Business Structure Flashcards
Primary Sector Business Activity
Firms engaged in the extraction of natural
resources so they can be used and processed by other firms.
Example: Oil extraction, fishing and farming
Secondary Sector Business Activity
Firms that manufacture and process products
from natural resources.
Example: Brewing, baking, clothes - making and construction
Tertiary Sector Business Activity
Firms that provide services to consumers and other
businesses.
Example: Retailing, transport, insurance, banking, hotels and tourism
Public Sector
Comprises of organisations accountable to and controlled by central or
local government (the state)
Example: Military and police
Private Sector
Comprises of business owned and controlled by individuals or groups
of individuals.
Example: Sole proprietors
Mixed Economy
Economic resources are owned controlled by both private and
public sectors.
Example: England and Canada
Free - Market Economy
Economic resources are owned largely by the private sector
with very little state intervention.
Example: Hong Kong, with its extremely low tax rates, minimal regulations on
businesses, and highly capitalist system of economics, ranks as 89.8% economically free,
which is the highest rating in the world.
Command Economy
Economic resources are owned, planned and controlled by the
state.
Example: North Korea
Sole Trader
A business in which one person provides the permanent finance and in
return, has full control of the business and is able to keep all of the profits.
Example: Small retailers, plumbers, builders
Partnership
a business formed by two or more people to carry on a business
together with shared capital investment and, usually, shared responsibilities.
Example:
McDonalds: Richard and Maurice McDonald
Apple Inc: Steve Jobs and Paul Allen
Limited Liability
The only liability - or potential loss - a shareholder has if a
company fails is the amount invested in the company, not the total wealth of the
shareholder.
Private Limited Company
A small to medium - sized business that is owned by
shareholders who often members of the same family; this company cannot sell shares
to the general public.
Example: Ernst & Young
Share
A certificate confirming part ownership of a company and entitling the
shareholder owner to dividends and certain shareholder rights.
Shareholder
A person or institution owning shares in a limited company.
Public Limited Company
A limited company, often a large business, with legal right
to sell shares to the general public - share prices are quoted on the national stock
exchange:
Example: Pakistan State Oil Company Ltd (PSO)
Memorandum of Association
This states the name the company, the address of the
head office through which it can be contracted, the maximum share capital for which
the company seeks authorisation and the declared aims of the business.
Articles of Association
This document covers the internal workings and control of
the business such as the name of the directors and the procedures to be followed at
meetings will be detailed.
Cooperatives
A cooperative is an autonomous association of people united
voluntarily to meet their common economic, social and cultural needs and aspirations
through a jointly owned and democratically controlled business.
Franchise
A business that uses the name, logo and trading systems of an existing
successful business.
Example: Ben and Jerrys, Mc Donalds and Subway
Joint Venture
Two or more businesses agree to work closely together on a
particular project and create a separate business division to do so.
Example: Sony-Ericsson - Sony-Ericsson is a joint venture between Sony and the Swedish
company Ericsson.
Holding Company
A business organisation that owns and controls a number of
separate businesses, but dos not unite them into one unified company.
Example: HSBC Holdings PLC and Goldman Sachs
Public Corporations
A business enterprise owned and controlled by the state also
known as nationalised industry.
Example: Publicly owned TV channels
