Business structure

Question 1

Economic sector

Answer 1

1) Primary
2) Secondary
3) Tertiary
4) Quaternary

Question 2

Primary

Answer 2

That extracts natural resources such as coal, oil, fishing e.t.c.

Question 3

Secondary

Answer 3

Firms that process natural resources to make finished goods such as clothes from cotton or leather jacket from leather.

Question 4

Tertiary

Answer 4

Firms providing services to consumers and other businesses such as transport, banking, hotels e.t.c.

Question 5

Quaternary

Answer 5

Business providing information services such as web design or information and communication technologies e.t.c.

Question 6

Private limited company

Answer 6

Business owned by shareholders which are often members of the same family this company shares cannot be sale to general public.

Question 7

initial public offering(IPO)

Answer 7

An offer to public to but shares in a public limited company.

Question 8

Public limited company

Answer 8

A company whose shares can be traded on stock exchange and can be bought or sold by general public.

Question 9

Industrialization benefits

Answer 9

1) GDP increases which increases standard of living
2) Increasing output leads to more export less import.
3) More jobs.
4) Value added to raw materials.

Question 10

Industrialization problems

Answer 10

1) Manufacturing can lead lot of people to move from country side to town causing housing problems.
2) Raw material can be needed for production which leads to higher import.
3) Increase in multinational companies.
4) Rise in income leads people to spend on services so more focus on industrialization can lower focus on tertiary sector.
5) Rise in imports can take market away from domestic secondary sector firms.

Question 11

Deindustrialisation

Answer 11

1) Job losses in agriculture or mining.
2) Movement of people from towns to city.
3) Jobs opportunity increases in service industry.
4) Increased need for retraining programmes.

Question 12

Mixed economy

Answer 12

Economic resources owned by both private and public sectors.

Question 13

Free market economy

Answer 13

Economic resources largely owned by private sector with very less state intervention.

Question 14

Command economy

Answer 14

Economic resources controlled, owned and planned by state.

Question 15

Public cooperation

Answer 15

An entity that operates independently from a government department but carries out its functions at arm’s length from central government.

Question 16

Advantages of PC

Answer 16

1. Focuses more on social objectives rather than only profit.
2. loss making products not stopped if social benefit is great.
3. Finance mainly provided by government.

Question 17

Disadvantages of PC

Answer 17

1. There can be insufficiency due to strict profit targets.
2. Subsidies can also encourage inefficiencies.
3. Government may interfere due to political reason for example opening branch in certain area for popularity.

Question 18

Sole trader

Answer 18

Single owner of business with unlimited liability, Providing full finance and taking all profit.

Question 19

Disadvantages of Sole trader

Answer 19

1 More risk
2 More competition from bigger firms
3 Difficult to raise additional capital
4 long hours of work to meet profit target
5 lack of continuity

Question 19

Advantages of sole trader

Answer 19

1 Full control
2 No much legal problems
3 Full profit
4 Can adjust timing and pattern.
5 Can establish close relationship with employees.
6 Business can be based on owners personal skills or interest.

Question 20

Partnership

Answer 20

Two or more persons carrying business together sharing capital, investment and usually responsibilities

Question 21

Advantages of partnership

Answer 21

1 Partners may have specialty in different sect.
2 Share of decision making
3 Availability of capital
4 Losses are shared
5 greater privacy fewer legal formalities

Question 22

Disadvantages of partnerships

Answer 22

1 All partners have unlimited liability so every person with some expectation
2 Profits are shared
3 No continuity as partners to be reformed
4 partners bound by each other decisions
5 cannot raise capital by selling shares
6 No independence in decision making

Question 23

Limited liability

Answer 23

A form of legal protection for shareholders and owners that prevents individuals from being held personally responsible for their company’s debts or financial losses.

Question 24

Private limited company Advantages

Answer 24

1 Shareholders have have limited company
2 Has separate legal personality
3 Continuity if shareholder dies
4 original owner can retain control
5 Able to raise capital from the sales of shares to family

Question 25

PLC Disadvantages

Answer 25

1 Too many legal formalities
2 Capital cannot increase by selling shares
3 Difficult for shareholder to sell shares
4 End of year account to be sent to government and to show to general public

Question 26

Public limited companies advantages

Answer 26

1 Shareholders have limited liability
2 Separate legal identity
3 Easy for share holders to buy and sell shares encouraging investment

Question 27

PLC disadvantages

Answer 27

1 Legal formalities
2 High pay for consultants
3 Share prices can cause fluctuation
4 Legal requirement that can disclose information to shareholders
5 Risk of takeover bcz of stokes present in share market
6 May be influenced by short term objectives of the major investors.

Question 28

Cooperatives

Answer 28

Jointly owned business operated by members for their mutual benefit.

Question 29

Franchise

Answer 29

Legal right to use name

Question 30

franchiser

Answer 30

Sells right to person or business to open stores or sell products

Question 31

franchisee

Answer 31

A person or business that buys the right to operate franchise

Question 32

Advantages of franchise

Answer 32

1 Less chances of business failure
2 Advice and training provides by franchiser
3 franchiser pays for national advertisement
4 Supplies are obtained from quality checked suppliers
5 Franchiser agrees to open another branch in local area

Question 33

Disadvantages of franchise

Answer 33

1 Share of revenue has to be paid to franchiser
2 initial franchise license can be expensive
3 local advertisement to be paid.
4 Franchise cannot choose suppliers
5 strict rules over pricing and full control

Question 34

Joint venture

Answer 34

Two or more business agrees to work closely together on a particular project.

Question 35

Social enterprise

Answer 35

A business with mainly social objectives that re invests most of its profits into benefiting society rather than maximum return to owner