Unit 2 - Types Of Business

Question 1

Classification of Industries

Explain Primary Industry.

Answer 1

> Refers to firms/industries involved in extracting natural resources.

> They have little choice in their location.

> Eg Oil Drilling, diamond mining, fishing.

Question 2

Classification of Industries

Explain Secondary Industry

Answer 2

> Firms involved in converting raw materials from primary industries into manufactured parts or finished goods
Eg. Furniture making, computer manufacturing.

Question 3

Classification of Industries

Explain Tertiatry Industry

Answer 3

> Firms involved in providing supporting services to other industries or to final consumer.
They are located close to demand.
Eg. Transportation, hospitality, banking, hair salon.

Question 4

Classification of Industries

What is SMEs stands for?

Answer 4

Small and Medium Enterprises.

Question 5

Classification of Industries

What are the criteria for SMEs?

Answer 5

=> With an annual sales turnover under $100 million

OR

=> An employment size below 200 workers.

Question 6

Classification of Industries

What are the features of SMEs? 6.

Answer 6

OLSNII.

OWNER MANAGED
LIMITED CAPITAL
SMALL NUMBER OF WORKERS
NEIGHBOURHOOD-BASED
INADEQUATE BOOKKEEPING
INDISPENSABLE OWNER MANAGEMENT

Question 7

Classification of Industries
SMEs

Explain/Describe owner managed

Answer 7

Owner managed.
#Managed and controlled by owner.
#Close relationship between owner and employees.

Question 8

Classification of Industries
SMEs

Explain/describe Limited Capital.

Answer 8

Limited capital
#Financed by personal savings, loans.
#Difficult to get loans from banks.

Question 9

Classification of Industries
SMEs
Explain/describe Small no. of worker.

Answer 9

Small no of workers
#Employ small numbers, usually family members or relatives.
#Owner play multiple roles.

Question 10

Classification of Industries
SMEs

Explain/describe Neighbourhood-based.

Answer 10

Neighbourhood-based
#Usually small business eg. Provision shops, pastry shops.
#Serve the neighbourhood.
#Friendly and close relationship with customers.

Question 11

Classification of Industries
SMEs
Explain/Describe Inadequate bookkeeping.

Answer 11

Inadequate bookkeeping
#SMEs do not keep proper business accounts.
#Difficult to compute real profit made.

Question 12

Classification of Industries
SMEs
Explain/describe indispensable owner management.

Answer 12

Indispensable owner management
#Owner manager is indispensable because only he knows all the details of the business.
#Business usually closes upon the death of the owner.