Types of businesses Flashcards
What are the main ways businesses can be classified?
By size, industry sector, legal structure, and geographical location.
What are the size classifications for businesses?
Small to medium enterprises (SMEs) and large businesses.
How does the Australian Bureau of Statistics (ABS) define small businesses?
Based on the type of industry and size of the labor force.
What are the types of businesses by size according to the number of employees?
Micro: <5 employees
Small: <100 (manufacturing) <20 (non-manufacturing)
Medium: 20-199 employees
Large: >200 employees
Which sector is the largest contributor to Australia’s economy?
Small businesses.
Where are many small businesses in NSW located and why?
Sydney and Central Coast region due to high population.
What is a local business?
A business that operates within one area.
What is a national business?
A business that operates across the country, such as Woolworths and Coles.
What are some advantages of national businesses?
Greater awareness and trust, cost savings through bulk buying.
What is an international business?
A business with ownership and production based in one country that exports goods and services to other countries, like Giorgio Armani.
What factors contribute to the growth of international businesses?
Technological developments and strengthening relations between countries, growth of a common consumer market.
What is a transnational (multinational) corporation (MNC)?
A corporation that operates and sells in many countries, such as Toyota and Ford.
What are the different industry sectors businesses can be classified into?
Primary, secondary, tertiary, quaternary, and quinary.
What is the primary industry sector?
Acquisition of raw materials, for example, wheat, timber, and sugarcane.
What is the secondary industry sector?
Combining raw materials with labor and equipment, for example, manufacturing.
What is the tertiary industry sector?
Providing a service, for example, hairdressers, engineers, nurses.
What is the quaternary industry sector?
Information services, for example, banks, telecommunications, IT.
What is the quinary industry sector?
Domestic services, traditionally done in the home, for example, take-away restaurants, cleaning, childcare.
How is the legal structure of a business defined?
By how ownership of the business is registered and whether the business is controlled by a select group of people or is ownership open to the public.
What is a sole trader?
A business owned by one person, unincorporated with unlimited liability, where funding and day-to-day management are handled by the owner.
What are the advantages of being a sole trader?
Quick and inexpensive to establish, less costly, managerial freedom, simple management structure, owner retains all profit.
What are the disadvantages of being a sole trader?
Unlimited liability, may lack skills, limited capital.
What are the advantages of a partnership?
Division of responsibilities, joint decision-making, additional finance.
What is a partnership?
A business owned by 2-20 owners, unincorporated with unlimited liability, governed by a partnership agreement.
What are the disadvantages of a partnership?
Unlimited liability, potential for disputes, shared profit.
What is a private company?
A business with 1-50 shareholders, incorporated with limited liability, where ownership is not affected by changes in owners (Pty Ltd).
What are the advantages of a private company?
Limited liability, usually run by smaller family businesses with greater control and financial decisions.
What are the disadvantages of a private company?
Limited capital due to ownership being limited to 50 shareholders, possible long-term viability issues if unable to expand, invitation-only ownership, expensive entry fees, potential disagreements.
What is a public company?
A business with 5 or more shareholders, incorporated with limited liability, managed by a board of directors, listed on the ASX, and owners receive dividends.
What are the advantages of a public company?
Limited liability, access to unlimited shares for expansion funds, ability to raise funds through equity finance, highly skilled and experienced management.
What are the disadvantages of a public company?
Complex stock exchange requirements, complex and political management, control management determined by majority of shares.
What does privatising a government enterprise involve?
Transferring ownership from the government to the private sector.
What is a government enterprise (GBE)?
A government-owned and operated business, such as Australia Post, providing essential community services like healthcare and education.
What factors influence the choice of legal structure for a business?
Size of the business, ownership structure, and the finances needed.
What are companies limited by guarantee focused on?
Providing service rather than making a profit.
What is a cooperative?
A company where the owner is either a supplier or customer, with owners receiving dividends and having limited liability.
What are the types of cooperatives?
Consumer cooperative: Provides retail services.
Producer cooperative: Acts as an agent for businesses to sell goods and services.
Financial cooperative: Provides financial services for members.
What is a trust in a business context?
An entity that manages assets on behalf of individuals.
