Classifying the Business:
Size - number of employees or owners and its legal structure
Geographic spread - presence and range within an area
Industry - grouped based on industry
Primary - production directly associated with natural resources e.g. farming, fishing and mining.
Secondary - Take output of firms in primary sector - finishing or semi-finishing the product e.g. steel/car manufacturers.
Tertiary - Provide services e.g. banks, dentists and solicitors.
Quaternary - provides services involving transfer and processing information e.g. computing, finance and education.
Quinary - Provides services that have been performed in the home e.g. hospitality and childcare.
Legal Structure
Unincorporated: sole traders and partnerships
Incorporated: private and public companies
Unincorporated businesses have taken on a life of its own - most common legal structure, easiest and cheapest
Incorporated business have a separate legal entity - the business continues to operate regardless of the individual owners (shareholders) of the company.
Sole Traders:
Advantages
simple not to costly no disputes with partner
Disadvantages
personal liability burden of management
Perform wide variety of tasks
Partnerships:
Advantages low start-up costs shared responsibility and workload no taxes on profits
Disadvantages
personal limited liability disputes are a possibility difficulty finding loyal partner and divided authority
Proprietary Companies:
Private company
2-50 shareholders (PTY LTD)
Small/medium sized
Public Companies:
Large in size and market
Limited or LTD in its name
At least on shareholder
Government Enterprises:
Owned and operated by government - (GBE’s) -Government Business Enterprises
Small in number (5000)
Owned operated by all levels of government - federal, state and local
Privatisation:
Process of transferring ownership of government business to private sector
Organisations change their legal structure from GBE to public company - due to process of privatisation
Influences on Businesses:
External Influences: factors which business has little control of
Government policy
Technology
Economic conditions
Social attitudes
Economic Influences: economic cycles - boom and bust
Financial Influences: changes in markets global financial markets undergone rapid change developments in communications
Geographical Influences: geographic location economic growth changing demographic factors - age, sex, population, background and family - population baby boomers, requiring more aged care facilities
Social Influences: change in fashion and culture
environmental