Types of Business Flashcards
types of businesses classification of business size — small to medium enterprises (SMEs), large local, national, global industry — primary, secondary, tertiary, quaternary, quinary legal structure — sole trader, partnership, private company, public company, government enterprise
Hint: Think about businesses that cater to a specific local community.
What is the business type often associated with small size?
Answer: Small businesses often include corner stores, local mechanics, and hairdressing salons.
Hint: The employee count is relatively low and limited.
How many employees does a small business usually have?
Answer: Small businesses typically have fewer than 20 employees.
Hint: Ownership is usually very hands-on and personal.
Describe the typical type of ownership for a small business.
Answer: Small businesses are usually independently owned and operated, often by one or two people.
: These legal structures involve a relatively small number of owners.
What is the most common legal structure for small businesses?
Answer: The most common legal structures for small businesses are sole traders and partnerships.
Hint: Decision-making is often direct and streamlined.
What is the usual decision-making process in small businesses?
Answer: Owners are responsible for the majority of decisions, leading to a simple and quick implementation of choices.
Hint: Think about where the funds for small businesses come from.
Identify the common sources of finance for small businesses.
Answer: Small businesses rely on equity finance (owner’s funds) and debt finance (loans from financial institutions).
The influence is localized and limited compared to larger competitors.
How would you define the market share of a small business?
Answer: Small businesses usually have a small market share, typically limited to their local area and not dominant in the industry.
businesses that are larger than local shops but not yet conglomerates.
Name some examples of medium-sized businesses.
Answer: Examples of medium-sized businesses include services clubs, motels/hotels, and engineering factories.
What is the range of employees in a medium-sized business?
Answer: Medium-sized businesses usually have 20 to 199 employees.
How is decision-making typically organized in medium-sized businesses?
Answer: Decision-making in medium-sized businesses is still largely overseen by the owners.
Compare the sources of finance for medium-sized businesses with small businesses.
Answer: Medium-sized businesses rely on both equity and debt finance, and may involve private shareholders.
Define the market share characteristics of a medium-sized business.
Answer: Medium-sized businesses have a medium market share, dominating within a specific geographic region.
Provide examples of large businesses.
Answer: Large businesses include well-known entities like Woolworths, Qantas, and the National Australia Bank.
What distinguishes the number of employees in a large business?
Answer: Large businesses typically have 200 or more employees.
Describe the type of ownership for large businesses.
Answer: Large businesses are usually owned by thousands of shareholders, often as public companies.
Explain the decision-making process in large businesses.
Answer: Decision-making in large businesses is complex due to divisions of responsibilities and layers of management.
How do large businesses typically obtain their sources of finance?
Answer: Large businesses have many sources of finance, including cash reserves, retained profit, sale of shares, and loans from domestic and overseas institutions.
Define the market share characteristics of a large business.
Answer: Large businesses have a large market share, especially multinational corporations that dominate markets across countries.
Name the types of sizes for a business
Answer: The categories are Micro, Small, Medium, and Large, based on the number of employees.
How many employees are typically classified as “Micro” businesses?
Answer: Micro businesses have 1 to 4 employees.
What is the employee range for “Small” businesses?
Answer: Small businesses have 5 to 19 employees.
Define the employee range for “Medium” businesses.
Answer: Medium businesses have 20 to 199 employees.
How many employees are usually found in “Large” businesses?
Answer: Large businesses have 200 or more employees.
What defines a local business in terms of its size and scope?
Answer: Local businesses are usually small to medium-sized and serve a local area.
Describe a national business in terms of its operational boundaries.
Answer: A national business operates within the boundaries of a single country.
What does “geographical spread” refer to in the context of businesses?
Answer: Geographical spread indicates how widespread a business’s operations are across different locations.
Define a global or transnational corporation in terms of its operations.
Answer: A global/transnational corporation operates on a worldwide scale with assets in multiple countries.
Define the primary industry category and provide examples.
Answer: Primary industries involve the extraction of natural, raw materials/resources, such as mining and agriculture.
Explain the secondary industry category and give examples.
Answer: Secondary industries involve manufacturing and production of products from raw materials, such as food processing and oil refining.
What characterizes the tertiary industry category? Provide examples.
Answer: The tertiary industry provides services to consumers, like banking, education, and healthcare.
Define the quaternary industry category and give examples.
Answer: Quaternary industries provide information/intellectual services and knowledge, such as journalism and teaching.
What is the quinary industry category and provide examples.
Answer: The quinary industry involves domestic services provided to others, such as restaurants and childcare.
What factors are affected by the legal structure chosen by a business owner?
Answer: The legal structure affects set up/startup costs and the liability of owners for business debts.
Explain the tax differences between unincorporated and incorporated businesses.
Answer: Unincorporated businesses are taxed based on income, while incorporated businesses pay a fixed company tax rate.
Compare the liability in unincorporated and incorporated business structures.
Answer: Unincorporated businesses have unlimited liability, while incorporated businesses have limited liability.
Define the advantages of a sole trader business structure.
Answer: Advantages of a sole trader structure include low start-up costs, full control over decisions, and simple operation.
Explain the benefits of a partnership business structure.
Answer: Partnership benefits include shared responsibilities, capital raising, and potential tax advantages.
Describe the advantages of a private company (Pty Ltd) business structure.
Answer: Advantages include limited liability, perpetual succession, and borrowing capacity.
What are the advantages of a public company (Ltd) business structure?
Answer: Advantages include raising capital through share sales, wider shareholder base, and growth opportunities.
What are government enterprises (GBEs) and their role?
Answer: Government enterprises are government-owned and operated businesses that provide essential community services.
Explain the concept of privatization in the context of government-owned businesses.
Answer: Privatization is when governments sell off businesses to private citizens, resulting in increased efficiency, competition, and revenue.
