Business Ownership Structures and Global Economic Sectors

Factors Influencing Business Ownership Structure

Key Determinants of Legal Status

• Growth: Many businesses start small and gradually expand. Most businesses change their legal status as they grow, primarily to raise more capital.
• Size: Small businesses typically operate as sole traders or partnerships. Public limited companies (PLCs) are much larger, often having thousands of employees and huge turnovers.
• The Need for Finance: Finance is a primary reason owners change their business's legal status. Changing the organizational structure is often the only way to secure significant additional funding.
• Control: Some owners value independence and complete control over the business. This preference often leads them to remain sole traders.
• Limited Liability: Sole traders and partners face unlimited liability, meaning their personal assets are at risk. Therefore, some owners transition to limited companies to gain financial protection.
• Other Factors:
  • The type of business activity may influence the choice of legal status.
  • The way a business plans to use its profits may be important.
  • Different stakeholders (e.g., employees and shareholders) might influence the choice of organization.

Economic Sectors of Production

The Primary Sector (Extraction Industry)

Production involving the extraction of raw materials from the earth.

Key Primary Activities:

• Agriculture: Involves a range of farming activities and is the most important primary sector activity for most countries.
• Fishing: Includes netting, trapping, angling, and trawling for fish. China is noted as the world's largest fish producer.
• Forestry: Managing forests to provide timber for wood production.
• Mining and Quarrying: The extraction of raw materials such as coal, iron ore, copper, tin, and salt.

The Secondary Sector (Manufacturing Industry)

Production involving the conversion of raw materials into finished and semi-finished goods.

Activities include:

• Metalworking
• Car production
• Textile production
• Aerospace manufacturing
• Engineering
• Food processing

Some secondary businesses focus on the production of semi-finished goods, which are sold to other producers. Others focus on final goods, which are then sold directly to the consumer.

The Tertiary Sector (Service Industry)

Production of services within the economy.

Categories of Tertiary Services:

• Commercial Services: Freight delivery, debt collection, printing.
• Financial Services: Banking, insurance, pensions.
• Household Services: Plumbing, decorating, gardening.
• Leisure Services: Television, tourism, hotels.
• Professional Services: Legal advice, medical care.
• Transport: Train, car, and taxi services.