Chapter 2 - Types of Businesses Flashcards
What are the 4 ways a business can be classified?
The four ways a business can be classified by are Size, Geographical Spread, Industry Sector, and Legal Structure.
- Size - What are the four different sizes of a business?
Micro, Small, medium, Large
What is a small business? How many employees does it have?
A small business is a business with 5-19 employees.
What is a medium business? How many employees does it have?
A medium business is a business with 20-199 employees.
What is a large business? How many employees does it have?
A large business is a business with over 200 employees.
- Geographical Spread - What 3 categories is geographical spread split into?
Local, National and Global.
What is a local business?
A local business such as a news-agency is a business that serves the surrounding area/suburb/town.
What is a national business?
A national business is one that operates just within one country. For example, David Jones
What is a global business?
A global business, or a multinational corporation is a business that haas branches in multiple countries, such as McDonalds.
- Industry Sector - What are the five main types of industry sectors?
Primary, Secondary, Tertiary, Quaternary, Quinary
What is a Primary Industry?
A primary includes the businesses involved in the collection of natural resources. For example, mining, fishing, etc.
What is a secondary industry?
A secondary industry includes those business that take a raw material and make it into a semi-finished or finished product. For example manufacturing.
What is a tertiary industry?
A tertiary industry involves people performing a vast range of services for other people. For example, retailers, health workers.
What is a quaternary industry?
A quaternary industry includes services that involve the transfer and processing of information and knowledge. For example, telecommunications, property, computing, education, etc.
What is a quinary industry?
A quinary industry includes all services that have traditionally been performed in the home. For example accommodation, hospitality, tourism etc.
What are the four main legal structures of privately owned businesses?
Sole traders, partnerships, private company, public company
What is a sole trader?
A sole trader is a business that is owned and operated by one person
What is unlimited liability?
Unlimited liability is when the business owner is personally responsible for all the business’s debt
What is a partnership?
A partnership is a legal business structure that is owned and operated by between 2 and 20 people.
What is limited liability?
Limited liability means that the most money a shareholder can lose is the amount they paid for their shares.
What is a private company?
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)
How do we know if it is a public company?
A public company usually has ‘Limited’ or ‘Ltd’ in its name.
What is a government enterprise?
A government enterprise (GBE) is a government owned and operated business.
What is privatisation?
Privatisation is the process of transferring the ownership of a government business to the private sector.
What are the three main factors that may influence choice of legal structure?
- Size of the business
- Ownership
- Finance
