Types of Business

Chanel Cutelli
Flashcards by Chanel Cutelli, updated more than 1 year ago
Chanel Cutelli
Created by Chanel Cutelli about 6 years ago
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1.2. Types of business

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Classification of Business: Size - Micro: 5 or fewer employees - Small: fewer than 20 employees - Medium: 20 - 199 employees - Large: 200 or more employees
Classification of Business: Local, National, Global - Local: serves the surrounding areas. Small-medium e.g. hairdresser. - National: Operating in one country e.g. Sportsgirl. - Global: Based in one country and their goods and services are produced and sold in a number of countries e.g. Coca-Cola
Industry Primary: Production is associated with natural resources e.g. farming Secondary: The raw materials and the process to finish it e.g. car manufacturing. Tertiary: provides a service e.g. teacher. Quaternary: Transfer & process of information e.g. finance. Quinary: services performed in the home e.g. child care
Classification of Business: Legal Structure - Sole Trader: unincorporated,one owner. Responsible for all decisions. - Partnership: 2-20 owners. Unincorporated and Unlimited Liability - Private: 1-50. Owners are called shareholders. Incorporated and limited liability, has Pty Ltd after their name. - Public: listed under Australian Stock Exchange ownership open to public. Government Enterprises: Owned by Australian Public e.g Australia post
Proprietary Limited (Pty Ltd) A private company has (Pty Ltd) after its name. Pty means the company is private. Ltd means the company has limited Liability.
Factors influencing choice of legal structure - Size: The business may start as a sole trader. As the business enters the growth phase, investors may be bought into the company. Private company structure - protects investors through limited liability. Public company structure - allows easier access to funds.
Factors influencing choice of legal structure - Ownership: Associated with control. Individuals who want to be own boss - sole trader structure. Individuals who work well with others - partnerships or private companies.
Factors influencing choice of legal structure - Finance Most businesses are established with a limited amount of capital. Growth may be achieved by offering a partnership or to a private company to provide increased protection (limited liability)
Geographical spread Is the presence of a business and the range to its products across a suburb, city, state or country or the globe. Eg. Local businesses.
Incorporated Is the process companies go through to become a separate legal entity from the owner/s.
Unincorporated business is a sole trader (1) or partnership (2). - most common as it is easiest and cheapest.
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