Business Studies

Business aims and activities

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Private sector activities

The chain of production consists of three main stages:

Primary-

Collecting the raw materials for the products to be made, e.g. oil drilling, fishing, chopping down trees.

Secondary-

Assembling products from the raw materials, factories that make cars etc.

Tertiary-

Services provided by people, teaching, taxi drivers, doctors.

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Limited companies

A limited company is a company that has limited liability (Owners are not personally liable for businesses debts).

There are two types of limited companies,

Public limited company (PLC)-

A company that can sell their shares freely on the stock exchange.

Private Limited Company (LTD)-

A company that cannot sell their shares freely on the stock exchange, instead they can only sell to friends and family.

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Sole Traders

What?

A business with one owner is called a sole trader.

Advantages-

  • Be your own boss.
  • Usually easy to set up due to its smallness.
  • Control will be easy as the owner has a hands-own approach to the business.

Disadvantages-

  • No one to share the responsibility with.
  • All liabilities fall on the owner.
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Partnership

What?

A business that has two or more owners such as a Law firm or dental practice.

Advantages-

  • Each partner can specialise in a certain field that allows the business to run smoothly.
  • The workload will not be as intense due to work being shared among partners.
  • More capital investment.

Disadvantages-

  • Disagreements can arise.
  • Unlimited liability.
  • Distribution of profits may feel unfair to some who work harder and earn the same as others who work less. (Leads to de-motivation).
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