1. What are the different stages of economic/ business activities?

Stage Goods/ Services

Stage 1 - primary - Involves the Earth’s natural resources.
sector - Activities include farming, fishing, forestry and the
extraction of natural materials, such as oil and copper
ore
Stage 2 - secondary - Involves taking the materials and resources provided by
sector the primary sector and converting them into
manufactured or processed goods
- Activities include building and construction, aircraft
and car manufacturing, computer assembly, bread
baking
Stage 3 - tertiary - Involves providing services to both consumers and
stage other businesses
- Activities include transport, banking, retail, insurance,
hotels and hairdressing.

2. What business activities are included in the quaternary sector?

Some people now describe the economy as having a quaternary sector,
consisting of information services such as computing, ICT (information and
communication technologies), consultancy (offering advice to businesses) and
R&D (research and development, particularly in scientific fields). Broader
definitions add the news media, libraries, universities and colleges, and other
intellectual activities including culture generally.
3. How different is the private sector from the public sector in mixed economics?

Private sector Public sector

Not owned and controlled by the Owned and controlled by businesses and
government organisations.
Own decisions about what to produce The government makes decisions about
Goal: profit what to produce and how much to charge
consumers.
Goods and services are provided free of
charge to the consumer, such as state
health and education services.
 4. What are the features of different forms of business organisations: Sole trader,
Partnerships, Private and Public Limited Companies and Joint Ventures? What
are their advantages and disadvantages?

Business Defination Advantages Disadvantages

organisations
Sole trader It is a business You’re the boss. You have
owned and unlimited liability
operated You keep all the for debts as there’s
by just one person profits. no legal distinction
– the owner is the between private
sole proprietor Start-up costs are and business assets.
low.
Your capacity to
You have raise capital is
maximum privacy. limited.

Establishing and All the

operating your responsibility for
business is simple. making day-to-day
business decisions
It’s easy to change is on you.
your legal structure
later if Retaining high-
circumstances calibre employees
change; you can can be difficult.
easily wind up
your business. It can be hard to
take holidays.

Partnership is a group or Two heads (or Two heads (or

association of at more) are better more) are better
least two people than one. than one.
who agree to own
and run a business Your business is Your business is
together easy to establish easy to establish
and start-up costs and start-up costs
are low. are low.

More capital is More capital is

available for the available for the
business. business.
 There is There is
opportunity for opportunity for
income splitting, income splitting, an
an advantage of advantage of
particular particular
importance due to importance due to
resultant tax resultant tax
savings. savings.

Partners’ business Partners’ business

affairs are private. affairs are private.

It’s easy to change It’s easy to change

your legal structure your legal structure
later if later if
circumstances circumstances
change. change.

Private Limited A Private Limited Shareholders are Limited Access to

Companies Company (Ltd) is only liable for the Capital: Cannot
a company owned amount they invest, raise funds from
by shareholders, protecting personal the public by
where shares are assets. issuing shares,
privately held and limiting capital
not available to the raising options.
general public. It Ownership
has a separate legal Restrictions:
identity from its Shares can only be
owners and is transferred with the
typically smaller consent of other
than a public shareholders,
limited company. making it difficult
to bring in new
investors.
Public Disclosure:
Certain financial
records must still
be disclosed, even
if shares aren’t
publicly traded.
Complex Setup
and Maintenance:
More legal and
administrative
duties than sole
 proprietorships or
partnerships,
including annual
filings and
shareholder
meetings.
Profit Sharing:
Profits must be
shared among the
shareholders.

Public Limited A Public Limited Access to Capital: Regulatory

Companies Company (PLC) is Can raise large Compliance:
a company whose amounts of capital Public companies
shares are available by issuing shares to are subject to strict
for purchase by the the public through regulations,
public and traded the stock market. including audits,
on a stock Limited Liability: detailed financial
exchange. It has a Like private disclosures, and
separate legal companies, governance
identity and allows shareholders' requirements.
anyone to invest in liability is limited Loss of Control:
the business by to the value of their Original owners or
buying shares. shares. directors may lose
Increased control over
Credibility: decision-making,
Listing on a public as shareholders
exchange boosts have voting rights
the company’s and can influence
reputation and major business
visibility, attracting decisions.
more customers, Public Scrutiny:
investors, and Financial
suppliers. statements,
Share Liquidity: business plans, and
Shares can be major decisions are
bought and sold subject to public
freely, providing and media scrutiny,
liquidity for affecting
shareholders and reputation.
enabling easy Costly to Set Up
transfer of and Operate: The
ownership. process of going
Economies of public (through an
Scale: The large Initial Public
 scale of operations Offering, or IPO) is
often allows the expensive, and
company to ongoing costs to
achieve operational maintain a listing
efficiency and on the stock
lower production exchange can be
costs. high.
Profit Pressure:
Public companies
are often pressured
by shareholders
and analysts to
achieve short-term
profit goals, which
may affect long-
term business
strategies.
Joint Ventures Access to new
markets and The objectives of
distribution the venture are
networks. unclear.

Increased capacity. The

Sharing of risks communication
and costs (i.e. between partners is
liability) with a not great.
partner. The partners expect
different things
Access to new from the joint
knowledge and venture.
expertise, including
specialized staff. The level of
expertise and
Access to greater investment isn’t
resources, for equally matched.
example,
technology and The work and
finance. resources aren’t
distributed equally.