L4.1 Classify different economic and industrial sectors Flashcards
What is a sector?
Sectors are a way of CLASSIFYING organisations in relation to…
- the way they are FUNDED,
- what their OBJECTIVES are, and
- what PRODUCTS/SERVICES they are involved with
Public sector
+ stakeholders {probably just rmb a few}
Case study: New Zealand govt being wary not to overtax tobacco alternatives, in order not to discourage cessation
Case study: Grenfell fire due to local authorities not bringing their housing stock to expected STANDARDS, blaming on economic pressures of shrinking budgets
- one of the fire doors in Grenfell Tower failed safety testing; the tragedy took many lives
- org.s are owned and controlled by the GOVT
- purpose: providing general public with services integral to their wellbeing and lifestyle
eg. hospitals, schools, Army, ambulance - funded through TAXATION
- some govt.s have privatised services previously supplied by the public sector, ie. taken over by a PRIVATE INVESTOR
- governed by many RULES & REGULATIONS, and high media interest b/c funded by taxpayer money
» needs to meet high ethical standards, promote ESG awareness and sustainability, be TRANSPARENT and accountable for mistakes
Stakeholders
- regional/national govt
- health and wellbeing agencies
- schools, colleges
- communities of interest
- voluntary org.s and charities
- NGOs
- social enterprises
- businesses
- local authorities
Private sector
+ 4 diff. forms
- org.s are owned and funded by INDIVIDUALS / ENTERPRISES
- objective: to make a PROFIT (through supplying products and/or services to customers and consumers)
eg. hospitality, services (eg. plumber, hairdresser), supermarkets, non-food retailers (Nike, Swarovski), online retailers, manufacturers (Toyota, Bosch), extractive commodities (Shell, BP), food processing businesses (Kraft Heinz, Nestlé)
-
Sole traders
- owned and run by 1 person; can employ other ppl to work for them
eg. hairdresser, carpenters, artists
+ don’t have to report to anyone else / share profit or decision-making
- SOLELY LIABLE for any debts the biz may incur -
Partnerships
- owned and liable by 2 or more ppl
- partners may not all have equal responsibility {for profits & losses}; the partner with largest % of ownership = majority owner
- can be limited companies -> LLP(?)
eg. firms of solicitors -
Private limited companies (Ltd)
- a LEGAL ENTITY IN ITS OWN RIGHT, ie. legally separate from the ppl who run it; the co. itself keeps any post-tax profit and is liable for any debt
- must have minimum 1 SHAREHOLDER; shares are OWNED PRIVATELY and CANNOT BE TRADED on the stock exchange
eg. small market traders, biz consultants, IKEA -
Public limited companies (Plc)
- SHARES are TRADED on the STOCK EXCHANGE & belong to INVESTORS
eg. Sky, Rolls Royce, Tesco, McDonald’s
Third sector organisations (TSOs)
+ charities, co-operatives
= charities, NGOs and not-for-profit organisations
- neither public nor private sector
- exist to support and promote social, environmental or cultural objectives
- do NOT aim to make a profit
- funded by DONATIONS (privately, by the public, and through LEGACIES) and levies; independent of the govt but can be part-funded by them
eg. CIPS
CHARITIES
= a not-for-profit org. with the objective of raising AWARENESS or helping its chosen cause
eg. humanitarian aid, disaster recovery, animal welfare, environmental concerns; Bill and Melinda Gates Foundation
CO-OPERATIVES
= a PEOPLE-CENTRED enterprise owned and run by and for its MEMBERS, which either reinvests any profits or returns them to its members
- owned by members who aim to achieve the SAME OBJECTIVES; every member has the SAME RIGHTS within the org; all involved in decision-making
eg. John Lewis Partnership, Crédit Agricole, Fairtrade Foundation, Rainforest Alliance
Third sector organisations (TSOs)
+ 5 common aspects of TSOs
- Goals
- eg. awareness raising, fundraising, service delivery {think humanitarian aid, disaster relief} - Stakeholders
- wider range than private sector orgs, incl. donors, the media, recipients of aid… - Speed of delivery
- agreement and action often take longer than in public/private sector as EVERYONE is INVOLVED - Resources
- VARIES from limited skillset in org. run by volunteers…
- …to highly-sophisticated, well-funded operations - Budget
- VARIES from limited in small voluntary orgs. to…
- large in bigger orgs like The Red Cross, Age UK etc.
5 main differences between the 3 economic sectors
- OWNED BY
- govt; private investors; trustees - FUNDED
- taxes & levies; investments & loans; donations & levies - SHARES
- no; yes; no - OBJECTIVE
- provide general public with services; provide goods and services to make a profit; promote and support social, environmental and cultural objectives - INTERNALLY ADMINISTERED BY
- govt; own business, eg. senior mgmt; employees and volunteers
3 industrial sectors (see L1.1)
+ where do public, private and TSOs fit in the industrial classification?
eg. manufacturing, retail, construction, financial, agriculture and service
*the sector of the AGRICULTURE industry is often debated
» PRIMARY b/c farmers extract a raw material from the ground, eg. wheat, potatoes, maize {traditionally this}
» but SECONDARY b/c farmers need to sow seeds before the crop can grow and be harvested/extracted {I agree with this}
Case study: Nepal’s SERVICE sector is the major contribution to its GDP, hence for sustainable growth, investment in the primary sector (MANUFACTURING sector) should be matched by investment in the service sector
- PUBLIC sector orgs. belong to TERTIARY SECTOR b/c they provide services
eg. education, medical treatment, social housing - PRIVATE sector org.s can be PRIMARY, SECONDARY OR TERTIARY
eg. mining, agriculture, forestry, fishing
eg. manufacturing, food production and processing, construction and assembly
eg. services, hospitality, transport, professional services - TSOs belong to TERTIARY SECTOR b/c provide services in support of a cause
eg. charities, CIPS, cooperatives
