Negative consequences- much growth is due to the expansion of MNCs 1.4.3 De-industrialisation is developed economies Due to rising incomes associated with higher standards of living which have led to increased spending on services such as tourism, hotels and restaurant services More cost effective to conduct manufacturing activities in developing nations 1.5 Public and private sectors private sector comprises businesses owned and controlled by individuals or groups of individuals Public sector comprises organizations accountable to and controlled by central or local government. Includes health and education services, defence, the police force and so on. 1.5.1 The legal structure of business organization - the private sector The types and sizes of businesses in the private sector vary considerably.
BUSINESS STUDIES MS.VIMAL A N.K 15.1.1 Sole traders The most common form of business organisation, where one person provides the permanent finance, and in return, has full control of the business and is able to keep all of the profits. Advantages Easiest to set up- entails minimum legal formalities Sole proprietor has full control of the business Owner keeps all of the profits Lower tax rates compared to limited companies Able to choose schedules and patterns of working Rapport established with workers and other stakeholders Faster decision making- no necessity to consult anyone prior to decision making Business can be based on the interests or skills of the owner- rather than working as an employee for another firm Disadvantages Risk of unlimited liability- all of the owners individual assets are potentially at risk Losses have to be borne alone Difficult to raise capital for business expansion Intense competition from bigger firms Owner burdened with workload and may lose strategic focus Social life and health of owner may be affected due to long working hours Lack of business continuity as the business does not have separate legal status, so when the owner dies, the business ends too 184.108.40.206 Partnerships These are formed in order to overcome some of the drawbacks of a sole trader. Partnerships refer to agreements between two or more people to carry on a business together, usually with a view to making a profit. It is usual (although not a legal requirement) to draw up a formal Deed of Partnership to provide agreement on issues such as voting rights, the distribution of profits, the management role of each partner and who has authority to sign contracts. Advantages Partners can combine individual skills and expertise to run a successful business Shared decision making can result in the assessment and adoption of creative and well thought of ideas
BUSINESS STUDIES MS.VIMAL A N.K Additional capital injected by each partner into the business Business losses are shared between the partners- reduces individual burden Workload can be shared by the partners
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