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National 5 Business: Unit 1 (Partnerships: A partnership has shared…
National 5 Business: Unit 1
Factors of Production
Labour: The people employed by the business
Capital: Man made resources needed to make a product e.g. machines and tools
Land: Natural Resources e.g. Water
Enterprise: Combination of all factors of production by the entrepeneur
Goods and Services
Goods: A good is something we can see and touch (tangible). If it lasts more than 1 year it is durable if not and it less then its non-durable
Services: This is where someone does something for you. e.g. waiter, taxi, bus, bank, school
Sectors of Industry
Secondary Sector: Where goods are manufactured e.g. Builder, Joiner and Baker
Tertiary Sector: Where finished goods and services are sold to consumers e.g. Shops and Bank
Primary Sector: Where raw materials are collected e.g. farming, fishing and mining
Sectors of Business
Public Sector: Owned by the government and NOT FOR PROFIT
Third Sector: Owned by members and NOT FOR PROFIT
Private Sector: Owned by individuals and RUN FOR PROFIT
Sole Trader: A sole trader is a business owned by ONE person, it is the uk's most common type of business (Advantages)
Make decisions quickly
Sole Trader keeps all profits
Easy to set up
Can choose own hours and holidays
Sole Trader (Disadvantages)
Hard to raise money from banks (bigger risk)
No one to discuss decisions
Unlimited Liability (can loose personal possessions to pay debts)
Partnerships: A partnership has shared ownership of between 2-20 people, a deed of partnership agreement is drawn up which lists the rights and responsibilities of each partner (Advantages)
Start up capital is small
Individual partners can specialise in different areas
Workload is shared
New partners bring new money and new ideas
Easy to set up
Partnerships (Disadvantages)
Can be hard for everyone to agree on decisions
Profits must be shared between partners
Business has unlimited liability
Private Limited Company: Is owned by shareholders, shares are not available on the stock market, shareholder must be asked if they would like to invest, has limited liability (Advantages)
Shareholders have control over the business
Can sell more shares to raise more capital
Private Limited Company (Disadvantages)
More difficult to set up than a Sole Trader or Partnership
Cannot sell shares on the stock market
Accounts are made available to the public
Third Sector
Owned by the organisations members usually set up to help a specific cause
NOT FOR PROFIT
Social Enterprise