:L01

primary activity

extraction and harvesting of raw materials

secondary activity

the manufacturimg of products by transforming primary products into finished products

tertiary activity

provision of services, including sales of finished goods

Examples of primary activities

Fishmonger, farmer, miner, agriculture

Examples of secondary activities

Factories

Examples of Tertiary Activity

Supermarket, School

Why is there a an Increase in the tertiary sector

- Increase in disposable income have resulted in consumers spending money on services e.g. shopping/ restaurants
- Many tertiary business in the Uk sell their services abroad as well as at home
- This sector has less scope for automation than the primary and secondary sectors, meaning that workers cannot be as easily replaced by machines e.g. school teachers

Private sector organisations

Businessed which are owned, run and financed by private individuals who mostly aim to make a profit

Examples of Private sector organisations

Tesco, Starbucks, Costa, Coffee 1, Lidl, Aldi

Why are business in the private sector

The main aim of these businesses is to sell and make profit off products that they sell.

Public sector organisations

Businesses which are owned and operated by the government, them aim to provide an essential service

Examples of Public sector organisations

NHS, Police, Emergency services, Met Office, Schools, Library

Why are business in the public sector

As the business provides an essential service

Third Sector Organisations

Voluntary or non-profit sectors of economy

Examples of Third sector organisations

Oxfam, British Heart Foundation, WWF, BTA, Alcholics Anonymous

Why are business in the third sector

They do not aim to make a profit and are not government owned

What is a soletrader?

A business owned by one person person may have may employees working for them

Advantages of a sole trader

- Easy to set up
- owner keeps the profit
- accounts are kept private
- own working hours
- build good relationships with customers
- responsible for all decisions

Disadvantages of sole traders

- Reliable for all debts
- Long working hours
- Lack of finance can restrict the business
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Examples of sole traders

- Gardener
- Hairdresser
- Plumer

What is a partnership?

business owned by two or more people

Advantages of Partnership

- Other people to discuss ideas with
- More money
- Different partner, more areas of expertise
- Few legal requirement when starting a business

Disadvantages of Partnership

- Take longer to make decisions
- Partners could disagree
- Profit shared
- Working hours could cause problems

Examples of Partnerships

- Carphone Warehouse
- Whats App
-Pret A Manger

What are private limited companies (Ltd)

A company which is a separate legal entity to its owner and therefore has limited liability, but it is not allowed to sell shares to the public

Advantages of a private limited company (Ltd)

- Limited liability
- Sell shares to rise finance
- Shareholders can be chosen, meaning they can ensure they have the business best interests at heart
-If theh sell less than 50% of shares they can keep control

Disavantages of a private limited company (Ltd)

- Legal documentation is expensive
- Have to publish accounts and send them to Companies House
- Can't sell shares to the general public which limits how much money you can raise from selling shares
-People may be reluctant to invest as it can be difficult to sell on shares.

Examples of Private Limited companies (Ltd)

- Virgin Alantic
- B&M Retail
- River Island

What are Public limited companies (plc)

- A company which can sell shares to the public, it has a separate legal entity to its owners and therefore has limited liability

Advantages of a public limited company (plc)

- Limited Liability
- Selling publically meaning large amounts f capital cam be raised
- Easy to buy and sell shares, so more desirable to own than ltd.

Disavantages of a public limited company (plc)

- Anyone can view accounts
- Getting shareholder's approval can mean a slower decision making process
- Expensive a d complex legal go set up requirements and to issue more shares
-Threat of takeover
- Original owners likely to lose control

Examples of Public Limited companies (plc)

- Rolls-Royce

What are State owned (public sector) companies

- An organisation managed by the government

Advantages of a State owned (public sector) company

- Provides essential services
- Necessary in industries wheee having more than one provider would be chaotic, e.g. currency
- To support struggling private sector business

Disadvantages of a State owned (public sector) company

- Diseconomies of scale
- May not prioritise cost control and not be as efficient as possible aas they are not aiming to profit maximise and are not shareholders
- Can be used for political gain e.g. create unnecessary jobs

Examples of State owned (public sector) companies

- National Physical Laboratory
- BBC
- Network Rail

What are Charity / not for profit (public sector) companies

- Have charitable aims rather than making money, e.g. voluntary ans community groups, trade unions, charitable trusts, charities.
- If a profit is made this is reinvested into good causes.

Advantages of a Charity / not for profit (public sector) company

- Quick to set up small community groups
- For charities that are classified as limited companies with charitable aims, they have the same advantage as limited companies.

Disadvantages of a Charity / not for profit (public sector) company

- Depends on volunteers, may be difficult to retain volunteers and this may increase training cost.
- Setting up a formal charity is expensive as complex legal regulations, and annual accounts need to be provided.

Examples of Charity/ not for profit (third sector)

- Charities
- Children in need
- Guide Dogs

What is capital?

money invested in a business to generate income

What is unlimited liability?

The owner is personally and fully responsible for all losses and debts of the business

What is limited liability?

If the company falls into debt you only pay back what you invested

What are diseconomies of scale?

When a business becomes too large the cost per unit may increase and the business may become more inefficient

what is survival

- Usually associated with new business or if external factors are causing a fall in sales

What is Break-Even

When a business makes enough revenue to cover its costs but makes no profit and no loss

What is increase Revenue

- Revenue is the income from sales
- Increasing revenue can be achieved by selling higher volume of products or possibly by increasing the price which should increase profit.

What is Reduced cost

lowering costs mesns a business has 2 choices
- Pass this cost saving on to customers by lowering the selling price, this increases their competitiveness in the market.
- Keep the prices the same but lower the business has a higher profit margin