Sectors of Business Activity
This consists of three sectors stated below;
Primary Sector: This is the changing of natural materials into primary products. It involves the extracting of raw materials from their sources (the ground) and the packaging and selling of the finished goods. Examples of a business that operates in this sector is McDonalds. They extract raw materials like potatoes from the ground and then they refine it and sell it.
Secondary Sector: This sector turns the primary goods into manufactured goods. They manufacture finished goods. Examples are; construction, processing and textile production etc.
Tertiary Sector: This is the service industry. They make peoples lives easier by providing services. They provide services to other businesses as well as the final consumers. Examples are; banking, hair cut and teaching etc.
Business Purposes
The main purpose of a business is to fill a need, money can come afterwards. There are other purposes which are;
- To satisfy customers needs
- To maximise profit
Types of Business Ownerships
There are seven types of business ownerships;
Sole-trader: This is a small business owned and managed by one person. In this business the decisions are made by its owner alone. The owner of the business can employ people but they are not involved in the control of the business. It has unlimited liability. Examples are; small shops, cleaners, barbers, electronics etc.
Partnership: This is a business that can be owned and managed by 2-20 people. All partners are involved in decision making. The profit made is shared amongst themselves. It is also an unlimited liability. Examples are; doctors, solicitors, dentist etc.
Private Limited Companies (PLC): This is a company that provides limited liability to their shareholders but places certain restrictions to the ownership.
Public Limited Companies (LTD): This is a type of company in which the shares can be offered for sale to a general public and members. It includes businesses with liability and a wide range of shareholders.
Franchise: This is a license that the franchisee gets to enable them get access to a business’s proprietary knowledge process and trademarks in order to allow the franchisee to sell products.
Co-operative: This is a business organisation owned by a group of people for benefits. They are owned and controlled by their members.
Public Ownership: This is a property which is owned by the people(you and me). It is different from a private ownership. It can also be known as the ownership of land by the government.
Two Contrasting Businesses
What is a business?
A business is an organisation that is engaged in the making of goods for the purpose of selling them to customers. It can also engage in providing services like insurance, banking, learning etc. Many businesses are set up for profit making, but there are others that are set up as non-profit businesses.
In this essay, I will be describing a profit-making business and a non-profit business, how they are each structured to show their ownership and extent of liability.
Profit Making Businesses
Most profit making businesses are set up and privately owned by individuals who run them for the purpose of making profit for themselves. A business can be owned by an individual in which case the individual is called a sole-proprietor. He may carry on the business by himself alone or employ a few people to help carry out one function or the other. Such people are paid based on their skill, time and what they produce. A profit making business can also be owned by two or more people who come together as partners to set up the business. Such business is called partnership. In both the sole-proprietorship and partnership businesses the owners have unlimited liability for any debts that their business may incur in the process of carrying out their business.
Furthermore, a profit making business an be called a corporation. A corporation is a business with a limited liability. In law such businesses are said to be a legal person, different from its owners. They can be owned by the government or individuals. A corporation that is privately owned calls the owners shareholders, who appoints a board of directors to run the business. The board appoints managers who run the business day to day.
Non-profit Businesses
Non-profit businesses, also known as non-profit organisations are businesses set up purely for charity purposes. The shareholders from this type of business are not allowed to benefit from the business financially. Most money they earn is used to run their business. In return, they seek tax exemption since they are working for charity. Examples of such businesses include the Red Cross, The Salvations Army, Foundations named after their founders, and set up for one form of philanthropy or the other. Churches can also be included in this category, as well as trade associations like the Chambers of Commerce.