Business Structures
150 important questions on Business Structures
What are joint ventures and how do they function?
- Joint ventures occur when businesses collab on a common project.
- Businesses remain separate legal entities.
- They reduce risk compared to mergers.
- Becoming common for strategic projects and resource sharing.
What characterizes the private sector?
- Operated and owned by private individuals/companies.
- Aim to earn profits for owners (shareholders).
- Example: Private sector businesses.
Why are joint ventures becoming common among firms?
- Increasing due to shared goals.
- Collaborative work on mutual targets.
- Reduce costs and risks of high-risk research.
- Allows focus on strategic projects involving multiple firms.
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What is an incorporated business and its legal status?
- An incorporated business is known as a "company."
- A company functions as a separate legal entity.
- It has its own rights and responsibilities distinct from its owners.
What defines public sector ownership/businesses?
- Owned or controlled by the government.
- Not aimed at profit but providing goods/services.
- Example: RBS, Network Rail.
What examples illustrate successful joint ventures?
- Vodafone and Telefonica: Share network infrastructure.
- BMW and Toyota: Research on hydrogen fuel cells.
- Google and NASA: Developed Google Earth.
- Hollywood studios: Collaborated on anti-piracy.
- GSK and Sanofi: Research on COVID-19 vaccine.
What is the difference between unincorporated and incorporated businesses with respect to liability?
- Unincorporated Businesses:
- Owners have unlimited liability for debts.
- Often operate as sole traders.
- Incorporated Businesses:
- Legal difference between company and owner.
- Shareholders have limited liability.
- Often operate as private limited companies.
Who are the owners of a company and what is the importance of limited liability?
- Shareholders are the owners of a company.
- Limited liability protects shareholders.
- Shareholders can only lose the value of their investment.
- They are not liable for the company's debts.
What are public sector organizations?
- Provide goods/services owned by public bodies.
- Funded by central/local government.
- May charge for some services.
- Example: NHS.
What are limited companies and their key characteristic regarding shareholders?
- Shareholders own a share of the company.
- They do not own the company’s assets.
- Not liable for the debts of the company.
What is unlimited liability and who does it apply to?
- Characteristic of unincorporated businesses.
- Owner personally responsible for debts/liabilities.
- If the business fails, owners must cover all debts.
- Increases risk when operating as a sole trader.
What are the benefits of a partnership in business?
- Simple Setup: Easiest way for two or more people to do business together.
- Shared Responsibility: Shares benefits and efforts equally.
- Specialist Skills: Partners can provide specialized expertise.
- Finance Potential: Partners contribute to investment.
What are the advantages of operating as a limited company?
- Limited liability protects shareholders.
- Easier to raise finance via share sales and corporate debt.
- Stable business structure; continuity despite shareholder changes.
What are the advantages of operating as a sole trader?
- Quick and easy to set up.
- Business profits can be transferred to a limited company.
- Simple operations with complete control over decision-making.
- Minimal paperwork.
- Easy to close or shut down.
What are the drawbacks of a partnership in business?
- Full Liability: Partners have unlimited liability.
- Interdependence: Poor decisions by one affect others.
- Finance Challenges: Harder to raise finances than a company.
- Decision Bound: Partners' decisions impact each other.
What are the disadvantages of operating as a limited company?
- Greater administrative costs.
- Full disclosure of company information required.
- Directors have legal duties.
What characterizes unincorporated businesses in the private sector?
- Unincorporated businesses have unlimited liability.
- No legal difference between owner and business.
- Owners have liability for business debts.
- Most operate as sole traders.
What are the disadvantages of a sole trader business?
- Full personal liability, with unlimited liability.
- Raising finance is harder.
- Owner suffers if the business fails.
- Can pay higher taxes than a company.
What are producer co-operatives and who are their members?
- In producer co-operatives, the producers, such as farmers, are the members and owners.
- They produce goods and services and share the benefits.
What defines incorporated businesses in the private sector?
- Incorporated businesses have limited liability.
- Legal difference exists between the company and owners.
- Owners (shareholders) have limited liability.
- Operate as private limited companies.
What roles can producers have in producer co-operatives?
- Roles vary: coordinating supply chains, ensuring consistent quality, managing seasonality, and marketing products.
- Examples: Ace Foods, dairy co-operatives, local producer co-operatives.
Can you name an example of a dairy farming co-operative in the UK/Europe?
- Arla Foods (UK/Europe) is a major example.
- Farmers are members, benefiting directly from the business.
Describe the key features of sole traders.
- Most common business form.
- Owned by an individual.
- Sole trader has personal liability for debts.
- Sole traders can employ people who are not business owners.
What are key elements of a legal partnership agreement?
- Includes sharing of profits.
- Specifies partner investment.
- Details decision-making processes.
- Outlines what happens if a partner wants to leave.
- Covers asset and liability management.
What are some benefits of producer cooperatives?
- Shared Resources: Access to infrastructure, logistics, distribution networks.
- Market Access: Better pricing and larger markets.
- Knowledge & Support: Training and adaptation to industry changes.
- Public Goods: Support environmental and social initiatives.
What are some examples of retail co-operatives?
- Retail co-operatives are member-owned and consumer-focused.
- Examples: The Co-operative Group, REI, Richer Sounds, Ace Hardware, Waitrose.
- They often cover sectors like food, agriculture, and consumer electronics.
Describe the Mondragon Corporation in Spain.
- Mondragon Corporation (Spain) is a federation of co-operatives.
- Includes many producer-owned businesses across various sectors.
What is a notable liability feature in a partnership?
- Partners share unlimited liability.
- This means personal assets can be pursued for business debts.
What is a holding company and how does it function?
- Owns and controls multiple separate businesses.
- Businesses are not joined, allowing for diversification.
- Mitigates risk by balancing performance across businesses.
- During recessions, can benefit from lower-cost products.
What is the purpose of producer cooperatives?
- Empower Producers: Farmers gain business support.
- Improved Terms: Selling goods on better terms.
- Greater Market Influence: Enhanced bargaining.
Describe the co-operative structure of Richer Sounds.
- Richer Sounds is a consumer electronics retailer.
- It was founded as a co-operative with staff as employee owners.
- Operates in consumer electronics retailing.
What is the role of local food co-ops in the UK?
- Local food co-ops are formed by local farmers or producers.
- They sell their products bypassing conventional retailers.
What are the responsibilities of a franchisee?
- Pays a start-up fee to trade under the franchise.
- Pays ongoing fees related to sales.
- Contributes to national marketing campaigns.
How do retail cooperatives empower consumers and independent retailers?
- Provide collective purchasing power.
- Consumer-owned for better pricing and quality.
- Foster trust and social capital.
- Promote sustainable practices.
Describe the shared characteristics and principles of cooperatives.
- Member Ownership: Control by producers or consumers.
- Democratic Control: Structured with member decision-making.
- Focus on Members: Serves members’ needs over profit.
- Social Values: Ethical, responsible, and sustainable operations.
What is unique about the employee ownership at Waitrose?
- Waitrose is a department store and supermarket chain.
- Operates under The John Lewis Partnership.
- Known for employee ownership, where staff are partners.
How are fair-trade co-operatives structured and what do they offer?
- Fair-trade co-operatives focus on equitable trade.
- Structured as producer co-operatives.
- Offer technical support and fairer terms for products.
What are the advantages of a public limited company?
- Large amounts of finance through share sales
- Limited liability
- Media publicity
- Shares bought/sold on stock exchange
- Cost advantages for large companies
How do joint ventures function?
- Two or more firms join for a joint project.
- Share risks, costs, responsibilities.
- Separate departments; not a merger.
- Temporary, may lead to future ventures.
What is the main function and purpose of producer cooperatives?
- Empower farmers/artisans with shared resources.
- Member control and democratic governance.
- Focus on needs and mutual benefit over pure profit.
What kind of products and services do producer co-operatives focus on?
- Focus areas: food and agriculture, local products.
- Examples include Ace Foods and various dairy co-operatives.
- Aim to support local producers and manage product quality.
What is a limited partnership and when was its related law set?
- In 2000, a new law allowed the formation of limited liability partnerships.
- Required more legislation than straightforward partnerships.
- Partners must file accounts.
What are the disadvantages of a public limited company?
- High costs of floating on the stock exchange
- Minimum £50,000 share capital required
- Loss of control if a member holds >50% shares
- Owners have limited control; managers more in control
- Published financial information
What characterizes a social enterprise?
- Set up by individuals to operate profitably.
- Allocate profits to beneficial causes.
- Owners take a salary, not all profits.
Describe the types and functions of retail cooperatives.
- Consumer-owned: customers form and operate stores.
- Retailer-owned: independent retailers share costs/benefits.
- Allow for joint purchasing and marketing.
What is a partnership and what is included in the deed of partnership?
- Partnership Definition: 2-20 people jointly own the business.
- Deed of Partnership: Details partners' rights, contributions, profit/loss sharing, and control.
- Key Points: Not equal profit split; vital in disputes.
What characterizes limited companies?
- Incorporated businesses with a separate legal identity.
- Feature limited liability.
- Benefit from raising capital via shares.
- Require shareholder meetings.
What is a franchise and how does it operate?
- Not a legal structure; method of business setup
- Operates as sole trader, partnership, or limited company
- Franchisor sells license under brand name
- Provides training, materials, equipment
- Exclusive area for franchise operation
Describe the role and nature of public corporations.
- Owned by government or state.
- Mostly nationalised firms.
- Government appoints board, sets objectives.
- Example: water supply in the UK.
What is a sole trader, and why is it common?
- Most common and easiest type of business ownership.
- Owned by one person.
- Few legal requirements.
- Can employ workers.
- Attractive to entrepreneurs.
What documents are needed to form a limited company?
- A memorandum of association for company details.
- Articles of association for business procedures.
- Details include objectives, shares, and capital.
Describe the role of a franchisor in the franchising process.
- Sells license for brand name use
- Provides training, help, advice to franchisee
- Supplies materials and equipment, possibly for a fee
- Establishes geographical exclusivity for franchise
What changes occurred in Britain's economic sectors since the Industrial Revolution?
- Before Industrial Revolution: Britain relied on the primary sector (e.g., agriculture).
- During Industrial Revolution: Shift to secondary sector (e.g., manufacturing).
- Last 70 years: Decline in secondary; focus on tertiary sector (services).
- Developed countries show similar trends.
What is a major disadvantage of being a sole trader?
- Unincorporated, leading to unlimited liability.
- Owner's personal assets at risk if business fails.
- Liable for all business debts.
What is a private limited company and its characteristics?
- Small to medium-sized, often family-formed.
- Does not float on the stock exchange.
- Share transfers need shareholder agreement.
What are the four sectors businesses are classified into?
Businesses are classified into four sectors:
- Primary sector
- Secondary sector
- Tertiary sector
- Quaternary sector
How do primary, secondary, and tertiary sectors interact in developed countries?
- Tertiary sector: Services rely on primary and secondary sectors for inputs.
- Example: Restaurants (tertiary) needing raw materials from agriculture (primary).
- Interdependent economic activities ensure sector growth.
How is a sole trader different from an incorporated business?
- No legal difference between owner and business.
- Unincorporated.
- Typically small scale.
How does joint and several liability work in partnerships?
- Liability: Partners risk all debts.
- Example: $100,000 debt, both partners liable.
- Collection: Bank can claim more from one partner.
What are the advantages of private limited companies?
- Limited liability.
- Continuity despite shareholder death.
- More capital via shares.
- Control retained by insiders.
What are some advantages of being a sole trader in terms of profits and decisions?
- Profits: Do not have to be shared with others.
- Decisions: Can be made quickly, allowing for agility and responsiveness.
What does the primary sector involve?
The primary sector involves the extraction and growing of raw materials. Examples include:
- Mining
- Fishing
- Forestry
- Agriculture
How are businesses classified in terms of public and private sectors?
- Public enterprise: Government-provided services (e.g., NHS in the UK).
- Private enterprise: Owned by individuals; focuses on profit-making.
- Mixed economies balance both enterprise types, common in the UK and US.
What are the advantages of being a sole trader?
- Owner keeps all profit.
- Independence in decisions.
- Potential government help.
- Personal service.
- Easy setup, minimal legal requirements.
- Privacy in financial affairs.
What are the disadvantages of private limited companies?
- Cannot raise as much money as public companies.
- Higher setup costs.
- More legalities.
- Shared profits require time.
What are the characteristics of a sole trader business?
- Only one owner is required, despite many employees.
- Suited for providing personal services.
- Requires minimal capital to start.
- Large-scale production is not typical.
What are some challenges a sole trader might face in terms of capital and burden?
- Capital: Not easy to obtain; cannot be obtained from a share issue.
- Burden: Not shared with others, leading to long hours and little chance of holidays.
What is the secondary sector concerned with?
Secondary sector involves converting raw materials into finished or semi-finished products, including:
- Car industry
- Food processing
- Construction
What are the main types of business organizations in the private sector?
- Sole trader: Individual ownership.
- Partnership: Owned by two or more people.
- Private limited company: Shareholders involved; shares not publicly traded.
- Public limited company: Shares available to the public.
What are the disadvantages of being a sole trader?
- Sole responsibility for decisions.
- Unlimited liability.
- Limited finance options.
- Small scale, lack bulk buying benefits.
- Operations disrupted by holidays/illness.
- Long hours.
- No business continuity after owner.
What are the most likely advantages of changing business ownership?
- Access to more finance
- Gaining legal identity
- Protecting owner’s capital through limited liability
How does setting up as a sole trader differ from other business forms?
- Setting Up: Requires little capital and involves few formalities, providing simplicity and ease for new entrepreneurs.
What services does the tertiary sector provide?
Tertiary sector provides services such as:
- Financial services
- Health care
- Transport
- Hotels
- Retail
What are the risks associated with partnerships in business structures?
- Differing management styles and cultures.
- Errors and mistakes can lead to disputes.
- Business failure of one partner risks others.
- Shared profit and decision-making can lead to conflicts.
What are the most likely disadvantages of changing business ownership?
- Increased legal costs and formalities
- Possible loss of control and ownership by the original owner
- Profits are shared
What details are partners' agreements expected to cover?
- Profit-sharing methods.
- Capital contribution amounts.
- Responsibilities of each partner.
- Rules for profit withdrawal, new partners, and dissolution.
Describe the control advantage for a sole trader.
- Control: Easy to maintain overall control of the business. The sole trader acts as their own boss, allowing for autonomous decisions.
Describe the significance of the quaternary sector.
The quaternary sector is a new classification for knowledge-based and information-based services. Examples include:
- Computing
- Software development
- Research and development
- Tax advisors
What are social enterprises and how do they function?
- Aim for social and community objectives.
- Reinvest profits into benefiting society rather than maximizing returns.
- Compete in the market like other businesses.
- Rely on profits, not donations, unlike charities.
According to the Partnership Act 1890, what happens in the absence of an agreement?
- Profits and losses are equally shared.
- Partners’ loans receive 5% interest.
- Equal say in partnership operations.
What is a franchise and how does it operate?
- A franchise is a legal contract between a franchiser and franchisee.
- Grants rights to use a name, idea, and trading system.
- Franchiser sells rights; franchisee operates using the system.
- Examples: McDonald's, Ben & Jerry's.
What is a joint venture and what are its potential benefits and risks?
- Definition: Two or more businesses collaborate on a project.
- Benefits: Access to new markets, resource sharing, reduced development costs.
- Risks: Merging different strategies, potential conflicts, shared profits.
What are the benefits and drawbacks of a partnership?
Benefits:
- Specialisation improves efficiency.
- Additional skills from new partners.
- More capital availability.
- Easier expansion.
- Slower decision-making.
- New partnerships needed if a partner departs.
- Shared profits and control.
What is a cooperative, and what are its key characteristics?
- Jointly owned business
- Operated by members for mutual benefit
- Produces/distributes goods or services
- Members contribute to operations
- Democratic decision-making: one vote each
- Profits shared equally
How does a franchise structure benefit businesses?
- Allows rapid business expansion with lower capital.
- Multinational brands grow faster than standalone entities.
- Entrepreneurs utilize established names.
- Benefits include brand recognition and established systems.
What is the Memorandum of Association, and why is it important?
- Must be completed for company formation
- States name, address of head office, and maximum share capital
- Determines maximum share capital authorized
- Crucial for legal business structure
How do agricultural cooperatives function?
- Members pool resources for seeds/materials
- Benefit from bulk buying
- Cooperative buys/sells collectively
- Obtains better prices for members
What are the advantages of a public limited company?
- Shareholders have limited liability.
- The company has a separate legal identity.
- Continuity is maintained.
- Easy share purchase encourages investment.
- Substantial capital can be raised by issuing shares.
What is the role of the Articles of Association?
- Governs company operations
- Covers director meetingsQ: What is the purpose of the Memorandum of Association?
- It states the company's name, address, and head office.
- Indicates maximum share capital.
- Necessary for company registration.
- Authorizes declared capital.
- Establishes liability of members.
What are the advantages of cooperative business structures?
- Mutual benefit and problem-solving
- Shared profits encourage hard work
- High motivation for cooperation
- Members have an equal say in decisions
What encourages flexibility in share buying and selling between private and public companies?
- Public companies generally provide greater flexibility in share transactions.
- Shareholders of private companies find it more challenging.
- Public companies have more numerous investors.
- Shareholders appoint a board of directors to oversee management.
What are the disadvantages of a public limited company?
- Formation entails legal formalities and costs.
- Share prices can fluctuate.
- Legal disclosures are required.
- Risk of takeover via share purchase.
- Directors may not own many shares.
What information does the Articles of Association cover?
- Details rights and duties of directors.
- Outlines business procedures.
- Includes meeting protocols.
- Defines internal regulations.
- Complements the Memorandum of Association.
What potential drawbacks do cooperatives face?
- Managerial skills might lack professionalism
- Raising capital can be challenging
- Slow decision-making due to member votes
What signifies that a business is a private limited company?
- The term "limited" or "Ltd" indicates a private limited company.
- Shares are usually owned by relatives and friends.
- Shares cannot be sold on the open market.
- Shareholder agreement is needed for share sales.
What are the typical conflicts between shareholders and directors in public companies, and how are they resolved?
- Common conflicts: budget objectives, business strategy.
- Directors might prioritize growth over shareholder preferences.
- Solutions involve aligning objectives with shareholder interests.
What are some legal considerations for public limited companies?
- Forming a company involves legal agreements.
- Agreements prove the company exists.
- There are legal requirements for publicizing accounts.
- Share availability can influence takeovers.
How are cooperatives defined and where are they common?
- Common in agriculture and developing countries.
- Owned by worker members.
- Members share profits.
- Sell goods produced by members.
- Democracy-driven operations.
What is legal personality in a business context?
- A company has a distinct legal identity separate from its owners.
- Owners have limited liability.
- Legal actions target the company itself.
- Continuity is maintained despite ownership changes.
How are public limited companies recognized and what are their benefits?
- Recognized by "Plc" or "Inc" after the name.
- Common structure for large businesses.
- Access to substantial funds for expansion.
- Can raise capital from public share issues.
How can directors convert public businesses back to private limited company status?
- Conversion occurs to be more flexible.
- Public status often encounters rigidity and scrutiny.
- Richard Branson and Ted Turner are noted examples overcoming these barriers.
What are the characteristics of company ownership in the context of business structures?
- Ownership divided into shares.
- People can buy shares to become part-owners.
- Possible for one person to have complete control by owning more than 50%.
- Directors can be individuals with large share blocks.
What is the significance of continuity for a company?
- Company continuity ensures uninterrupted trading.
- Ownership changes don’t lead to company dissolution.
- Important for legacy planning and investor confidence.
- Continues operations despite shareholder changes.
What is a common misconception about public limited companies?
- Public limited companies are in the private sector, not public.
- They have private company status.
- They offer shares to the general public on the stock exchange.
What is a share and who is a shareholder?
- Share is a certificate confirming part-ownership in a company.
- Entitles owners to understand shareholder rights.
- A shareholder is a person or institution owning shares in a company.
What are the advantages of a private limited company?
- Shareholders have limited liability.
- Separate legal identity.
- Continuity of existence.
- Control remains with the original owners.
- Easier to raise capital.
What are some key benefits and roles of shareholders?
- Shareholders benefit from limited liability.
- Limited liability: protects against claims on personal assets.
- Shares enable company expansion.
- They provide essential finance.
- They monitor financial health.
What are the disadvantages of a private limited company?
- Legal formalities are involved.
- Shares cannot be freely sold.
- Difficult to transfer shares.
- Limited access to capital compared to public companies.
What is a sole trader, and what are its key characteristics?
- A sole trader is a business owned by one person.
- Owner keeps all profits.
- Unincorporated: No separate entity.
- Full legal responsibility for debts.
- Common in trades like gardening, retailing.
What are important considerations when forming partnerships?
- Choose business partners carefully.
- Each partner is responsible for business debts.
- Consider the implications of unlimited liability.
- Liability issues can deter potential partners.
What are characteristics of limited liability?
- Limits potential loss to company investments
- Legal separation from company debts
- Important difference for shareholders
What is the significance of limited liability for shareholders?
- Protects shareholders' personal assets.
- No further claim against shareholder's personal assets for company debts.
- It's a fundamental aspect for attracting investors.
What are the types of private sector businesses discussed in the notes?
- Sole trader: Single owner, may employ others, small-scale, unlimited liability.
- Partnerships: Includes limited and healthy partnerships.
- Limited companies: Identified as Private (LTD) and Public (PLC).
What are the advantages of being a sole trader?
- Easy setup: No legal formalities.
- Complete control: Not answerable to others.
- Keeps all profits.
- Chooses work hours and patterns.
- Builds close customer relationships.
What is the role of partnership agreements?
- Provides agreement on rights and duties.
- Does not create a separate legal entity.
- Defines the scope of authority and responsibilities.
- Essential for smooth operation and conflict resolution.
What is the importance of the company form or organization?
- Ownership could be transferred
- Large organizations often incorporate
- Legal responsibility shared differently
What are the characteristics of public sector corporations?
- Objectives: Mainly social, not profit-driven.
- Ownership: Government-owned.
- Revenue Source: Government financing.
- Loss Handling: Tolerated if public benefit is significant.
Describe the characteristics of a sole trader business.
- Common form of ownership.
- Single owner, but may employ others.
- Small scale due to unlimited liability.
- Unlimited liability risks owner's possessions.
- Can deter potential entrepreneurs.
What are the disadvantages associated with sole traders?
- Unlimited liability: Owner’s assets at risk.
- Limited finance availability.
- Difficult to compete with larger firms.
- Business continuity reliant on one person’s health.
Describe the risk associated with a sole trader.
- Unlimited personal liability
- No shared decision-making
- Entire business failure risk on one person
What is a public corporation?
- Public corporation: Business enterprise owned and controlled by the state.
- Known as nationalized industry.
- Common in strategic industries like energy.
- Provides important goods and services by the government.
What are the advantages of public corporations?
- Social Focus: Managed for social objectives.
- Loss Management: Losses are acceptable for high social benefit.
- Financing: Primarily funded by the government.
What are the notes on shareholders?
- Provide capital to the company
- Risk limited to their investment extent
- Receive dividends based on shares owned
How does the importance of business sectors vary between economies?
- Importance varies with the degree of development.
- Table details differences in employment and outputs.
- Developed countries: More private sector activity.
- Developing countries: Public sector often larger.
Why are different types of business sizes significant in the private sector?
- Business sizes vary considerably.
- Allows for diverse business landscape.
- Differences accommodate various market needs and resources.
- Provides employment opportunities across sectors.
What are the disadvantages of public corporations?
- Inefficiency: No profit pressure can lead to inefficiency.
- Subsidy Reliance: Government subsidies may cause inefficiencies.
- Political Influence: Business decisions may be politically motivated.
What is the significance of the structural change in business sectors?
- Business structure: Shift from industrial to service economy.
- Secondary activity declines; tertiary sector increases.
- Process known as deindustrialization.
- Secondary's proportion of total output dropped.
What is the distinction between private and public sectors?
- Private sector: Owned by individuals/groups.
- Public sector: State/government manages resources.
- Level of private/public activity varies by country.
- Developed: More private activity.
- Command economies: Predominantly public.
Why do public corporations provide certain goods?
- Public sector allows for provision of important goods.
- Products significant to national interest.
- Often include education, defense, public transport.
- State aids in achieving broader accessibility.
What changes occur in an economy's sectors as it develops?
- Primary sector: Reduced alongside development.
- Secondary sector: Importance grows, then declines.
- Tertiary sector: Expands with economic advancement.
What are some causes of business sector changes?
- Rising incomes: Shifts spending to services.
- Manufacturing competition: Globalization increases.
- Consumer behavior: More spending on services.
- Innovation: Drives service sector growth.
How are economic resources distributed and used?
- Resources divided between private and public sectors.
- Private: Freedom to use resources.
- Public: Planned resource use.
- Mixed economies: Both sectors contribute.
- Resource usage illustrates economic orientation.
What are public goods and why are they significant?
- Public goods: Non-excludable and non-rivalrous.
- Examples include street lighting.
- Provide benefits without reducing availability.
- Funded through taxes as businesses can't profit from them.
What are examples of different sectors of industry?
- Primary: Dairy farm in New Zealand.
- Secondary: Clothing factory in Mumbai.
- Tertiary: Burj Al Arab Hotel in Dubai.
- Quaternary: Research laboratory in India.
What are the benefits of increasing industrial output?
- Higher GDP and average living standards.
- Increased employment and profitable exports.
- Enhances government revenues through taxes.
Why does the private sector rely on public sector goods?
- Relies on infrastructure provided by the state.
- Public sector offers goods essential for business operations.
- Taxes fund these goods, accessible for public use.
- Helps avoid free-rider problem.
What defines a Public Limited Company (PLC)?
- Shares are traded on a stock exchange.
- Shares can be bought and sold by the public.
- Suitable for large businesses.
How has the importance of economic sectors changed in Ghana since 2008?
- Primary Sector: 33.8% (2019)
- Secondary Sector: 18.6% (2019)
- Tertiary and Quaternary Sectors: 47.6% (2019)
- Reflects changes in industrial growth and economic focus.
What issues might arise from increasing industrialization?
- Urban migration causes housing strain.
- Raw materials scarcity for exports.
- Risks to other economic sectors.
How does manufacturing competition affect developed countries?
- Increased global competition due to cheaper labor.
- Manufacturing shifts from developed to developing.
- Demand shifts to tertiary sector goods and services.
What is a private limited company?
- Owned by shareholders, often family members.
- Cannot sell shares to the public.
- Provides more control over who owns the company.
How is economic activity classified in terms of sectors?
- Classified into primary, secondary, tertiary, and quaternary sectors.
- Based on the production stages.
- Primary deals with natural resources.
- Secondary involves manufacturing.
- Tertiary provides services.
- Quaternary includes information services.
What are the comparative employment data for economic sectors in the United Kingdom and China?
- United Kingdom:
- Primary: 1.2%
- Secondary: 18.1%
- Tertiary and Quaternary: 80.7%
- China:
- Primary: 26.1%
- Secondary: 27.6%
- Tertiary and Quaternary: 46.3%
What has influenced the movement of people toward towns and cities?
- Opportunities in service industries attract people.
- Decline of primary/secondary sector jobs.
- Need for program training for service industry employment.
What is an Initial Public Offering (IPO)?
- An offer to the public to buy shares.
- Conducted by a public limited company.
- Allows the company to raise capital from public investors.
What activities fall under the primary sector?
- Involves extraction of natural resources.
- Examples include farming, fishing, and mining.
- Resources extracted will be processed or transformed.
What are the key factors in the classification of business activity by economic sectors?
- Changes over time due to industrialization.
- Variations between different economies.
- Leads to shifts in employment and economic focus.
What is involved in the secondary sector?
- Processes products from natural resources.
- Activities include manufacturing, construction, and assembling.
- Examples: building computers, brewing, and baking.
Describe the tertiary sector activities.
- Firms provide services.
- Includes commercial services (banking, hotels).
- Also encompasses personal services (healthcare, education).
What characterizes the quaternary sector?
- Provides knowledge-based services.
- Activities include computing, design, and research.
- Emphasizes innovation and information services.
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