What is a

business?

Carlos Antonio Ancira Viejo A01190780

Elton Nathan Leal Mireles A01034759

Alejandro Duran Baker A01034803

What

is it

? An organization whose

principal economic purpose is to produce

goods and services”

Busi

ness

Fu

nct

ions · Production/operations

· Marketing· Finance· Human resources/personnel

Product

ion

Involves changing natural resources into

a product or the supply of a service”

Mark

eti

ng

Identifies consumer needs in order to satisfy them.”

Finance

Is responsible for the

control of money in business”

Hum

an

Reso

urc

es

Involves the management of people”

Cla

ssifi

cati

on o

f busi

ness

act

ivit

y1.Primary production2.Secondary production

3.Tertiary production

Prim

ary

pro

duct

ion

Includes activity which

takes the natural resources from the earth”

Seco

ndary

pro

duct

ion Involves manufacturing,

processing and construction which transform raw materials into goods”

Tert

iary

pro

duct

ion

Includes the provision

of services”

Unit 7: Legal structure –

sole traders and

partnerships

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

Unit 8: Legal

structure – limited

companies

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)

Unit 9: Legal

structure – not-for-

profit organisations

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.

Now

….

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