Business aims and
Activities Private sector aims
The aim of a business
in the private sector is to survive by making a profit. This may be a sole
trader working alone, like a newsagent, or thousands of shareholders in a large
Public Limited Company. Businesses gain a larger market-share [a percentage of
overall sales in an industry] by increasing the sales of their products against
competitors. This may involve reducing prices. To win the loyalty of customers
and encourage repeat sales [Customers returning to buy the product from the
same business], businesses need to be reliable and provide a quality service to
their customers. Private sector activities The activities of industry can be
divided into stages - primary, secondary and tertiary production. These stages
form the chain of production and provide consumers with the finished goods.
Primary production This involves acquiring raw materials. For example, metals
and coal have to be mined; oil drilled from the ground; rubber tapped from
trees; foodstuffs farmed, and fish trawled. This is sometimes known as
extractive production. Secondary production Is the manufacturing and assembly
process. This involves converting raw materials into components, eg making
plastics from oil, and assembling the product, eg building houses, bridges and
roads. Tertiary production This refers to the commercial services that support
the production and distribution process, eg insurance, transport, advertising,
warehousing and retail, teaching and health care.
Limiting Companies
All limited companies are incorporated [ firm with separate
legal existence], which means they can sue or own assets in their own right.
Their owners are not personally liable for the firm's debts their losses are
limited to the amount they invested in the business (limited liability). The
ownership of a limited company is divided up into equal parts called shares.
Whoever owns one or more of these is called a shareholder. A public limited
company (PLC) can sell its shares on the Stock Market, while a private limited
company (Ltd) cannot. Unlike a sole trader or a partnership, the owners of a
limited company are not involved in the running of the business, unless they
have been elected to the Board of Directors.
Public and Private Limited Companies
In general, both types of company must audit [an independent check no the accounts of the company] their accounts, and have them available for inspection. There are, however, exceptions to this rule for smaller private limited companies. Both types of company must indicate their status in their name, usually by using the abbreviation PLC or Ltd. This lets traders know that their liability is limited and that debts cannot be recovered from the personal funds of the company shareholders
In general, both types of company must audit [an independent check no the accounts of the company] their accounts, and have them available for inspection. There are, however, exceptions to this rule for smaller private limited companies. Both types of company must indicate their status in their name, usually by using the abbreviation PLC or Ltd. This lets traders know that their liability is limited and that debts cannot be recovered from the personal funds of the company shareholders
. Private Limited
Companies
Advantages:-
Advantages:-
Easy and inexpensive to set up.
Ownership and control are closely conneted, eg board of
directors are usually the main shareholders.
Small and less bureaucratic than PLCs,eg Decisions can be
taken more quickly.
Disadvantages:-
Lack of Capital due to no share issue.
No benefit from economies of scale, eg bulk buying , cheaper
borrowing
No comments:
Post a Comment