Business structure (02) Flashcards
SUMMARY
In summary, the following is covered in this topic:
1. The three stages of business activity are primary sector, secondary sector and
tertiary sector business activity.
2. Businesses in the primary sector produce or extract natural resources, while
businesses in the secondary sector produce products from raw materials.
Businesses in the tertiary sector are mainly service providers.
3. The economic system is made up of public and private sectors.
4. The public sector consists of organisations controlled by the government, and
provides merit and public goods. The private sector is made up of private
businesses which provide goods and services for profit.
5. The three most common legal structures are sole proprietorship, partnership
and companies.
6. In a sole proprietorship, the business is owned by one person who contributes
all the required capital and makes all decisions.
7. A partnership is owned by between two and twenty owners who pool their
finances as capital and make shared decisions.
8. A company can be formed as a private limited or public limited company. In a
private limited company, shares can only be sold to family members and friends.
In a public limited company, shares can be sold to the general public, and are
listed and sold on the stock exchange.
9. There are advantages and disadvantages to the various legal structure, and it is
an important factor in the choice of legal structure when establishing a business.
