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CHAPTER 2: BUSINESS STRUCTURE - Coggle Diagram
CHAPTER 2:
BUSINESS STRUCTURE
Definition of:
secondary sector: firms that manufacture and process product from natural resourses
tertiary sector:firms that provide service to consumer and other business
primary sector :firms that extract natural resources- to be used and processed by other firms
industrialisation : term used to describe the growing importance of the manufacturing industries
deindustrialisation :there are decline in the importance of secondary- sector activity and an increase in the tertiary sector
Changes of business activity
benefits
value is added to the countries' output for raw materials
expanding and profitable firms will pay more tax to the government
result lower imports and higher exports of product
more job created
total national output(gross domestic product) increased,average standard of living increased
problems
imports of raw materials and component are often needed-increase the country's import cost
encourage a huge movement of people from the country side of the town-leads to housing and social problems
face much more competition -due to every firms tend to be more efficient and and use cheaper labour
higher living standard- consumers spend more money on services than more goods
other forms of business organisation
cooperatives
advntages
working together to solve problems and make desicions
good motivation for all members to work hard as they will benefit of shared profit
buying in bulk
disadvantages
poor management skills
capital shortage as no sales of share
slow decisions making
franchises
(a business that uses the name,logo and trading system of an existing successful business)
advantages
national advertising paid by the franchiser
supplies obtained fro established and quality-checked suppliers
advice and training offered by the franchiser
less competition-as franchiser agrees not to open other branches in the local area
fewer chance of failing
disadvantages
local promotion may be paid by franchiser
no choice of supplies or supplies to be used
expensive initial franchise licence
strict rules reduce owners' control over their own business
share of profit or revenue has to be paid by franchiser
joint ventures
(two or more business agree to work closely together on a particular project and create a separate business division to do so
advantages
cost and risk of the business shared
have different strength and experience
could exploit the new products better
disadvantages
different style of management and culture-teams does not blend together
errors and mistake happened -blaming the other
failure of one of the partner would put the whole project at risk
holding companies
( a business organisations that owns and control a number of separate business but does not unite them into one unified company