IB Business Management 1.2

What factors determine what sector a business is divided into?

• who owns them

• their main business objective

What is a private sector business?

A business owned and controlled by private individuals and businesses. Their main aim is to make a profit.

What is a public sector business?

A business owned and controlled by the government. Their main aim is to provide essential goods and services.

What are the goals of a profit-based business?

• to make a profit

• reward the owners with profit

• return profits back into the business for capital growth

What are sole traders?

• owned and run by one individual

• start-up money comes from personal savings and borrowing

What are partnerships?

• owned by two or more people

• at least one partner must have unlimited liability

What are limited liability companies?

• owned by their shareholders

What is an incorporated business?

The company is viewed as a separate legal entity from its owners.

What is a privately held company?

Shares are owned by friends/family and cannot be sold on the stock exchange.

What is a publicly held company?

Shares are sold to the general public on the stock exchange.

What is the core purpose of a for-profit social enterprises?

To generate revenue while having social objectives at the core of their operations

What is the main objective of a for-profit social enterprise?

To earn a surplus and use it for the benefit of society.

What are the types of for-profit social enterprises?

Private sector, public sector, and cooperatives

What is a private sector for-profit social enterprises?

Operates like a normal business to earn a surplus rather than relying on donations. Uses the triple bottom line framework.

What is a public sector for-profit social enterprise?

State-owned businesses that raise government revenues while serving society.

What is a cooperative?

Owned and run by their members. All employees get a vote in decision-making and share profits.

What is a non-governmental organization?

Operates in the private sector and provides goods and services normally expected from the public sector because they are often underprovided by governments

What are the main factors when deciding what type of business to form?

• amount of finance

• business size

• limited liability

• degree of ownership and control

• nature of the business activity