Term 1

Private sector

Businesses owned and controlled by private firms or individuals.

Public sector

Businesses that are owned and controlled by the government.

Social enterprise

A private sector organization that focus provides services to the public rather than profit maximizing.

Business Objectives (Financial)

• Survival

• Profit

• Financial security

• Increased market share

• Sales

Business Objectives (Non-Financial)

• Social Objectives

• Personal Satisfaction

• Challenges

• Independence and Control

Sole Trader

A business owned by a single person.

Advantages and Disadvantages of a Sole Trader

Pros -Ease of Formation: Setting up a sole trader business is relatively simple and involves fewer legal formalities compared to other business structures.

1. Direct Control: The sole trader has complete control over the business decisions and operations. This allows for quick decision-making and flexibility in adapting to market changes.

2. Profit Retention: The profits generated by the business belong entirely to the sole trader. There is no need to share the profits with other partners or shareholders.

3. Flexibility: Sole traders have the flexibility to change the focus or direction of the business easily without the need for approval from partners or shareholders.

4. Personal Connection: Sole traders often have a closer relationship with their customers, as they are directly involved in day-to-day operations. This personal touch can be beneficial for customer loyalty.

Disadvantages:

1. Unlimited Liability

2. Limited Capital

3. Limited Specialization

4. Workload and Time Constraints

5. Business Continuity

Unlimited liability

Owner of a business is personally liable for all business debts.

Partnership

A business owned by between 2 and 20 people

Advantages and Disadvantages of a Partnership

Pros - Easy to set up, Spreads the risk(share the loss), More capital is shared.

Cons - Unlimited liability, Profits will be shared, Decision making is shared, Less control, No continuity

Limited liability

Owners are only liable for the original amount they invested in the business.

Franchise

Structure in which a business allows another operator to trade under their name.

Private Limited Company

A legal structure where ownership is divided into shares, providing limited liability to its shareholders.

Advantages and Disadvantaged of a PVT LTD

Pros - raise more capital through shareholders, limited liability, continuity, separate legal identity.

Cons - More legal regulations, less secrecy of business information, profits are shared between more members, harder to set up

Public Limited Company

Limited companies whose shares are freely sold and traded on the stock market.

Advantages and Disadvantages of a PLC LTD

Pros - Large amounts of capital are raised, Limited liabilities. exploit EOS, shares can be traded easily

Cons - Setting up costs,

Public Cooperation

A business owned wholly by the government.

Advantages and Disadvantages of Public Cooperations

Pros - Higher chance of being monopolies, Funds from government, Higher job security.

Cons - Less efficiency, no incentive to innovate, political influence.

Primary sector

Production involving extraction of raw materials from earth.

Secondary sector

Production involving the conversion of raw materials to goods.

Tertiary sector

Production of services in the economy.

De-Industrialisation

Decline in manufacturing

Factors affecting location of factories

1. Production methods

2. Proximity to market

3. Availability of labour

4. Government Influence

5. Transport and communication

6. Climate

Factors affecting location of service firms

1. Customers type

2. Technology

3. Proximity to labour

4. Rent

Measuring success in a business

1. Revenue

2. Market share

3. Customer satisfaction

4. Profit

5. Growth

6. Owner/shareholder satisfaction

7. Employee satisfaction

Reasons for business failure

1. Cashflow problems

2. Lack of finance

3. Failure to launch new product

4. Not competitive

5. Failure to innovate

Effective communication

Transferring messages from sender to receiver, who understands the message.

Methods of communication

Face to face communication

Written communication(Letters, Reports, Noticeboards)

Electronic communication(Email, Intranet, Social media)

Barriers to communication

Lack of clarity, Technological breakdown, Poor communication, Jargon, Long chain of command