Introduction to business - business sectors

Question 1

what is the private sector?

Answer 1

• run by private individuals/companies
• main goal is generally to gain profit

Question 2

what is the public sector?

Answer 2

• run on behalf of the public
• tend to be government run and funded
• generally not run for profit
• the profit that is made is used for reinvestment

Question 3

what is the third sector?

Answer 3

• They are businesses which are motivated by the desire to achieve social goals such as social problems or the environment
• value driven, not run for profit

Question 4

what is the tertiary sector?

Answer 4

it is the provision of services e.g. leisure. it accounts for 80% of UK economy

Question 5

what is the primary sector?

Answer 5

activities undertaken by directly using natural resources e.g. farming. This counts for 1% of the UK economy

Question 6

what are the 3 sectors in a business?

Answer 6

primary, secondary, tertiary

Question 7

what is the secondary sector?

Answer 7

involves converting raw materials into finished products e.g. assembly plants
it accounts for 19% of UK economy

Question 8

what is a local business?

Answer 8

• more susceptible to competition
• customers are clustered in one area
• less money spent on advertising
• know your customers well
• potential market is limited
• can make changes quickly

Question 9

what is a national business?

Answer 9

• distribute their products throughout a country
• Offers tremendous profit potential but also exposes business to new competitors

Question 10

what is an international business?

Answer 10

• operate in more than one country
• adjustments normally made in the marketing mix in various countries
• legal and cultural differences alone can greatly affect a strategy’s outcome
• if national markets become more saturated the continued expansion into foreign markets will be inevitable

Question 11

what are the reasons for multinationals?

Answer 11

• emerging economies
• economies of scale
• protectionism
• external growth → takeovers and mergers

Question 12

what are economies of scale?

Answer 12

a reduction in unit costs achieved as the scale of production increases

Question 13

what is protectionism?

Answer 13

• taxing imports to protect domestic UK imports, so more people buy UK grown/made products
• keeps people employed and in work

Question 14

what are the potential benefits of multinationals?

Answer 14

• significant employment and training to the labour force
• adds to the host country’s GDP
• increased competition and consumer choice
• increased tax revenue to host country

Question 15

what are the potential drawbacks of multinationals?

Answer 15

• domestic businesses not be able to compete
• tax avoidance
• could damage domestic businesses
• may not feel as socially responsible as domestic (impose culture on host nation)

Question 16

what is the difference between international and multinational companies?

Answer 16

• An international company doesn’t have investment outside of their home country, but multinationals do.
• International companies are located in one place with negotiations being done in other countries, whereas multinational companies can be located in multiple countries