Business activities- tasks completed by a business to achieve its objectives
Primary activity- extraction and harvesting raw materials. Includes mining, agriculture, fishing, oil and gas extraction
Secondary activity - purpose is to manufacture product, can be finished products sold to retail customers or components sold to business customers and used in production
Retail customers- customers who buy finished products
Business customers- businesses that purchase products or services from another business
Tertiary activity- the provision of services to the public and businesses
Public sector - responsible for providing a wide range of public service. Financed via taxation, council tax payments, business rates, licence fees, selling products and services
Third Sector - Organisations that do not aim to make profit and are not government owned. They rely on fundraising, grants, donations
Business aims - a summary of what the business wants to achieve in the future
Recession- A period of economic decline where demand and output fall.
Economies of scale- cost advantage gained when the size of the business increases.
Memorandum of Association -A document that states what the company has been formed to do
Unlimited liability- assets can be freezed or taken away.
Limited liability- assets are protected
Sole Trader- One owner, unlimited liability, makes own decisions
Partnership- two or more owners, unlimited liability, joint control, share profits
Private Limited Company- Owned by one or more shareholders, shares are only bought privately and the business is incorporated, limited liability
Shareholder- someone who has an interest in the business
A memorandum of association is an administrative requirement of a private limited company
A form 12 is a declaration that all legal requirements of the company registration have been complied with
Key feature of a public sector organisation- its funded by taxation
The Companies Act requires a public limited company hold a shareholders meeting at least once a year
Who’s responsible for day to day decision making in a public limited company - shareholders
Requirement of the Partnership Act - profits must be shared
Main business activity of a secondary sector organisation - manufacturing goods
A community interest company is a social enterprise
Unincorporated Business- Sole traders and partnerships do not have separate legal identity.
Advantages of being a sole trader
Owner makes all decisions
Only needs little capital to start
No co-owners to discuss ideas with
Easy to set up as few legal requirements
Owner has total control
Keeps all profits
Financial affairs private
Disadvantages of being a sole trader
Lack of more capital (difficult to expand)
Lack of continuity (if owner dies the business may close down)
Difficult to find cover for holidays/ sick days
Unlimited liability(owner responsible for business losses)
Have to do multiple jobs in the business
Reasons for business failure
Lack of demand
Lack of customers
Lack of funds to start the business
Supplierissues- can't deliver on time
changes in law
competition
Disadvantages of a Partnership
Profits are shared
Disagreements could affect the service
Unlimited liability (owners responsible for business losses)
No separate legal identity (owners could be sued)
Advantages of a partnership
Workload is shared
Have someone else to discuss ideas with
Cover for sickness/ holidays
More finance available for investment
Easy to set up as little legal requirements
Can offer different areas of expertise
Financial affairs private (except for tax purposes)
Incorporated business- the business is separate from the people who own it
Disadvantage of a private limited company
The process takes a long time
Shared profit
Taxed from the first one pound profit
Financial documents are published
Advantages of a private limited company
Raises capital
Corporation tax
Control over who buys shares
Public limited company - form of incorporated business owned by shareholders
Advantages of a public limited company
Flotations raise large amounts of capital that can finance expansion
Benefit from greater media exposure and may be seen as more prestigious or reputable
Disadvantages of a public limited company
The stability is vulnerable to changes in share price
Directors are accountable to thousands of shareholders
Attract the media so incidents and public relations are widely reported
Articles of association- internal rules over including what the directors can do and voting rights of the shareholders
Aim - Long term and provides overall direction and focuses on the purpose and why of a project