Chapter 2 - Classification of Businesses

Govt

________ needs cash- new owners have additional cash to invest- improved service offered by the business.

Profits

________ are used within the organisations.

eg

aggriculture, forestry, mining, fishery

eg

factories, industries, construction craft

eg

trade, banks, transport, eductaion, culture, health

increases competetion

efficiency/low prices

decision making changes

based on efficiency & not on govt subsidies

Sale

money for the government

Job Losses

umeployment benefits extra cost to government

Risk of monopoly

higher prices

What is the primary sector of the industry?

The primary sector extract raw materials from the Earth

What is the secondary sector of the indsutry?

The secondary sector manufactures goods using raw materials bought from the primary sector

What is the tertiary sector of the industry?

The tertiary sector provides services to consumers, businesses & other sectors of the industry

What is de-industrialisation ?

This occurs when there is a decrease in the importance in the secondary sector (manufacturing industry) of the industry

Define 'private sector'

Private sector is a sector of the industry, which consists od businesses owned by private individuls; they keep any profits

Define 'public sector'

Public sector is a sector of the industry which consists of organisations that are state-owned (owned by the local or national govt). All profits are used within the organisation

What is a mixed economy ?

Countries that have a mixed economy consist of both private sector & public sector

What is privatisation ?

This is when the governments sell state-owned businesses to new owners in the private sector

What are the 5 advantages of privatisation

1) The new owners have a profit motive, so the business is more efficient. 2) Privatissation increases competetion, which translates ti low prices & efficiency. 3) The new owners have additional cash to invest so, the services offered are improved. 4) Decision making chnages and is now based on efficiency. 4) The sale of the business translates to more moeny for the govt

What are the 4 advantages of privatisation ?

1) Since private forms mainly run for profit, some people in rural areas might lose services. 2) The losses of jobs means that the govt must pay unemployement benefits, which is an extra-cost.. 3) RIsk of monopoly, which means the new owners might increase prices. 4) This benefits only new owners, where as public sector entities will benefit the whole country