1.2.1 classification of business

micro

• 5 people or fewer

• often work from home

• 58% sole traders and partnership legal structure

small

• less than 20 employees (1-19)

• independently owned and oeprated

• sole trader and partnership legals tructure

• owner makes most decisions

• owner provides capital

• usually local

medium

• 20-199 employees

• owned/ operated by a few ppl

• often partnership/ private company

• owner/ partners savings and loan

• may have greater market dominate in the region

large

• 200 plus employees

• owned by lots of shareholders

• public company

• complex decision making

• many sources of finance

geographical spread (local)

• restricted geographical spread

• serves surrounding area

• used by consumers who live in the area

• usually small/ med size

• eg fruit shop vege shop

geographical spread (national)

• operates within 1 country

• expansion neccessary to increase sales

• may have to reach market saturation (selling products to as many people and have to expand)

• eg. sportsgirl

geographical spread (global)

• businesses with operations in diff countries

• usually large businesses

• assets move between countries

• eg. coke

industry

• defined by the types of goods or services produced

• businesses which produce similar types of products

primary industry

the primary business is those businesses that are involved in the collection of natural resources. eg. mining, fishing, farming

secondary

• the secondary sector transforms raw materials or components into semi- finished products

• eg. steel manufacturer

tertiary

The tertiary industry involves people performing a range of services that involve the transfer of knowledge eg. dentists, banks

quatenary

It includes services than involve the transfer and processing of information and knowledge

quinary

The quinary industry includes all services that have traditionally been performed at home

sole trader

One person provides all finance, all decisions, takes responsibility and may employ other people to work and has unlimited liability.

partnership

They have unlimited liability and may be responsible for the debts of the business.

• 2-20 people

• share business profits and losses

• low startup costs, less costly to operate, no taxes on business profits only on personal income

private company

They are the most common and have 2 to 50 owners and are the most common, mostly family owned and medium sized.

• shares are only offered to people if the business wishes to have part owners

• not listed on shares, limited liability

• many procedures and expenses the business must pay

limited liability

the shareholders are only liable for the debts of the company up to the value of their shareholdings and cannot lose more money than what they put in

• shares lost, assets safe

unlimited liability

The owner is responsible for all the debts of the business and they may lose personal assets and the business and owners are one.

unincorporated

the owners and the business are not separate from each other in a legal sense the business is not a separate legal entity

incorporated

the business is established through corporation law as separate entitites and can be sued and they own and sell property. They are regstered with ASIC

GBE

• public, private

• they are businesses that are government owned and operated and participate in commercial activities to make profit

• however they carry out government policies while delivering community services

• eg. au post, sydney water

public sector

business is gov funded which means it may come directly or indirectly form taxes

private sector

organisations fund themselves form revenue, banks or raising capital

privatisation

• process of transferring ownership of a business, enterprise or public service from the gov to private individuals/ organisations

• eg quantas