Private sector activities
The chain of production consists of three main stages:
Collecting the raw materials for the products to be made, e.g. oil drilling, fishing, chopping down trees.
Assembling products from the raw materials, factories that make cars etc.
Services provided by people, teaching, taxi drivers, doctors.
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.
A business with one owner is called a sole trader.
- 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.
- No one to share the responsibility with.
- All liabilities fall on the owner.
A business that has two or more owners such as a Law firm or dental practice.
- 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.
- 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).