Business Structure

1- Primary sector business activity Businesses related to extraction of natural resources 2- Secondary sector business activity manufacturing businesses 3-Tertiary sector business activity firms providing services

Benefits a. GDP increases b. Lower imports high exports c. More jobs d. More taxes to government e. Value is added to countries' output of raw materials.

Problems a. Movement of people and housing and social problem b. Imported raw materials increase s import costs of country c. Expansion of multinational companies

Private Sector Businesses owned and controlled by individuals or groups of individuals.

Public Sector Organisations accountable and controlled by central or local government.

1- Sole trader 2- Partnership 3-Limited companies a) Private (Ltd) b) Public (plc) 4-Cooperatives

1- Limited liability 2- Legal personality 3-Continuity

1- Memorandum of Association(MOA) 2- Article of Association(AOA)

1- Cooperatives 2- Franchises 3-Joint ventures 4- Holding companies 5-Public sector enterprise – public corporations

Co-operatives are owned by their staff, who are ‘members’ of the firm Profits are shared amongst the members Losses too must be shared

Two or more businesses agree to work together on a particular project and create a separate business division to do so. Reasons for joint venture Not same as mergers but can lead to a merger. Costs and risks are shared. Different companies` different strengths fit well together More effective than “go it alone”

A business that uses the name logo and trading system of an existing successful business. A business idea is licensed to a franchisee The owners of the brand receive a license fee The franchisee gains the right to use the business brand

A business organisation that owns and controls number of separate businesses but does not unite them in a unified company. Not a legal form of business. Holding company has diversified interests. Independent of major decisions and policies. Possibility of centralised control over key issues like new investments.

A business organisation owned and controlled by state___ also known as nationalised industry. Profit is not the motive. Social objective Gov raise finance Loss making services still operate. Subsidies will lead to low efficiency

Franchise

A-LEVEL PRIVATISATION Selling state owned and controlled business organisations to investors in the private sector.

Argument for and against Privatisation For Privatisation Against Privatisation Profit motive will lead to efficiency Strong motivation More profit..market forces will operate No commercial reasons More finance for gov Free competition no consumer exploitation Increased investment in industries Unprofitable areas will close down Difficult to achieve coordinated policy for the country Less gov control No economies of scale due to breaking up of nationalised industries in to several units.

Public private partnership (PPP) These are the gov services or business ventures that are funded and managed through a partnership of gov and one or more private sector companies. Types Of PPP  Government Funded  Private Sector Funded

Nature and scope of international trading links Loss of output and jobs Decline in domestic industries Job losses Factory closures Competition Infant industries may not grow Some importers dump goods below cost to eliminate competition

Free trade and Globalisation Free Trade :No restriction or trade barriers exist that might prevent or limit trade between countries Tariffs: Taxes imposed on imported goods to make them more expensive than they would other wise be. Quotas: Limit on physical quantity of goods to be imported Voluntary export limits exporting country agrees to limit the quantity of goods sold to one country to discourage setting of tariffs or quotas. Protectionism :using barriers of free trade to protect a country`s own domestic industries.

Benefits Of Trade Between Nations Wider choice Imported raw materials Developing economies can increase rate of industrialisation Additional competition for developing countries Comparative advantage Specialisation leads to Economies of scale Living standards of consumers increase.

Globalistaion The increasing freedom of movement of goods capital and people around the world. World trade organisation Free tarde blocs

Multinational businesses Business organisations that has its head quarters in one country but with operating branches, factories and assembly plants in other countries.

Multinational businesses Why become a multinational ---closer to main markets ---lower cost of production ---Avoid import restrictions ---access to local natural resources Potential problems of multinationals. ---risky ---Language, culture and legal differences ---coordination issues ---low local skill level (training costs )

Evaluation of the impact on host countries of multinational operations ADVANTAGES Foreign currency Employment Local Firms quality increases Taxes for gov Increased management expertise Total output of economy will increase

Evaluation of the impact on host countries of multinational operations DRAWBACKS Exploitation of local work force Pollution Local firms out of business Reduction in cultural identity Profits sent back to country Extensive depletion of limited natural resources