Chapter 2- Business sectors and types of business

Question 1

Definition of multinational

Answer 1

• when they have operations in other countries as well as nationally in the UK.

Question 2

Definition of chain of production

Answer 2

• Stages that a product passes through until it reaches the final consumer

Question 3

What happens as a product passes along the chain?

Answer 3

• It has value added to it
• It becomes worth more because of the business activity at each stage of the chain

Question 4

What are the 3 sectors of business activity ?

Answer 4

• primary sector
• secondary sector
• tertiary sector

Question 5

Primary sector

Answer 5

• businesses in the primary sector are concerned with the extractive industries.

Question 6

Examples of primary sector

Answer 6

• farming
• forestry
• fishing
• mining
• oil/ gas extraction

Question 7

Secondary sector

Answer 7

• businesses in the secondary sector are concerned with manufacturing
• (turning raw materials into semi-finished and finished products)
• Also includes the construction industry

Question 8

Examples of secondary sector

Answer 8

• building houses, factories, office blocks and roads

Question 9

Tertiary sector

Answer 9

• businesses in the tertiary sector are concerned with the output of services

Question 10

Examples of tertiary sector

Answer 10

• retailing
• banking
• transportation

Question 11

What are the proportions of each sector in the output of the UK?

Answer 11

• tertiary (80%)
• secondary (14%)
• primary (6%)

Question 12

What is a feature of an advanced economy?

Answer 12

• A large tertiary sector

Question 13

Definition of deindustrialisation

Answer 13

• the decline in the size of the secondary sector of the economy

Question 14

Why would there be a positive effect on the other 2 sectors if manufacturing is thriving?

Answer 14

• there will be a need for more raw materials inputs and services to support the business

Question 15

What are the types of business?

Answer 15

• private sector
• public sector

Question 16

Private sector

Answer 16

• businesses owned and run by private individuals
• referred to as private enterprise
• usually for profit

Question 17

Public sector

Answer 17

• businesses and organisations owned and run by local or central government
• usually referred to as public enterprise
• objective is to provide a service rather than make a profit

Question 18

What is a sole trader?

Answer 18

• simplest form of business organisation
• sole trader owns the business and makes all the decisions affecting it
• the business and owner are inseparable
• business doesn’t exist in its own right (unincorporated)

Question 19

Advantages of being a sole trader

Answer 19

• making decisions is quick and easy as sole trader doesn’t have to consult with anyone
• sole trader keeps all the profit (after tax)
• there are a few legal requirements when setting up as a sole trader so it is possible to start a business quite quickly with relatively little capital
• sole trader can’t issue shares so can’t be subject to a takeover