It produces raw materials.

Question 2

Secondary

Answer 2

Uses factors of production to manufacture or construct goods, e.g. roads, hospitals, cars ad food products

Question 3

Tertiary

Answer 3

The provision of services, e.g. hairdressing and banking. And it includes the distribution of goods and selling/ retail

Question 4

Quaternary

Answer 4

It consists of those industries providing information services, such as computing, ICT and consultancy

Question 5

How are shares sold in a Public Limited Company(plc)?

Answer 5

Shares are sold via the stock exchange

Question 6

How are shares sold in a Private Limited Company(ltd)?

Answer 6

Shares of ownership is agreed between the people who originally set up the business

Question 7

Advantages of Private limited company

Answer 7

They do not have to make their financial information as public as a plc
They annoy be subject to a hostile takeover bid

Question 8

Advantages of a Public limited company?

Answer 8

Shares can be resold on the stock exchange.

Encourages investors to buy shares of ownership as it is easier to raise larger sums of money quickly.

Question 9

Disadvantages of a private limited company?

Answer 9

It can be difficult to ensure who will buy shares, this means there is a rather limited scope for raising finance

Question 10

Disadvantages of a public limited company?

Answer 10

Members of the public and competitors can inspect financial information
Large organisations may become inflexible and unresponsive to market change.
May be subject to a hostile takeover bid

Question 11

Franchise

Answer 11

A franchise is a business run by one business under the name of another

Question 12

Franchiser

Answer 12

The franchiser is the parent company that gives the franchisee a license to trade under the franchisers brand name

Question 13

Advantages to the franchiser

Answer 13

Their name becomes better known as their business expands.

They receive a percentage of the franchisees profits without taking any major financial risks

Question 14

Advantages to the franchisee

Answer 14

They can immediately begin trading on the established reputation of the franchiser
They receive ongoing support and advice and training from the franchiser

Question 15

Disadvantages to the franchiser

Answer 15

May take a while to realise that the franchisee is not up to standard, this could damage the franchisers reputation
Profits are split with the franchisee so they are not getting as much profit as they would if they had been operating it by themselves

Question 16

Disadvantages to the franchisee

Answer 16

The franchiser may impose strict rules on the franchisees, e.g. ways of working
Profits must be split and they still run the risk of failure

Question 17

Multinational Corporations (MNCs)

Answer 17

A multinational corporation will have operating sites in more than one country

Question 18

Advantages of MNCs

Answer 18

There could be an increase in the market share by producing products which can meet the needs of the consumers in the host country
Could be cheaper premises an labour available
They might not need to pay as much tax in the host country

Question 19

Disadvantages of MNCs

Answer 19

Laws in the host country may be restrictive, e.g. within the EU, they can restrict the range of products and may lead to. Higher operating costs
There could be culture differences, the company may need to adapt its products

Question 20

Advantages of MNCs to the host country

Answer 20

When a MNC locates in a country it brings investment and expertise into that country and creates jobs for local workers.
The presence of a MNC may give more choice for consumers in that host country.

Question 21

Disadvantages of MNCs to the host country

Answer 21

MNCs can be powerful and may exert influence on the governments of the host countries
MNCs have been accused of exploiting labour in low wage countries, and engaging in unethical practices

Question 22

Voluntary sector organisations

Answer 22

An organisation where they are ‘not for profit’. They aim to raise awareness, support a charitable cause, promote sporting/ social activities. Etc. They are owned by members and/or supporters. Controlled by an elected committee. Financed through fundraising, grants, membership fees etc.

Question 23

Advantages of voluntary sector organisations

Answer 23

They operate for the good of their members rather than for profit, they will provide services that profit making organisations would consider not profitable enough to provide.
Top of services provided by the government, helping those most vulnerable.

Question 24

Disadvantages of voluntary sector organisations

Answer 24

May have difficulties raising enough finance to provide their services and may rely on appealing to people’s good nature.
There is also a risk for mismanagement if the committee or volunteers slack necessary experience.

Question 25

Public sector organisations

Answer 25

Funded by taxes and run by the government, they usually include thing like schools, libraries, social work, street lighting, and leisure. Day to cay control is in the hands of civil servants.