Professional Documents
Culture Documents
Business Structure
Primary Sector
The first stage of production and includes extractive industries
such as mining, farming, forestry and fishing.
North Korea
Government decides how resources are allocated
This results in a large public sector and small private sector
U.S.A.
Allows market forces to allocate resources
This results in a large private sector and smaller public sector
Cuba
Government has intervened less in recent years leading to
bigger private sector
Venezuela
Government has intervened more and taken control of many
businesses
The public and private sectors
Public sector organizations can have social
objectives, not just profit objectives
This means they may provide non-profit-making
services such as transport to remote areas
A private sector business would probably not be
interested if there were not enough passengers
The government may provide this service for the
welfare of its citizens
Case Study: Cuba
1. Explain the potential benefits of a centrally planned economy.
Organizations may pursue social objectives rather than profit; may mean
certain goods such as education and health care are available to all; may
provide jobs
2. Discuss the possible reasons why Cuba has moved some way
towards a market economy.
Cuba may have decided that competition is good for efficiency, that the
state system is sometimes inefficient and expensive, that the market
system is better for growth and matching demand and supply. It may
have wanted to open up markets to investment from outside of Cuba to
bring in income
2.2 Legal Structures
Legal Structures
When setting up a business the founders must consider the
appropriate legal form for their enterprise.
Advantages Disadvantages
Making your own decisions can be Sources of finance are limited.
motivating.
You can make decisions quickly and You rely heavily on your own
respond rapidly to changes in the ability to make decisions.
market.
You have direct contact with the You may work long hours and
market. have
limited holidays, leading to stress.
Setting up is easy. You are subject to unlimited
liability.
Partnerships
If you join with other people and set up a business
together this is known as a partnership.
Advantages Disadvantages
Share resources, ideas and the Share profits
workload
More sources of finance than May disagree over decisions
sole trader
Cover if someone is ill or on Unlimited liability
holiday
Math Moment
You have four other partners in your business. You have
agreed to share profits. If your profits are $240,000 how
much does each partner receive?
$48,000
Companies
To set up a company, the owners have to complete
various documents and register the business at
Companies House.
0.16%
Cooperatives
Cooperative businesses are owned and run by
and for their members
customers, employees, residents
$213,640
Case Study: Toni & Guy
1. Do you think the business model adopted by Toni
Mascolo would be easy for other hairdressers to
adopt?