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Business Revision Notes: 1AS.2

Business Structure

Economic sectors
Primary, secondary and tertiary sector businesses

Private Sector and public sector

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There are interlinked, important to the economy and will be determined by market types:

Mixed Economy : economic resources are owned and control by both private and public

Free-market economy : economic resources owned largely by the private sector with very
little state intervention

Command economy : economic resources…

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Figure. The private sector ­ legal structure hierarchy

Legal Structures
Sole Trader

A business in which one person provides the permanent finance
Full control and full profit
Unlimited Liability ­ the owners personal possession and property can be
taken to pay for the debts off the company
Common sole trader…

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People who own large blocks of shares usually become directors of the
Limited Liability :The only liability a shareholder has is the amount he or she
Risk is transferred from investors to creditors
Company is viewed as a person therefore can be sue
Managers and owners are responsible…

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A business that uses the name, logo and trading systems of an existing
successful business
Not a form of legal structure ­ but a legal contract
Franchises are a rapidly expanding form of business operation
Famous franchise companies (multinational business) are : McDonald,
Burger King, The body shop, L'occitane....…

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A business enterprise owned and controlled by the state ­also known as
nationalized industry
There are two main types of PPP:
Government funded: government provides most of the funding but
it is managed by the private sector to maximize the efficiency
Privatesector funded: government or state managed. Private
sector funded…

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made from the business,
Mortgage loan.

Partnership (advantages and disadvantages)

Advantages Disadvantages
Each partner may specialize in
Unlimited liability for all partners ( with
different areas of business
some exception)
Shared decision making Profits are shared
Additional capital injected by each
Lack of continuity
Business losses shared between…

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You can only buy or sell shares with the
shareholders have limited liability permission of all the others
Legal costs to set up can be significant
Separate legal personality
in some countries
Annually, companies must file their
Continuity in the event of the annual financial report to the

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Annual Financial reports are available to
all shareholders and members of the
Access to substantial capital public. Secrecy is reduced. Even the
source competition may easily obtain these

Ability to raise finance:
They can have access to
substantial capital sources due to
the ability to issue a prospectus




Really good! The revision notes are very helpful

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