chapter 2- business structure

Question 1

what are the three stages in business activity?

Answer 1

primary sector, secondary sector, and tertiary sector

Question 2

define the term ‘industrialization’

Answer 2

the term used to describe the growing importance of the secondary sector manufacturing industries in developing countries

Question 3

what are the two ways the relative importance of each sector can be measured?

Answer 3

in terms of employment levels or

in terms of output levels as a proportion of the whole economy

Question 4

define the term ‘deindustrialization’

Answer 4

when there is a decline in the importance of secondary sector activity and an increase in the tertiary sector, in developed economies.

Question 5

what is the difference between public and private sectors?

Answer 5

public sectors are organizations accountable to and controlled by the local government (the state).
private sectors are businesses owned and controlled by individuals or groups of individuals.

Question 6

what is the difference between a mixed economy, a free-market economy, and a command economy?

Answer 6

a mixed economy is when economic resources are owned and controlled by both public and private sectors.
a free-market economy is when economic resources are owned largely by the private sector with very little state intervention.
a command economy is when economic resources are owned, planned, and controlled by the state.

Question 7

what are the 8 legal structures of business organizations in the private sector?

Answer 7

sole trader
partnership
private limited company
public limited company
cooperative
franchise
joint venture
holding company

Question 8

what is a shareholder?

Answer 8

an individual or institution owning shares in a limited company

Question 9

in order to establish a company, what 2 legal stages must be carried out?

Answer 9

1. memorandum of association

2. articles of association

Question 10

what are the contents of a memorandum of association and an article of association?

Answer 10

a memorandum of association states: 
the name of the company, 
the address of the head office, 
the maximum share capital the company seeks authorization, 
and the declared aims of the business

an article of association states:
the internal workings and control of the business (names of directors and procedures to be followed at meetings will be detailed)