1 / 17

SECTORS OF THE ECONOMY

SECTORS OF THE ECONOMY. Private Sector – firms that are owned and controlled by private individuals or investors Public Sector – firms that are owned and controlled by the government

pearly
Download Presentation

SECTORS OF THE ECONOMY

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. SECTORS OF THE ECONOMY • Private Sector – firms that are owned and controlled by private individuals or investors • Public Sector – firms that are owned and controlled by the government • Voluntary Sector – firms that are set up to raise money for good causes or provide facilities for their members, e.g. charities.

  2. PRIVATE SECTOR BUSINESSES • SOLE TRADER • A business that is owned and controlled by one person • E.g. hairdressers, plumbers

  3. Advantages Easy and cheap to set up Owner has complete control Makes all the decisions Keeps all the profits Disadvantages Difficult to raise finance – too high a risk Has unlimited liability – if firm goes bankrupt owner is liable for all debts and may lose personal possessions No one to share responsibilities with Difficult to take holidays – no one to take over

  4. PARTNERSHIP • A business that is owned and controlled by 2-20 people. • Partners will sign a Partnership Agreement which will set out how much capital each will invest, share of profits and what each will do in the business.

  5. Some partnerships will follow the Partnership Act (1890) instead of drawing up there own partnership agreement. • Some partners will invest money into the business but not take an active part in running it. These are called SLEEPING PARTNERS

  6. Advantages Responsibilities are shared Allows for specialisation More capital available Someone to cover if on holiday or ill Disadvantages All partners, except sleeping partners, have unlimited liability Conflict between partners Lack of continuity if partners change Profits have to be shared.

  7. LIMITED COMPANIES • PRIVATE LIMITED COMPANY (LTD) • PUBLIC LIMITED COMPANY (PLC)

  8. Ltds and Plcs both issue shares as a method of raising finance • Each person who buys shares is called a SHAREHOLDER and they are the owners of that business. • They are run by a BOARD OF DIRECTORS

  9. Both must fill in two documents: • The Memorandum of Association – the details about the firm • The Articles of Association – internal workings of the firm • These are then sent to the REGISTRAR OF COMPANIES • They will issue the company with a CERTIFICATE OF INCORPORATION

  10. Shares in a Plc are open to anyone, on the stock market. This means that they can raise huge amounts of capital. • However, shares in a Ltd are only available to people invited by present shareholders. This means they have more control over who can become an owner. • Plcs also need an initial start up capital of £50,000. • All shareholders have LIMITED LIABILITY. If the company goes bust they will only lose the value of the money they have put into the business.

  11. Ltds have a bit more privacy than Plcs. They do not have to publish as much information as a Plc does. • Plcs can become too big that they become inflexible. • All limited companies have to abide by the Companies Act.

  12. Multi-nationals • Many large Plcs will become multi-nationals. • This is a firm that has production facilities in more than one country. E.g BP

  13. Reasons for becoming a MNC: • Increase market share • Secure cheaper premises and labour • Avoid or minimise paying tax • Take advantage of government grants • Avoid trade barriers • Save transport costs

  14. Disadvantages of MNCs: • Can be very powerful and strongly influence the governments in host countries • Exploitation of labour • Using non-renewable resources • Forcing local firms out of business

  15. Franchises • This is where a business is run under the name of another. • The franchiser gives the franchisee a license to sell under their name. • In return the franchisee gives a percentage of their profits to the franchiser. • Franchises can be sole traders, partnerships, Ltds or Plcs

  16. Advantages Cheap way of expanding market share. Provides them with a reliable revenue. Disadvantages Share of profits depends on the success of the franchisee Reputation of business is dependent on each franchisee Franchiser

  17. Advantages Lower costs as franchiser may do all training and advertising. Risk of failure is reduce Already have brand loyalty Ideas can be shared between franchisees Disadvantages Can’t use initiative as franchiser may dictate products, selling price etc. Have to give a percentage of profits to franchiser Costly to buy a franchise Franchise may not be renewed Franchisee

More Related