Sectors of Economy

Question 1

What are the sectors of economy?

Answer 1

• Private
• Public
• Third

Question 2

Types of a private companies:

Answer 2

• Private limited company (ltd)
• Public limited company (plc)

Question 3

Ownership of a ltd:

Answer 3

Shareholders (who holds a share of the business that is’nt available for the public to purchase)

Question 4

Control of a ltd:

Answer 4

Board of directors elected at the AGM (who are people who that are specialised so they bring significant experience and expertise)

Question 5

Finance of a ltd:

Answer 5

Selling shares privately, bank loans, grants and retained profits

Question 6

Aim of a ltd:

Answer 6

Maximise profits

Question 7

Advantages of a ltd:

Answer 7

• Control of the company is not lost to outsiders
• More finance can be raised form shareholders and lenders
• Limited liability
• BOD bring significant experience and decision making skills to the business

Question 8

Disadvantages of a ltd:

Answer 8

• Profits are shared
• Shares cannot be sold publicly
• Must abide by companies act

Question 9

Ownership of a plc:

Answer 9

Shareholders

Question 10

Control of a plc:

Answer 10

Board of directors

Question 11

Finance of a plc:

Answer 11

Selling shares on the stock market, bank loans, grants, retained profits and share issues

Question 12

Aim of a plc:

Answer 12

Maximise profits

Question 13

Advantages of a plc:

Answer 13

• Limited liability
• Large amounts of finance raised through selling shares publicly
• Easier to borrow money due to plc’s size and reputation
• PLC’s can easily dominate the market

Question 14

Disadvantages of a plc:

Answer 14

• Dividends are shared with many shareholders
• Can lose control of the business
• Annual accounts must be public
• It is a costly and complicated process to set-up

Question 15

Public sector ownership:

Answer 15

Government
e.g. council, local, government, central government, scottish government, uk government

Question 16

Public sector control:

Answer 16

Elected officials
e.g. Mp’s

Question 17

Public sector finance:

Answer 17

Taxation

Question 18

Public sector aim:

Answer 18

Provide a good quality service with the budget that they are given

Question 19

Third sector (charity) ownership:

Answer 19

A trust

Question 20

Third sector (charity) control:

Answer 20

Board of trustees

Question 21

Third sector (charity) finance:

Answer 21

Donations, sponsorship and fundraising events

Question 22

Third sector (charity) aim:

Answer 22

Depends on the individual cause

Question 23

Third sector (charity) advantages:

Answer 23

• Exempt from paying some taxes
• Low wage cost due to volunteers
• Clubs that run as charities can gain gift aid (tax paid by customers)
• Private companies are more willing to donate as it leads to good PR

Question 24

Third sector (charity) disadvantages:

Answer 24

• Can be difficult to compete with private companies larger marketing budgets
• Volunteers may leave for paid work

Question 25

Third sector (voluntary organisations) ownership:

Answer 25

Members

Question 26

Third sector (voluntary organisations) control:

Answer 26

Elected committee

Question 27

Third sector (voluntary organisations) finance:

Answer 27

Members subscriptions

Question 28

Third sector (voluntary organisations) aim:

Answer 28

Provide a service for members and the local community

Question 29

Third sector (social enterprise) description:

Answer 29

An organisation that runs like a private business but must donate atleast 50% of its profits

Question 30

Social enterprise ownership:

Answer 30

Soletrader, partner, shareholder

Question 31

Social enterprise control:

Answer 31

Board of directors elected at the AGM or paid managers

Question 32

Social enterprise finance:

Answer 32

Capital investment or bank loans

Question 33

Social enterprise aim:

Answer 33

Make a profit to benefit a specific group of cause

Question 34

Social enterprise advantages:

Answer 34

• Increased customers who share the same aim value
• More likely to receive government grants
• Asset lock (if company goes bust, all assets go to the cause)