BUSINESS STRUCTURE

Classification of Business Activities

PRIMARY SECTOR

SECONDARY SECTORTERTIARY SECTOR

Primary Sector;

Firms engaged in farming, fishing, oil extraction, and all other industries that extract natural so that they can be used and processed by firms.

Secondary Sector;

Firms that manufacture and process products from natural resources, including computers, baking, clothes making and construction.

Tertiary Sector;

Firms that provide services to consumers and other businesses, such as retailing, transport, insurance, banking, hotels, tourism and tele-communication

Public and Private Sector(another way of classifying the industry)

Public Sector;Comprises organisations accountable to and controlled by central or local government (state)

Private Sector;Comprises business owned and controlled by individuals or groups of individual

The domain of operation is highly dependent on the economic system prevailing in the country

• Mixed EconomyThis type of economic system includes a combination of private economic freedom and centralized economic planning and government regulation( resources are controlled by both public and private sector)

• Free-Market Economy A market economy based on supply and demand with little or no government control. A completely free market is an idealized form of a market economy where buyers and sellers are allowed to transact freely (i.e. buy/sell/trade) based on a mutual agreement on price without state intervention in the form of taxes, subsidies or regulation.

• Command EconomyA system where the government, determines what goods should be produced, how much should be produced and the price at which the goods will be offered for sale. The command economy is a key feature of any communist society. China, Cuba, North Korea and the former Soviet Union are examples of countries that have command economies.

Local vs National vs International

The Legal Structure of Organisations in Private Sector

Sole Trader A sole trader is a one-person business,

commonly found in trades where only small amounts of finance are required to set up and where there are very few advantages to the existence of larger organizations.

(e.g. hairdressing, newsagents, market traders)

Partnership

To overcome many of the problems of a sole trader, a partnership may be formed. A partnership is an association of individuals and generally there will be between 2 and 20 partners.

Each partner is responsible for the debts of the partnership and therefore you would need to choose your partners carefully and draw up an agreement on the responsibilities and rights of each partner (known as a Deed of Partnership or The Articles of Partnership). The most common examples of a partnership are, accountants, teaching institutes.

Traits of Company

• Limited LiabilityThe investors can not lose more than amount they had invested.

• Legal Personality Company has a separate legal identity, can be sued, however the owners wont be at stake.

• ContinuityCompany does not dissolve by the death of owner, inheritance is on basis on share holding.

Private Limited Company

This is a type of joint-stock company (that is, it is an incorporated business - where the business has a separate legal identity from the owners). Often private limited companies are small, family run businesses which are owned by shareholders.

Public Limited Company (P.L.C.)

This is the other, much larger, type of joint-stock company and, just like a private limited company, a PLC is an incorporated business, is run by the Board of Directors on behalf of the shareholders and has an A.G.M. at which shareholders vote on certain key issues relating to the company.

The main difference between a PLC and a private limited company is that a PLC can sell its shares on the Stock Exchange to members of the general public and can, therefore, raise significantly more finance than a private limited company.