Types of Business Flashcards
What are the classifications of business based on size?
Small to medium enterprises (SMEs), large
What is a multinational corporation?
A company that has branches in many different countries
What defines a micro business in terms of number of employees?
> 5
What is the employee range for small businesses?
5-19
What is the employee range for medium businesses?
20-199
What is the employee count for large businesses?
200+
What are the legal structures of small to medium businesses?
Sole trader, partnership, private company, public company, franchise
What are common sources of finance for small businesses?
Owner, loans, owners’ savings
What are common sources of finance for large businesses?
Loans, private shareholders, retained profit, sale of shares
How is market share characterized for small businesses?
Small, usually in local area
What characterizes the market share of medium businesses?
Based on dominance of geographic region
What is the market share like for multinational corporations?
Large
What are the geographical spreads for businesses?
Local, national, global
What characterizes local businesses?
Serves surrounding area, small/medium size, no position to offer a range of products
What characterizes national businesses?
Operates within one country, medium size, branches in multiple countries
What characterizes global businesses?
National borders DO NOT represent barriers to trade
Give examples of local businesses.
Newsagency, corner store, hairdresser, motel/hotel
Give examples of national businesses.
Coles, Westfield
Give an example of a global business.
Apple
What are the industry sectors of business?
Primary, secondary, tertiary, quaternary, quinary
What defines the primary industry sector?
Businesses involved in the collection of raw/natural materials
What are examples of the primary industry?
Mining, fishing, farming
What defines the secondary industry sector?
Businesses that take raw materials and make it into a finished or semi-finished product
What are examples of the secondary industry?
Bakery, car manufacturers, construction
What defines the tertiary industry sector?
Businesses that perform a vast range of services for other people
What are examples of the tertiary industry?
Retail, transportation, insurance
What defines the quaternary industry sector?
Businesses that involve the transfer and processing of information and knowledge
What are examples of the quaternary industry?
Computing consultancy, education, stockbrokers
What defines the quinary industry sector?
Businesses that include services that have traditionally been performed in the home
What are examples of the quinary industry?
Daycare providers, private chefs, maid services
What is the legal structure of a sole trader?
Owned and operated by one person, no separate legal entity, unincorporated
What are the advantages of being a sole trader?
Complete control, low cost of entry, less government regulation, owner’s right to keep all profits
What are the disadvantages of being a sole trader?
Unlimited liability for business debts, difficult to operate if sick, need to carry all losses, difficulty in raising finance for expansion
What defines a partnership?
Operated by between 2-20 people, no separate legal entity, unincorporated
What are the advantages of a partnership?
Low startup costs, shared responsibility and workload, pooled funds and talent
What are the disadvantages of a partnership?
Unlimited liability for business debts, possibility of disputes
What is a proprietary (private) company?
Most common type in Australia, shareholders must be invited, incorporated
What are the advantages of a proprietary company?
Limited liability, easy to transfer ownership, growth potential
What are the disadvantages of a proprietary company?
High cost of formation, double taxation, must publish annual report
What is a public company?
Shares are listed on Australian Securities Exchange (ASX), at least 1 shareholder
What are the advantages of a public company?
High growth potential, easier to attract public finance, limited liability
What are the disadvantages of a public company?
High cost of formation, can lose ownership through random buying majority of shares
What factors influence the choice of legal structure?
Size, ownership, finance
What happens when sales increase and business operations grow?
Business may need to incorporate
What is a float in business?
The raising of capital in a company through the sales of shares to the public
What is a prospectus?
A document giving details of a company and inviting the public to buy shares in it
What is venture capital?
Money invested into small and sometimes struggling business that have the potential to become successful
Fill in the blank: Limited liability applies to _______.
incorporated companies
Fill in the blank: Availability of capital affects the ability to _______.
incorporate or expand
