| define secondary bussiness | using materials which have already been extracted by the primary stage |
| secondary bussiness are divided into | manufacturing industries
construction industries |
| define manufacturing industries | are engaged in producing goods through processing of raw materials |
| manufacturing industries are divided into four | analytical industry
assembling industry
synthetical industry
processing industry |
| analytical industry | analyses and separates different elements from the same materials
oil refinery separates crude oil into kerosene |
| synthetical inustry | these industries put together two or more materials to form a new product
plastic, gypsum, concrete and coals mixed to produce cement |
| processing industry | different stages for manufacturing finished products
sugar industry |
| assembling industry | assembles different components parts to make a new product
television |
| construction industry | construction of building , dams , bridges and roads , tunnels . engineering and architectural skills are needed for this work. |
| service industry (tertiary sector) | providing support services to the primary and secondary industry
banking
retailing
tourism
hotel
advertising
education |
| private sector | business that are owned by private individuals that are in private sector
supermarket and beauty salons |
| public sector | business that are owned by the government that are in private sector
electricity , water , health , education |
| nationalization | occurs when the government takes ownership of a business from the private sector into the public sector |
| privatization | occurs when the government takers ownership of a business from the public sector into the private sector |
| merit goods | goods and services provided for free for the benefit of the entire society by a government
public parks |
| business organization and its legal structures (private sector) | sole trade
partnership
companies
co-operatives
franchise
joint ventures |
| sole trader | where a person is solely responsible for providing capital bearing the risk and management of the business. |
| advantages of sole traders | setting up business is easy
direct contact with market
make quick decisions and respond rapidly to changes in market |
| disadvantages of sole trade | limited sources of finance
unlimited liability
may work long hours and limited holidays
rely heavily on your own ability to make decisions |
| unlimited liability | when an individual or group of individuals are personally responsible for all the actions of their business. |
| partnership | if you set up a business together with other people |
| partnership deed | document which terms and conditions regarding the conduct of partnership business |
| advantages of partnership | can share resources ideas and skills , workload
more sources of finance than sole trade
can manage if someone is ill or on holiday |
| disadvantages of partnership | have to share profits
have many disagreements or conflicts over decision
unlimited liabilty |
| company | is a business organization which has its own legal identity and limited liability |
| ownership | company owned by shareholders each share represents part of the company more share someone owns the more the company belongs to them |
| legal identity or status | company is separated from its owners.
company can own any property equipment and other goods in its own rights and responsible for its debts .
business must have its accounts checked annually by auditors
account must be made public |
| limited liability | if company fails shareholders can lose the money they have invented into the business but their personnel possessions are safe |
| incorporation | is the process to set up a company and the owners have to complete various documents and register the business at companies house . |
| memorandum of association | states the name of the company
address of the head office through which it can be contacted
maximum share capital which the company seeks authorization and declared aims of business |
| articles of association | a document that covers the internal workings and control of the business |
| dividends | money that is paid out to shareholders /reward to the owner of the business |
| company is divided into two | private limited company
public limited company |
| private limited company features | have "LTD" after their names
minimum of 2 and maximum of 50 mem
more easy to form private company than public |
| public limited company | "plc" after their names
minimum of 7 no limit on maximum
owned by shareholders
shareholder in plc can sell their share through stock exchange |
| co-operatives | working together for a common purpose
has limited liability |
| different form of co-operatives | employee co-operative
community co-operative
retail co-operative |
| employee co-operative | when the business is owned equally by all the employee working there |
| community co-operative | owned by the members of a community to provide local services such as postal , bus service |
| retail co-operative | occurs when independent retailers join together and operate under one brand name
food , hardware |
| Franchise | continuing relationship in which the franchisor provides a licened privillage to the franchisee to do business and offer assistence in organizing training merchandising in return of monetery consideration
dominos ,subway |
| elements of franchise agreement | franchisor sells the right o the product in return for the initial fee and percentage of franchisee turnover sales
the franchisee receives the right to use the name logo and system used by the franchisor |
| payment for franchisee | franchise free + percentage of turnover profit |
| advantages of buying a franchise | have support and experience from the franchisor
helps choose suppliers
reduce the risk of setting up on your own |
| disadvantages of franchise | reduces profit we make
initial license fee can be expensive
no choice of suppliers |
| benefits of franchisor | benefit from the income generated by the franchisee
leads to more motivated managers bec they r running their own store |
| drawbacks of franchisor | loss of ownership
loss of flexibility
loss of confidentiality |
| joint ventures | when two business agree to join together for a common purpose and mutual benefits |
| benefits of joint ventures | can share skills and experience resources and expertise
less difficult to manage
less expensive bec not merging fully |
| difficulties of joint ventures | decision making
disagreements over contribution of each business |
