Classification of business Flashcards
What are businesses classified by?
Size, Geographical spread, Industry sector, Legal sector
Identify the business sizes
Micro: fewer than 5
small: 5-19
medium: 20-199
large: 200+
define geographical spread and describe 3 classifications
geographical spread: The presence of a business and the range of its products across a suburb, city, state, country or globe
Local-
Operate and sell within small geographical spread in Australia such as a subrub. e.g Gordon donut shop
National-
Operate and sell throughout Australia but within national boundary e. JBHiFi
Global-
Business with branches all over the world. National borders done mean trade borders e.g White fox
define the 5 industries businesses are classified into with examples
Primary-
Involved into growing, harvesting, extracting of natural materials
Secondary-
processing of raw materials into products
Quanternary-
processing of information and knowledge
Quinary-
providing domestic services
services traditionally done in the home
Tertiary-
provision/ supplying services
what legal entities do we classify businesses into
Sole trader
Partnership
Private business
public business
franchise
GBE’s
What are 4 main features of a sole trader. list 3 pro’s and 3 con’s
-unincorporated
-not seperate legal entities
-unlimited liability
-low start up costs
pro
simple to form
owners right to keep all profits
no partner disputes
con
unlimited liability
unincorporated- not a seperate legal entity
end of business when owner dies
What are 4 main features of a Partnership. list 3 pro’s and 3 con’s
-2-20 people
-partnership agreement from solicitor lodges with Australian tax office but…
-written agreement is not required but advised in case of disputes
pro
low start up cost
death of partner and business continues to run
shared responsibility and workload
con
unlimited liability
unincorporated- not seperate legal entity
possibility of disputes
What are 4 main features of a private company. list 3 pro’s and 3 con’s
-Proprietary limited (PTY LTD)- doesn’t sell shares to public
-Submit a return to ASIC annually
-20-50 owners buying shares
pro
limited liability- incorporated
seperate legal entity
transfer of ownership easily
perpetual succession
con
more expensive start up cost
public disclosure
must submit annual report of audited accounts (report of how financial results of business)
What are 4 main features of a public company. list 3 pro’s and 3 con’s
Sue and can be sued
register a prospectus (file with details about investments being offered to public)- attract shareholders
pros
incorporated- seperate legal entity
limited liability
board of directors
growth potential
attracts public finance
cons
cost of formation
must publish an annual report of audited accounts
public disclosure
What are 4 main features of a franchise. list 3 pro’s and 3 con’s
franchisor- Individual or organisation granting franchise to franchisee
franchisee- invests in franchisor to have franchise
franchise- license to operate individually owned business as a part of a chain of outlets stores
pros
franchisor provides training and management backup
equipment and premise design already established
volume buying available- cheaper
cons-
franchisor controls operation leaving little room for franchisee indiciduality
profits shared with franchisor through franchise fees
contracts may be biased in favour of franchisor
What are 4 main features of GBE’s. give 2 examples
Large organisations typically
either wholly or partially owned by government
Owned by all levels of government (Federal, state, local)
act in the interest of the community
wholly owned GBE’s provide statement of corporate intent to place responsibility
public sector businesses provide: health, welfare, roads, education
e.g australian post
NBN co limited
features of a small business
features of a micro business
features of a medium business
features of a large business
