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LO1: Different types of business & objectives - Coggle Diagram
LO1: Different types of business & objectives
different types of activity
primary: extracts raw materials (planets natural resources)
mining, farming, fishing, extraction
secondary: manufacturing products - may be finished goods or components to be sold on (making of goods through construction/manufacturing)
factories, mills, construction
tertiary: provides a service - they provide expertise and assistance to carry out a particular action/deed
retailers, personal services, business services
different sectors of operation
private: business owned by individuals (one or many) exist to make a profit for their owners
tesco plc, npower ltd, manchester united plc, coca-cola enterprises ltd, muller dairy ltd
public: owned by state/government - controlled by central/local government
british red cross society, royal voluntary service, salvation army social work trust, rspb, living well CIC
third: organizations run for social benefit that are not owned by the government - community groups, charities, self help groups, social enterprises, CIC's
NHS, ofsted, british army, BBC, local authority refuse collection
sole trader
one owner
unlimited liability
owner has full control of business
operates in private sector
advantages
own boss
keep all profits
few legal requirements
financial affairs are private
set up with limited amounts of capital
disadvantages
no separate legal entity
unlimited liability
business ends if owner dies
shortage of finance
no co-owner to discuss ideas with
long hours, few holidays
skill shortage
partnership
two or more owners
unlimited liability
joint control (owners)
private sector
advantages
multiple skills
workload shared
co-owner to discuss ideas with
capital from each partner
few legal/admin requirements
financial affairs are private
set up with limited amounts capital
disadvantages
owners may disagree
profits must be shared
no separate legal entity
unlimited liability
business ends if one of the partner dies
private limited companies
owned by one or more shareholders
shares can be bought and sold privately
incorporated
limited liability
directors control the business
business operates in private sector
advantages
raise funds by selling shares
control who shares are sold to
shareholders closely involved
business continuity if shareholder dies
separate legal entity
range of skills and expertise
limited liability
disadvantages
financial accounts not kept private
dividends need to be paid to shareholders
complex legal/admin requirements
public limited companies
two or more shareholders
shares brought and sold via stock exchange
incorporated
limited liability
directors run company on behalf of shareholders
operates in private sector
disadvantages
cannot control who shares are sold to
original owners likely to lose some control
very complex legal/admin requirements
time-consuming to set up
dividends need to be paid
financial accounts must be published
owners play no part in the day to day running
risk of takeover
expensive legal process to set up
advantages
wide range of skills and expertise
raise large amounts of capital
limited liability
business continuity if shareholder dies
state/government owned organizations
business owned by the state and controlled by the government
operates in public sector
aims and objectives are set by the government
protection of limited liability
advantages
seperate legal entity
business continuity
wide range of expertise
limited liability
availability of funds e.g. taxes
can provide service others would not provide
public provision
is not driven by need to make a profit
no shareholders to please
disadvantages
slow to change
bureaucratic
slow decision making
inflexible procedures
registered charities/not for profit
business with charitable aims - one that seeks to benefit a specific cause rather than make a profit - fighting cancer, child poverty
charitable aims are subject to a charitable status test - far stricter regulation than just being a benefit to society
business operates in third sector
registered charity - business with charitable status - is a legal entity and has the protection of limited liability
it does not have owners in the way some business would do they are are controlled by employees
disadvantages
relies on volunteers
strict charitable status test
financial accounts not kept private
bureuacratic rules and regulations
very complex legal/admin requirements
advantages
tax advantages/exception
separate legal entity
business continuity
direct control of business aims
wide range of funds available
any surplus is used for charitable benefit
community interest company
set up by private individuals to benefit society, rather than make a profit
CIC can be limited by shares or by guarantee - all monies made are ploughed back into business
business is incorporated
owners have limited liability - legal restrictions on how company uses its resources - ensures that any financial returns are put back into the business for the benefit of society
business operates in 3rd sector
advantages
separate legal entity
business continuity
resources can be locked so only available for public benefit
limited liability
wide range of funds available
any profit reinvested in the business
no dividends to pay
disadvantages
financial accounts not private
must pay tax on income
complex legal/admin requirements