UNIT 6: CLASSIFICATION OF BUSINESSES

READING 1: STAGES OF ECONOMIC ACTIVITIES

	primary stage	secondary	tertiary
resources	Earth’s natural resources	resources in 1st stage → convert into manufactured goods	providing service → consumers + businesses
activities	farming, fishing, forestry, the extraction of natural materials	building and construction, aircraft, assembly, baking	transport, banking, retail, insurance, hotels

Quarternary sector: information services such as computing, ICT, consultancy, R&D. Broader defintions: news media, libraries, universities and colleges, other intellectual activities

Mixed economy:

Public sector	Private sector
gov-owned	profit-driven
focus on public welfares and services	operates for profit
provides public goods and services	relies on market forces
funded thru taxation	more competitive
accountable to the gov and the public

Types of business:

	Features	Advantages	Disadvantages
Sole Traders	single owner complete control simple setup	full control easy decision-making direct profits	limited resources personal liability lack of specialisation
Partnership	owned by two or more individuals shared responsibilities	shared workload diverse skills potential for more K	shared profits interpersonal conflicts unlimited liability
Franchising	franchisee pays for the right to use a proven business model	Established brand Support from the franchisor	franchise fees limited independence shared profits
Joint ventures	collaboration btw two or more entities for a specific project	Sharing of costs combined expertise	successful → share profits disagreements limited duration
Private limited comp	limited liability shares held privately	limited liability easier K raising perpetual existence	restricted transfer of shares regulatory compliance
Public limited comp	publicly traded shares widespread ownership	access to public K and liquidity of shares	stringent regulations loss of control public scrutiny