1.2 business activity

• Primary sector: this involves the use/extraction of natural resources. Examples include agricultural activities, mining, fishing, wood-cutting, oil drilling etc.
• Secondary sector: this involves the manufacture of goods using the resources from the primary sector. Examples include auto-mobile manufacturing, steel industries, cloth production etc.
• Tertiary sector: this consist of all the services provided in an economy. This includes hotels, travel agencies, hair salons, banks etc.
• Private sector: where private individuals own and run business ventures. Their aim is to make a profit, and all costs and risks of the business is undertaken by the individual. Examples, Nike, McDonald’s, Virgin Airlines etc.
• Public sector: where the government owns and runs business ventures. Their aim is to provide essential public goods and services (schools, hospitals, police etc.) in order to increase the welfare of their citizens, they don’t work to earn a profit. It is funded by the taxpaying citizens’ money, so they work in the interest of these citizens to provide them with services.
• Advantages of being a sole trader include having complete control over your business decisions, keeping all profits made by the business, and not needing to pay corporation tax or VAT (if turnover is below £85k)
• A sole trader is an individual who owns, manages and controls their own business.
• Disadvantages of being a sole trader include unlimited liability meaning that if the business fails, personal assets can be seized to repay debts
• Partnerships are when two or more people come together to form a business venture. They share responsibility for running it, but also share any losses or gains equally between partners. Partners have limited liability which means that only the amount invested into the company will be lost if the business goes bankrupt.
• Limited companies are businesses owned by shareholders who invest capital into the firm. The owners do not take part in day-to-day management of the business, instead appointing directors to manage the business on behalf of the shareholders. Shareholders receive dividends based on how many shares they hold. Limited liability means that shareholders cannot lose more than what they originally invested in the company.
• Limited Liability Partnership (LLP): A type of partnership which limits the personal liability of partners. The LLP itself is responsible for its debts rather than the partners themselves.
• The advantages of partnerships include sharing responsibilities and liabilities between partners, as well as spreading out the financial risk involved in starting up a new venture.
• In a limited company, the owners have limited liability which means that if the business goes bankrupt, only the value of shares invested will be lost, rather than any other personal assets.
• Limited Liability Company (Ltd): A type of privately owned business structure where owners/shareholders are protected from financial loss beyond what they initially invested. The maximum liability of the owner(s) is limited to the value of shares held.
• Public Limited Company (PLC): A large company with at least 50 members and whose shares are traded publicly on stock exchanges. PLC's must follow strict rules set out by Companies House.
• Private Limited Company (LTD): A small/medium sized company where ownership is restricted to a few individuals. Shares may be sold privately amongst friends and family.