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level: Level 1

Questions and Answers List

level questions: Level 1

QuestionAnswer
define secondary bussinessusing materials which have already been extracted by the primary stage
secondary bussiness are divided intomanufacturing industries construction industries
define manufacturing industriesare engaged in producing goods through processing of raw materials
manufacturing industries are divided into fouranalytical industry assembling industry synthetical industry processing industry
analytical industryanalyses and separates different elements from the same materials oil refinery separates crude oil into kerosene
synthetical inustrythese industries put together two or more materials to form a new product plastic, gypsum, concrete and coals mixed to produce cement
processing industrydifferent stages for manufacturing finished products sugar industry
assembling industryassembles different components parts to make a new product television
construction industryconstruction of building , dams , bridges and roads , tunnels . engineering and architectural skills are needed for this work.
service industry (tertiary sector)providing support services to the primary and secondary industry banking retailing tourism hotel advertising education
private sectorbusiness that are owned by private individuals that are in private sector supermarket and beauty salons
public sectorbusiness that are owned by the government that are in private sector electricity , water , health , education
nationalizationoccurs when the government takes ownership of a business from the private sector into the public sector
privatizationoccurs when the government takers ownership of a business from the public sector into the private sector
merit goodsgoods and services provided for free for the benefit of the entire society by a government public parks
business organization and its legal structures (private sector)sole trade partnership companies co-operatives franchise joint ventures
sole traderwhere a person is solely responsible for providing capital bearing the risk and management of the business.
advantages of sole traderssetting up business is easy direct contact with market make quick decisions and respond rapidly to changes in market
disadvantages of sole tradelimited sources of finance unlimited liability may work long hours and limited holidays rely heavily on your own ability to make decisions
unlimited liabilitywhen an individual or group of individuals are personally responsible for all the actions of their business.
partnershipif you set up a business together with other people
partnership deeddocument which terms and conditions regarding the conduct of partnership business
advantages of partnershipcan share resources ideas and skills , workload more sources of finance than sole trade can manage if someone is ill or on holiday
disadvantages of partnershiphave to share profits have many disagreements or conflicts over decision unlimited liabilty
companyis a business organization which has its own legal identity and limited liability
ownershipcompany owned by shareholders each share represents part of the company more share someone owns the more the company belongs to them
legal identity or statuscompany is separated from its owners. company can own any property equipment and other goods in its own rights and responsible for its debts . business must have its accounts checked annually by auditors account must be made public
limited liabilityif company fails shareholders can lose the money they have invented into the business but their personnel possessions are safe
incorporationis the process to set up a company and the owners have to complete various documents and register the business at companies house .
memorandum of associationstates the name of the company address of the head office through which it can be contacted maximum share capital which the company seeks authorization and declared aims of business
articles of associationa document that covers the internal workings and control of the business
dividendsmoney that is paid out to shareholders /reward to the owner of the business
company is divided into twoprivate limited company public limited company
private limited company featureshave "LTD" after their names minimum of 2 and maximum of 50 mem more easy to form private company than public
public limited company"plc" after their names minimum of 7 no limit on maximum owned by shareholders shareholder in plc can sell their share through stock exchange
co-operativesworking together for a common purpose has limited liability
different form of co-operativesemployee co-operative community co-operative retail co-operative
employee co-operativewhen the business is owned equally by all the employee working there
community co-operativeowned by the members of a community to provide local services such as postal , bus service
retail co-operativeoccurs when independent retailers join together and operate under one brand name food , hardware
Franchisecontinuing relationship in which the franchisor provides a licened privillage to the franchisee to do business and offer assistence in organizing training merchandising in return of monetery consideration dominos ,subway
elements of franchise agreementfranchisor sells the right o the product in return for the initial fee and percentage of franchisee turnover sales the franchisee receives the right to use the name logo and system used by the franchisor
payment for franchiseefranchise free + percentage of turnover profit
advantages of buying a franchisehave support and experience from the franchisor helps choose suppliers reduce the risk of setting up on your own
disadvantages of franchisereduces profit we make initial license fee can be expensive no choice of suppliers
benefits of franchisorbenefit from the income generated by the franchisee leads to more motivated managers bec they r running their own store
drawbacks of franchisorloss of ownership loss of flexibility loss of confidentiality
joint ventureswhen two business agree to join together for a common purpose and mutual benefits
benefits of joint venturescan share skills and experience resources and expertise less difficult to manage less expensive bec not merging fully
difficulties of joint venturesdecision making disagreements over contribution of each business