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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 owned, planned and controlled by the state
Trend shows that most countries are moving from command economies to mixed or
free-market economies to encourage investment to their economies
Significant goods and services tend to remain…read more

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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 examples : hairdressers, builders, retail shops, etc..…read more

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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 if they act unethically
The company will continue to operate despite the death of the owner/
Limited Liability can be divide into 2 areas such as :
private limited companies and public limited companies…read more

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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....…read more

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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 but the government can lease the premises or repay
the amount. Once it has lease the premise, it can take the ownership.
Legal Formalities for setting up a business:
In the UK you need:
1.…read more

Page 7

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Mortgage loan.…read more

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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
death Companies House
(less secrecy)
Original owner is still often able to
retain control
Able to raise capital from sale of As more owners join the business, the
shares to family, friends and existing shareholders start…read more

Page 9

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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
reports.…read more



Really good! The revision notes are very helpful

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