Economic Sectors and legal structure and size Flashcards
What are the 4 business sectors
Primary
Secondary
Tertiary
Quaternary
How can you classify a business
By its size
Legal structure
And activities its involved with
What is a chain of production
The process in which a product goes through each sector in order to reach the consumer
What does the primary sector do
Extracts raw materials and natural resources
What does the secondary sector do
Turns the raw materials into products
What does the tertiary sector do
Sells the product or service to another business/consumer
What does the Quaternary sector do
Consists of it products
How do you measure the size of a business
Value
Number of employees
Sales turnover
Level of independence
What are the 4 sizes a business can be
Micro- earns less than 1.6m, less than 10 employees
Small- earns less than 8m, less than 50 employees
Medium- earns less than 40m, less than 250 employees
Larger- earns more than 40m, more than 259 employees
What is nationalisation
Where the government takes over the running of a business
What is privatisation
Selling state owned industries to the private sector
What is the public sector
This is the part of the economy that is owned and controlled by the state or government
What is the private sector
This is part of the Economy that is owned and controlled by individuals
What is a sole trader and what liability does it have and two advantages and two disadvantages
It's is when a person runs and owns there own business It's the easiest type of business Unlimited liability Advantages Easy to set up All profits kept Disadvantages Unlimited liability High risk of failure Long hours of work
What is a partnership and what liability does it have and two advantages and two disadvantages
It’s a business made up of 2-20 partners
It’s basically the same as a sole trader but with multiple owners
It can have sleeping partners who just give funds and don’t work
Unlimited liability
Advantages
Easy to set up
Partners keep profits
Disadvantages
Unlimited liability
Conflicts can occur
What is a public limited company (Plc)and what liability does it have and two advantages and two disadvantages
It's a company where shares are sold on the stock exchange, and shareholders have limited liability It's accounts must be published for everyone to see Advantages Sell shares to anyone Limited liability Disadvantages Have to share profits due to dividends Not all decisions made by owners
What is a private limited company (ltd)and what liability does it have and two advantages and two disadvantages
A private limited company consists of at least 2 shareholders and shares are sold privately to friends and family.
Limited liability
Advantages
Limited liability
Can get funds by selling shares (sell them to who the business wants to)
Disadvantages
Can’t be sold on the market, so harder to sell in aspects
Have to share profits because of dividends
What is a franchise and what liability does it have and two advantages and two disadvantages for each franchise and franchisee
It’s a large company that allows the use of the brand name for a smaller business, franchiser quips the small business for a cost
The franchisee must make regular payments to the franchiser
Limited liability for the franchiser
Unlimited liability for the franchisee
Advantages
Franchisee
Better chance of success for franchisee
Support if available
Franchise
More profits through royalty payments
Become even more well known
Disadvantages
Franchisee
Franchise brand can be removed
Have to make royalty payments
Franchise
Have to provide support to new business which may be difficult if they don’t have any sense of business
