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igcse business studies > classification of businesses > Flashcards

classification of businesses Flashcards

1
Q

examples of primary sector

A
  • fishing
  • farming
  • mining
  • beekeeping
  • shearing
  • oil extraction
  • poultry
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2
Q

examples of secondary sector

A
  • flour mill
  • brewery
  • manufacturing (automobiles)
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3
Q

examples of tertiary sector

A
  • retail shops
  • hospitals
  • transportation
  • banking
  • insurance
  • communication
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4
Q

relative importance of economic sectors

A
  • how many people are employed in that sector
  • contribution of that sectors output to the national output
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5
Q

reasons for the change in the importance of economic sectors

A
  • sources for primary products get depleted
  • lose competitiveness to manufacturing to developing countries
  • wealth and living standards increase so importance of tertiary sector increases
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6
Q

advantages of sole trader

A
  • easy setup
  • complete control
  • full profit
  • cater to local needs
  • business affairs kept private
  • personal relationship with customers
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7
Q

disadvantages of sole trader

A
  • limited capital so less expansion
  • less ideas
  • unlimited liability
  • no continuity
  • no sick leaves so commitment required
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8
Q

advantages of partnership

A
  • more capital than sole trader
  • divided workload
  • room for specialisation
  • more ideas
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9
Q

disadvantages of partnership

A
  • bound by actions of one partner
  • more discussion and consultation so time taking
  • limitation on number of partners
  • unlimited liability
  • no continuity
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10
Q

advantages of private limited company

A
  • more capital than partnerships
  • limited liability
  • owner can retain control
  • continuity
  • can enter into legal contracts with other businesses
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11
Q

disadvantages of private limited company

A
  • must be registered so difficult and expensive set up
  • accounts less private
  • cannot sell shares to public
  • cannot sell shares without permission of all shareholders
  • over expansion may lead to certain diseconomies of scale like many employees become hard to manage
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12
Q

advantages of public limited company

A
  • more capital than private limited company
  • economies of scale so can employ specialist and have lower per unit cost
  • limited liability
  • continuity
  • shares issues through Stock Exchange to general public
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13
Q

disadvantages of public limited company

A
  • expensive legal and administrative costs
  • legal formalities in setting up
  • must publish accounts
  • if too large then diseconomies of scale and cannot be managed efficiently
  • decisions difficult to arrive at
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14
Q

advantages of franchises to franchisor

A
  • money from license and royalties
  • expansion of business faster and easier
  • day to day management responsibility of franchisee
  • all products sold obtained from franchisor
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15
Q

disadvantages of franchises to franchisor

A
  • poor management could affect reputation
  • franchisee keeps profit
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16
Q

advantages of franchises to franchisee

A
  • less chances of business failure as they sell well known products
  • franchisor covers advertisement costs
  • all supplies obtained from central source
  • fewer decisions to make
  • training will be provided
  • established product so bank may be willing to give loans
17
Q

disadvantages of franchises to franchisee

A
  • less independence
  • unable to change products according to change in markets so no creativity
  • license fee and part of profit must be paid so heavy start up costs
18
Q

advantages of joint venture

A
  • sharing of costs, knowledge and risks
  • business you are working with may have local knowledge
  • international technologies can be utilised
19
Q

disadvantages of joint venture

A
  • different management styles lead to disagreements and conflicts
  • profits have to be shared
  • cultural differences can lead to problems
20
Q

advantages of public sector corporations

A
  • set up for public welfare so can reach out to underprivileged and unemployed groups of society
  • provision of goods and services at lower costs
21
Q

disadvantages of public sector corporations

A
  • less efficiency as can always rely on government subsidies
  • lower incentive to earn profits
  • political influence
  • low competition so less creativity
22
Q

advantages of multinationals

A
  • economies of scale
  • increased sales
  • tax incentives
  • save on transportation costs
23
Q

disadvantages of multinationals

A
  • legislation required to set up
  • cultural difficulties
  • opposition from local businesses

igcse business studies (27 decks)

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