Business Structure

Question 1

Primary Sector Business Activity

Answer 1

Firms engaged in the extraction of natural
resources so they can be used and processed by other firms.
Example: Oil extraction, fishing and farming

Question 2

Secondary Sector Business Activity

Answer 2

Firms that manufacture and process products
from natural resources.
Example: Brewing, baking, clothes - making and construction

Question 3

Tertiary Sector Business Activity

Answer 3

Firms that provide services to consumers and other
businesses.
Example: Retailing, transport, insurance, banking, hotels and tourism

Question 4

Public Sector

Answer 4

Comprises of organisations accountable to and controlled by central or
local government (the state)
Example: Military and police

Question 5

Private Sector

Answer 5

Comprises of business owned and controlled by individuals or groups
of individuals.
Example: Sole proprietors

Question 6

Mixed Economy

Answer 6

Economic resources are owned controlled by both private and
public sectors.
Example: England and Canada

Question 7

Free - Market Economy

Answer 7

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.

Question 8

Command Economy

Answer 8

Economic resources are owned, planned and controlled by the
state.
Example: North Korea

Question 9

Sole Trader

Answer 9

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

Question 10

Partnership

Answer 10

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

Question 11

Limited Liability

Answer 11

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.

Question 12

Private Limited Company

Answer 12

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

Question 13

Share

Answer 13

A certificate confirming part ownership of a company and entitling the
shareholder owner to dividends and certain shareholder rights.

Question 14

Shareholder

Answer 14

A person or institution owning shares in a limited company.

Question 15

Public Limited Company

Answer 15

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)

Question 16

Memorandum of Association

Answer 16

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.

Question 17

Articles of Association

Answer 17

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.

Question 18

Cooperatives

Answer 18

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.

Question 19

Franchise

Answer 19

A business that uses the name, logo and trading systems of an existing
successful business.
Example: Ben and Jerrys, Mc Donalds and Subway

Question 20

Joint Venture

Answer 20

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.

Question 21

Holding Company

Answer 21

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

Question 22

Public Corporations

Answer 22

A business enterprise owned and controlled by the state also
known as nationalised industry.
Example: Publicly owned TV channels