FIRMS 1. SOLE TRADERS 2. PARTNERSHIPS 3. REGISTERED COMPANIES

ORGANISATION OF FIRMS SOLE TRADERS PARTNERSHIPS COMPANIES OWNERSHIP STRUCTURE FINANCIAL STRUCTURE MANAGEMENT STRUCTURE One owner Unlimited Liability Two or more owners Unlimited Liability One or more owners Limited Liability Owner’s funds (Equity) Lenders’ fund Owners funds (Equity) Lenders’ fund Shareholders funds (Equity) Lenders’ fund Pyramid structure Owner/ Manager Workers Flat structure Separate Managers Pyramid structure Owners/ Manager Workers CO-OPERATIVES : - Many owners - Limited Liability LIABILITY: “What producers owe their lenders” UNLIMITED LIABILTY: “When a business fails the owners owe their lenders all assets belonging to the business AND their personal belongings. Their personal belongings are ALSO taken away”. LIMITED LIABILITY: “When a business fails the owners owe their lenders all assets belonging to the business only. Their personal belongings are NOT taken away”.

SOLE TRADER PARTNERSHIP OWNERSHIP TYPE CO-OPERATIVE COMPANY ADVANTAGES DISADVANTAGES Easy to Set up Run business as you like it More capital than sole trader More skills from owners available Suppliers / buyers are owners Large amount of capital can be raised Greater control of market Unlimited liability Difficult to expand Difficult to raise funds Unlimited liability Profit to be shared conflict between partners possible Complex to run and manage. too many opinions Setting up complicated Complex to run Hired managers have little at stake Limited liability Can raise more capital Can have specialised management.

GOALS OF PRODUCERS PROFIT MAXIMISATION: All firms except voluntary organisations aim to make maximum profits on their investments. They usually try and achieve this goal by keeping costs of productions low Increase sales efficient organisation of firms resources SALES MAXIMISATION: Some firms especially when they are starting off OR are establishing a new branch, have Sale Maximisation as their goal. Such a goal is aimed at establishing expanding sales, even if they have to reduce their profit levels. This goal is usually a short – term goal. Once the brand is established all firms revert back to profit maximisation. COMMERCIAL GOALS

PROVIDE CHEAP GOODS: Such firms aim at providing goods at a very low price by keeping the costs low. Brands such as ‘Basics’, ‘Pams’, No Frills etc are examples. SATISFICING: Not all firms aggressively seek profits or the greatest number of sales. They just set a profit or sales target which can be achieved with relative ease. They are satisfied with a less-than-maximum level of achievement. Owners of such firms find plenty of time for Golf and fishing!! MARKET POWER (PRESTIGE): When firms have attained a high level of reputation and profits, they then choose to attain a larger share of the market and work towards building greater goodwill. QUALITY GOODS: Firms some time concentrate on producing some goods even if it adds to the cost. Usually these firms produce goods which commands high price in the market eg Lamborginni cars

PEOPLE –PLANET- PROFIT: A combination of Community and employee; Environmental and Profit goals PROVIDE COMMUNITY SERVICES: This is always a goal for any Voluntary organisation. These organisations are funded by donations- either cash or in kind. They supply goods and services free of cost to those in need. For PROFIT businesses, they support Charities, Social clubs etc NON-COMMERCIAL GOALS ENVIRONMENTAL PROTECTIONS : Firms have as their goals to not exceed a certain level of environmental pollution. These goals involve putting in place best practices. Eg – 3 R’s Reducing wastes; Re-cyling, Re-using etc

PROFIT MAXIMISATION PEOPLE –PLANET-PROFIT : PROVIDE COMMUNITY SERVICES SALES MAXIMISATION QUALITY GOODS SATISFICING MARKET POWER PROVIDE CHEAP GOODS

RESOURCES NATURAL CAPITAL LABOUR ENTREPRENEURSHIP HUMAN FACTOR REWARDS (RETURNS) LAND MAN-MADE RENTINTERESTWAGESPROFIT FACTORS OF PRODUCTION

PRODUCER SECTORS OF THE ECONOMY PRIMARY SECTOR ELECTRICITY HOSPITALS TRANSPORT BANKS CLOTHES CAR BUTTER CHEESE Involves MANUFACTURING & PROCESSING of primary sector output SECONDARY SECTOR Involves EXTRACTION of Natural resources FISHING FARMING MINING FORESTERY Involves providing SERVICES to both primary & secondary sector TERTIARY SECTOR

HISTORICAL CHANGES TO THE 3 SECTORS  In the 1900’s N.Z was pre-dominantly Primary producer.  The majority of the people (38%) were involved in the Primary sector activities.  The current level of people involved in this sector has now dropped to only 8%.  The reason for the drop is not so much as less people involved in this sector, but due to the increase in the OUTPUT of the secondary & tertiary sector.  As Primary sector producers became wealthy, their demand for manufactured goods increased, thus leading to an increase in the production and therefore increase in the employment in these sectors.

REASONS FOR CHANGE IN PERCENTAGE OF LABOUR FORCE 2 MAIN REASONS ARE IDENTIFIED FOR THE CHANGE IN EMPLOYMENT FROM PRIMARY TO OTHER SECTORS : 1]The decline in primary sector is due to the greater use of technology technology on farms. This means less labour is required. 2]The growth in tertiary sector as a proportion of the total labour force. This has been mainly due to higher income levels and thereby higher demand for services.

SECTORS OF ECONOMY EMPLOYMENT AND OUTPUT LABOUR FORCE GROSS EMPLOYED DOMESTIC PRODUCT PRIMARY:9% 10% SECONDARY:26% 29% TERTIARY:65% 47% NON-PROFIT + GOVT. ORGANISATIONS : 14%  Although the contribution of Primary sector towards employment and GDP is approx. 10%, it is responsible for nearly 66% of EXPORT EARNINGS.  Without these export incomes, NZ will not be able to buy any of the import goods.

PERCENTAGE CONTRIBUTION TO GDP BY SECTOR 1901 % 1966 % 1993 % PRIMARY SECONDARY TERTIARY TASK 1:Construct a multi-line graph using the data above. TASK 2:Identify the major trends.

NEW ZEALAND EXPORTS BY SECTOR 1982 % OF EXPORT 1988 % OF EXPORT 1993 % OF EXPORT PRIMARY SECONDARY 8910 TERTIARY TASK 1:Construct a multi-line graph using the data above. TASK 2:Identify the major trends.

WHY THE CHANGES? PRIMARY SECTOR PRODUCTION The actual output has increased Improvement in technology, mechanisation & automation are the main reasons for increase in output The output of the other two sectors has increased more rapidly

The primary sector only employs approx. 9% of the labour force, down from 38% in the 1940’s & 50’s. This drop is not due to fall in production, but due to mechanisation and automation of the production techniques. The work once done by ten workers now require only one person with a machine or equipment. Primary sector has become more ‘CAPITAL- INTENSIVE’ and the productivity of each worker has increased. PRIMARY SECTOR AND EMPLOYMENT

SECONDARY SECTOR AND EMPLOYMENT In the 40’s & 50’s the primary sector products were exported directly to Britain & Europe. With improvement in technology, the concept of ‘VALUE ADDITION’ took hold for eg instead of exporting logs it was being converted into Timber & Furniture and then exported. With the Primary sector doing well, it increased the income and wealth of the population. With increased wealth came the demand for various goods & services, which resulted in more people being employed in this sector.