Business Sectors And Types Of Business Flashcards
What is the chain of production?
Stages that a product passes through until it reaches the final consumer
What are the three sectors a business can operate in?
Primary (raw materials)
Secondary (manufacturing)
Tertiary (service)
What is the effect of deindustrialisation?
The decline in the size of the secondary sector of the economy
What is the private sector made up of?
Businesses owned and run by private individuals, usually in the interest of profit
What is the public sector made up of?
Businesses and organisations owned and run by local or central government, whose objective is to provide a service rather than make a profit
Benefits of being a sole trader
Few legal requirements to start (quick startup with not much capital required)
Sole trader keeps all profits
Full decision making power
Financial state is private due to paying income tax
Disadvantages of being a sole trader
Sole trader must control all aspects of the business
Hard to raise capital
Easy to get overworked
No continuity
Usually small businesses, can be hard to trade with large firms
Unlimited liability
What does a deed of partnership help to clarify?
How much money each partner contributes How much income each partner can draw The responsibilities and duties of each partner Arrangements of cover/absence How decisions are to be made Arrangements for taking new partners Arrangements for dissolving partnership Arrangements for finances (joint or separate accounts?)
Advantages of partnership
Easy to establish
Additional partners means more capital
Work is shared and different partners can hold different skills
Partners can specialise
Losses are shared
Financial state can be kept private as they pay income tax
Disadvantages of partnership
Unlimited liability (sleeping partners have limited liability)
Decision making is slower and there’s possibility of disagreement
Restrictions on partnerships can mean limits on capital
Profits are shared
What is an LLP and what are the features of it?
Limited liability partnership
An arrangement with features of a partnership where partners have limited liability much like a ltd, but they also have to publish their accounts like an ltd
What are the features of a limited company?
Incorporation (company exists without owners)
Shares
Limited liability
Features of a public limited company
Public company is a plc
Can trade shares on the stock market
Shares are available to buy so can be subject to hostile takeover
Must have a minimum share capital of £50,000
A plc must give a full report to its shareholders
Features of a private limited company
Name will end with limited or ltd Shares must be privately sold Cannot be involuntary taken over No minimum share capital Accounts can be published in less detail
What is a third sector organisation?
An organisation that is neither in the public or private sector, usually aiming to accomplish social goals rather than trying to maximise profit. If profit is made, it is normally reinvested to improve the service
