Professional Documents
Culture Documents
Industrialisation describes the growing importance of the secondary sector (manufacturing processes) in developing countries. This brings many benefits as well as problems. Benefits: Increase in GDP More employment Higher exports lower imports More independence Tax revenue Problems: Environmental issues Shortage of skilled labour Import of raw materials? Multination companies rule Urbanisation
Deindustrialisation
The situation is reversed in most developed countries. Here the secondary sector looses importance to the tertiary sector. This process is called deindustrialisation. Reasons; - Rising incomes lead to higher living standard and higher demand for services - Industrialisation in developing countries forms strong competitors, which tend to be cheaper Problems: - Structural unemployment: Employment patterns change
Innovation Commitment and self-motivation Multi-skilled Leadership skills Risk taker Belief in himself
Identifying a nice market Losing job at the old employer Opportunity to make profit Desire for independence
Start-Up Business
Start up ideas: own skills; previous employment experience; franchising conferences; market research Problems: - Competition from old and established competitors - Building a customer base o Customer service? o Knowledgeable pre- and after-sales service - Lack of record keeping - Lack of working capital (liquidity and cash flow) o Cash flow forecast o Invest sufficient capital o Establish good bank relations o Credit control over customers accounts
Start-Up Business
Poor management skills o Leadership o Management o Planning and coordination o Risk-taking o Decision-making o Communication o Marketing, promotion, selling Changes in business environment o New competitors o Legal changes o Economic changes o Technological changes
Sole trader
A business in which one person provides the permanent finance and, in return, has full control of the business and is able to keep all of the profits
Benefits: No legal formalities Complete control Profits are not shared Independence Personal relationships
Problems: Unlimited liability Big competition Limited Capital Long working hours Lack of continuity
Partnership
A business formed by two or more people to carry on a business together, with shared capital investment and, usually, shared responsibilities
Benefits: Partners can specialise Shared-decision making Additional capital source Shared losses Not many legal formalities
Problems: Unlimited liability Shared- decision making No shares to sell Shared profit Lack of continuity
Benefits: Limited liability Continuity Legal personality Capital from shares Greater status
Problems: Legal formalities Less secrecy over financial affairs Difficulty of selling shares Shares cannot be sold to public
Pressure groups
Pressure groups want to induce changes in: - Policies by the government - Businesses policies - Consumers purchasing habits They try to do this in a number of ways: - Publicity through media coverage - Influencing consumer behaviour - Lobbying of government