Chapter 2 - Types of Businesses

Question 1

What are the 4 ways a business can be classified?

Answer 1

The four ways a business can be classified by are Size, Geographical Spread, Industry Sector, and Legal Structure.

Question 2

1. Size - What are the four different sizes of a business?

Answer 2

Micro, Small, medium, Large

Question 3

What is a small business? How many employees does it have?

Answer 3

A small business is a business with 5-19 employees.

Question 4

What is a medium business? How many employees does it have?

Answer 4

A medium business is a business with 20-199 employees.

Question 5

What is a large business? How many employees does it have?

Answer 5

A large business is a business with over 200 employees.

Question 6

2. Geographical Spread - What 3 categories is geographical spread split into?

Answer 6

Local, National and Global.

Question 7

What is a local business?

Answer 7

A local business such as a news-agency is a business that serves the surrounding area/suburb/town.

Question 8

What is a national business?

Answer 8

A national business is one that operates just within one country. For example, David Jones

Question 9

What is a global business?

Answer 9

A global business, or a multinational corporation is a business that haas branches in multiple countries, such as McDonalds.

Question 10

3. Industry Sector - What are the five main types of industry sectors?

Answer 10

Primary, Secondary, Tertiary, Quaternary, Quinary

Question 11

What is a Primary Industry?

Answer 11

A primary includes the businesses involved in the collection of natural resources. For example, mining, fishing, etc.

Question 12

What is a secondary industry?

Answer 12

A secondary industry includes those business that take a raw material and make it into a semi-finished or finished product. For example manufacturing.

Question 13

What is a tertiary industry?

Answer 13

A tertiary industry involves people performing a vast range of services for other people. For example, retailers, health workers.

Question 14

What is a quaternary industry?

Answer 14

A quaternary industry includes services that involve the transfer and processing of information and knowledge. For example, telecommunications, property, computing, education, etc.

Question 15

What is a quinary industry?

Answer 15

A quinary industry includes all services that have traditionally been performed in the home. For example accommodation, hospitality, tourism etc.

Question 16

What are the four main legal structures of privately owned businesses?

Answer 16

Sole traders, partnerships, private company, public company

Question 17

What is a sole trader?

Answer 17

A sole trader is a business that is owned and operated by one person

Question 18

What is unlimited liability?

Answer 18

Unlimited liability is when the business owner is personally responsible for all the business’s debt

Question 19

What is a partnership?

Answer 19

A partnership is a legal business structure that is owned and operated by between 2 and 20 people.

Question 20

What is limited liability?

Answer 20

Limited liability means that the most money a shareholder can lose is the amount they paid for their shares.

Question 21

What is a private company?

Answer 21

A private company is the most common type of a company structure in Australia, and usually has between 2 and 50 private shareholders. (Pty Ltd)

Question 22

How do we know if it is a public company?

Answer 22

A public company usually has ‘Limited’ or ‘Ltd’ in its name.

Question 23

What is a government enterprise?

Answer 23

A government enterprise (GBE) is a government owned and operated business.

Question 24

What is privatisation?

Answer 24

Privatisation is the process of transferring the ownership of a government business to the private sector.

Question 25

What are the three main factors that may influence choice of legal structure?

Answer 25

1. Size of the business
2. Ownership
3. Finance