Business
Financial terms
Different forms of legal business ownership
Different organisational structures
Types of business Activities
Secondary Activity is to manufacture products. these can be finished products that can be sold to retail customers.
Tertiary Activity is the provision of services. these can be services to the public such as hairdressers, schools, bank and supermarkets, or services to businesses such as transport.
Primary activity is the extraction and harvesting of raw material. This includes mining, agriculture, fishing and oil and gas extraction.
the different sectors
there are thee types of sectors in business private which aims to make profit, public which provides a wide range of public services and third sector which don't aim to make profit and are not government owned. They rely and donations and fundraising
Partnership can have from 2-20 owners and also has unlimited liability
Private limited company has limited liability but can't sell share to general public. private limited companies are usually run by family and friends but this limits finance that could be gained.
Sole trader has one owner and unlimited liability ad is easy to set up
Public limited company has limited liability but in PLCs companies can be bought and sold via the stock market and shares can be bought and sold easily but you can lose control depending on how many shareholders you get.
Tall structure has many layers which makes promotion easier.
Centralised structure
Flat structure this is used for smaller businesses and because it is small communication is good, authority is delegated to employees so decision are made quickly. However because it is small promotion is much harder and because there is a big span of control employees aren't suprvised which could lead to mistakes
Decentralized structure
Matrix Structure
Fixed Costs are costs that yo pay at the same price no matter what and this can be really difficult if you don't do well as a business. An example of some fixed costs are:
Rent
Office salaries
Advertising (budget)
Insurance
Depreciation
You need to make sure that your fixed costs aren't too high so when your business does have a problem your not spending as much on fixed costs.
Variable costs are costs that are different each time you pay for something and examples of this would be:
Raw materials
Packaging costs
Royalties paid
This can be could and bad for a business because you could buy something really cheap sometimes or buy something really expensive sometimes and this can have a big affect on the business
Net Cash Flow is the difference between money coming into the business and money going out of the business
Insolvent is when a business is unable to pay its debts
Cash Flow is the movement of money into and out of the business