Economics 3.5 Small versus Large firms

Sole trader, PLC, partner ship etc

Multinational

has its headquarters in one country but operates in multiple countries around the world.

External growth

A business takes over or merges with a different company.

Horizontal merger

When two companys in the same industry in the same stage merges.

Vertical merger

companies at different production stages of the same product combine.

Conglomerate

Companies in different industries that can be in the same of different stage of production merge.

Why would companies decide to keep their company small?

Be their own boss, different aims, lack of finance and size of the market

Partner ship

2 or more people running the company

Sole trader

owned by one person, although they can employ people to work for them. They have unlimited liability, meaning they are responsible for their own debts.

Public limited company

A public limited company offers shares to the public and has limited liability

Private limited company

is a type of business with a limited number of shareholders and restrictions on selling shares. It protects owners' personal assets from business debts and is often used by small to medium-sized businesses.

Co-operative

a business owned and run by its members.

Public sector or Public corporations

Government owned organisations that provides services to the public

Private sector

Part of the economy run by individuals and companies for profit and is not controlled by the state.

Objective of a private sector

to survive, to profit, to gain market share and to give good returns to the shareholders

What do public sectors provide

Water, electricity, gas, education and healthcare

Advantages of a sole trader

Low start up cost, low wage cost and easy to controll

Disadvantages of a sole trader

Long hours, hard to take holidays, unlimited liability and no one to share responsibility.

Advantage of a partnership

More capital, less time pressure, someone to make decisions with, shared responsibility

disadvantage of a partnership

Arguing on decisions, splitting profits and unlimited liability

advantages of private limited company

Cheap and easy to setup, decisions dealt with quickly and ownership and control is closely connected.

Disadvantages of a private limited company

Lack of capital and no benefits to EOS

Advantages of a public limited company

EOS, Lot of capital

Disadvantages of a public limited company

People can takeover your company since the shares are public, poor labour relations and disagreements between ownership.

Limited liability

Business owners are only liable up to their investment.

Technical economies

Investing in better technology and machinery leading to higher efficiency

Enterprise

A project or venture that presents significant challenges, complexities, or risks

mixed economic system

private enterprise with government regulation and public ownership elements.