what is a business? carlos antonio ancira viejo a01190780 elton nathan leal mireles a01034759...
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What is a
business?
Carlos Antonio Ancira Viejo A01190780
Elton Nathan Leal Mireles A01034759
Alejandro Duran Baker A01034803
Cla
ssifi
cati
on o
f busi
ness
act
ivit
y1.Primary production2.Secondary production
3.Tertiary production
Seco
ndary
pro
duct
ion Involves manufacturing,
processing and construction which transform raw materials into goods”
What
is a
busi
ness
org
anis
ati
on?
A business is often referred
to as an organisation that
satisfy needs by providing
people with goods and
services.All organisations will: • Try to achieve objectives
• Use resources• Need to be directed• Have to be accountable
• Have to meet legal requirements• Have a formal structure
Priv
ate
sect
or
busi
ness
org
anis
ati
ons
One method of classifying
businesses is by sector.
PRIVATE SECTOR: businesses which are set up
by individuals or groups of
individuals.
Businesses will vary
according to the legal form
they take and their
ownership.• Unincorporated businesses:
no legal difference between
the owners and the business.
• Incorporated businesses: a
separate legal identity from its
owners
Sole
tra
der
Advantages:• Few legal restrictions• All profit after tax belongs to owner
• Total control and freedom in decision
making• Schedule flexibility• Personalized attention from owner
• Government support programs
Disadvantages:• Unlimited liability• Limited capital, low capacity to
offer guarantees• Decision making cannot be shaed
• Affected by illness• Owner can be personally sued
• Depends on owner regarding
talent and drive
Part
ners
hip
s
Advantages:• Little formalities for establishing
• Partners can specialize
• More capital can be raised, internally and
externally• Share the burden of workload, ideas and
decisions Disadvantages:• Equal and unlimited
responsibility for debts
• Profit is shared• Greater difficulty to reach
agreements• Partnership could end on death
of a partner• Decisions of one partner are
binding on all partners
• Partners can be individually sued
Lim
ited
part
ners
hip
s
• A rare form of partnership that has
limited liability• Some partners may provide capital but take
no part in the management of the business (sleeping partners)• At least one partner
must have unlimited
liability
Lim
ited C
om
panie
s (S
oci
edad a
nónim
a)
• Separate legal identity and
limited liability• The capital is divided into
shares.• Shareholders can vote and
take a share of the profit.
• Run by directors who are
appointed by the shareholders.• The board of directores is
leaded by a chairperson.
• Annual General Meeting.
• Pay corporation tax.
Form
ing a
lim
ited c
om
pany
• They must submit important information to
the Registrar of Companies
• A Memorandum of
Association states details such as name of
the company, address,
objectives, scope of activities, liabilities of its
members, amount of
capital.
Priv
ate
lim
ited
com
panie
s
Advantages:• Have limited responsibility
• Additional shareholders provide
more capital• Control is not lost to people
external to business: shares are
sold only if existing shareholders
agree• Business continues if a shareholder
dies Disadvantages:• Profits are divided into a much
greater number of members
• Legal procedures take more time
and money• The public has access to
information• If a shareholder retires, it takes time
to find a buyer approved by rest of
shareholders
Public
lim
ited c
om
panie
s C
orp
ora
tions
(sto
ck
exch
ange)
Advantages:• May raise huge amounts from investors
coming from sales of shares to the public
• Production costs may be lower as firms may
gain economies of scale
• Because of size, they may dominate the
market• Easier to raise finance because financial
institutions are more willing to lend to plcs
Disadvantages:• Setting up costs can be very expensive
• An outside interest can take control of the
company• All accounts can be inspected by the public
(including competitors!)
• Difficult to deal with customers at a personal
level• Law and regulations limits their operations
• There may be a divorce of ownership and
control• Change is difficult (less flexibility)
Not-
for-
pro
fit
org
anis
ati
ons
• They are run according to business
principles but do not aim to make a
profit.• Their proceeds or surpluses from
trading may be shared with
employees and customers or passed
to a third party.• They may employ staff, raise finance,
buy resources, sells goods or
services, market themselves, have a
formal structure and be required to
meet the needs of different
stakeholders.• They have to operate within the law
and may also face competition.
• They include:• Public sector organisations
• Co-operatives• Mutual organizations
• Charities• Pressure groups
Chari
ties
• Are organisations with
specialised aims.• Rely on donations for
their revenue but are
not required to pay tax.
• Are generally run according to business
principles (minimise costs, promotions, recruit volunteers
Press
ure
gro
ups
• Groups of people that
attempt to influence
decision makers in politics, business and
society.• There is a wide variety
of pressure groups that differ significantly
in their aims, objectives and size.
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