types of business Flashcards
define size, what are the sizes of businesses
size: about how big the company’s operations are
micro, small, medium, large, small the medium enterprises (SMEs)
define and give examples of a micro business
a business with fewer than five employees e.g. lawn and landscaping companies, shoemakers
define and give examples of a small business
a business with 5-19 employees e.g. corner store, local mechanic, hairdresser
define and give examples of a medium business
a business with 20-199 employees e.g. service club, hotel/motel, engineering factory
define and give examples of a large business
a business with 200 or more people e.g. woolworths, quantas, mcdonalds
define geographical spread
the presence of a business and the range of its products across a suburb, city, state or country, or the globe
define and give examples of a local business
a business that has a restricted geographical spread; it serves the surrounding area e.g. newsagent, corner store, hairdresser, mechanic, pharmacy
define and give examples of a national business
a business that operates within just one country e.g. Coles, Mecca, commonwealth bank, david jones
define and give examples of a global business
a large company that has branches in many different countries, can also be know as a multinational corporation e.g. coca-cola, mcdonalds, lg, toyota, westfield, google
define and give examples of a small to medium enterprise
firms with fewer than 200 full-time equivalent employees and/or less than $10 million turnover e.g. hair and beauty salons, dental practices, medical centres, bars, cafes, restaurants, gyms
What may push a national business to go global?
if a national business expands and increases sales, running out of new customers and the domestic market becomes saturated therefore wanting to export and sell its product in other countries
define industry
businesses that are involved in similar types of production
define and give examples of the primary industry
includes those business involved in the collection of natural resources e.g. framing, mining, fishing, grazing, forestry
define and give examples of the secondary industry
includes businesses that take a raw material and make it into a finished or semi-finished product e.g. heavy manufacturing, steel and car manufacturers, food processing, oil refining, energy generation
define and give examples of the tertiary industry
involves people performing a vast range of services for other people e.g. retailers, dentists, solicitors, banks, health workers
define and give examples of the quaternary industry
services that involve the transfer and processing of information and knowledge e.g. property, computing, financing, education, telecommunications
define and give examples of the quinary industry
all services that have traditionally been performed in the home e.g. hospitality, tourism, craft-based activities, childcare
what industry employs the most of the labour force and why
quaternary, due to the demand of those jobs
what industry employs the least of the labour force and why
primary, due to the development of technology
what does the secondary industry do?
they take the output of firms in the primary sector (raw materials) and process it into a finished or semi-finished product
define an unincorporated business
they have no separate legal existence from its owner(s) therefore the business and the owner(s) are the same —> this means it is a sole trader or partnership
define an incorporated business
refers to the process companies go through to become a separate legal entity as it own legal entity and the business has taken on a life of its own —> this means it is a private or public company
define a sole trader and examples
a business that is owned and operated by only one person e.g. handyman, hairdresser, local markets stall
define unlimited liability
when the business owner is personally responsible for all the business’s debts, this may include selling personal assets such as property or motor vehicles, to pay for the liabilities of the business. this means legally they (gov) can take any personal items for the debts of the business
what does a sole trader do?
-employ others to work for the business
-provide all the finances
-make all the decisions
-takes all the responsibility for the operations of the business
what are the advantages of being a sole trader
-low cost of entry
-owner’s right to keep all profits
-only pay tax for personal income not company & personal income
-complete control
what are the disadvantages of being a sole trader
-unlimited liability for business debts
-difficulty in raising finance for expansion
-difficult to operate if sick
-need to carry all loses
define partnership with examples
a legal business structure that is owned and operated by between 2 and 20 people with the aim of making a profit e.g. medical practitioners, accountants, chemists, architects
partnership advantages
-less costly startup than a company
-low startup costs
-shared responsibility and workload
-pooled funs and talent
-only pay tax for personal income not company & personal income
partnership disadvantages
-unlimited liability
-when joining a partnership you are taking on the debts of other parties
-possibility of disputes
-difficulty in finding a suitable partner
define limited liability
which means that the most money a shareholder can lose is the amount they paid for their shares
what does it mean to have seperate legal entity?
means that the company can sue and be sued; it can lease, sell or own property; and it has perpetual succession (this means it will continue to exist even when the owners change)
define proprietary (private) companies with examples
an incorporated business and usually has between 2 and 50 private shareholders e.g. IKEA, LEGO, rolex
what make the business a private company?
-shareholders can only sell their shares to people approved of by the other directors
-must have the words ‘propriety limited’ aka ‘Pty Ltd”
what is an advantage of having a private company?
is that shareholders have limited liability protection
what is a disadvantage of having a private company?
closing a private company is complex as all shareholders of the company must agree to the end of the company
what is a public company? with examples
the shares for public companies are listed on the Australian Securities Exchange and the general public may buy and sell shares of those companies e.g. quantas, commonwealth bank of Australia, kmart
define government enterprise with examples
government-owned and operated business e.g. Australian Post, sydney water
define privatisation
the process of transferring the ownership of the government business to the private sector
what are the factors influencing choice of legal structure
size of business, ownership and finance
which sizes of a business influence a particular legal structure?
micro/small=sole trader or partnership
small/medium=partnership or private company
growing medium= private company (for seeking limited liability)
large global=public
How can ownership influence one’s choice of legal structure?
complete control of business=sole trader
shared ownership with others=partnership
maintain high degree of control and limited liability=private
sells shares to public and needs 50% to hold ownership=public
how can finance influence a businesses choice of legal structure being sole trader or partnership
difficult to obtain adequate finance because of their exposure to risk (unlimited liability)
how can finance influence a businesses choice of legal structure being private or public
businesses with lots of money have the ability to choose any legal structure but usually choose private or public
what businesses have limited liability
incorporated businesses, private and public
what is usually the size of private companies
small or medium
what is usually the size of public companies
large
