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Different types of business
Different types of business

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1 Categorising a business

Let’s start with an activity to get you thinking about these different types of business.

Activity 1 Your experience of different businesses

Timing: Spend approximately 30 minutes on this activity, not including any time spent travelling, walking or shopping.

This activity will help you start thinking about different types of business and what characterises them. Next time you are walking through your nearest town or city, make a note of the various businesses you come across and some of their most obvious characteristics. You can do this from memory if you prefer. Think about the criteria by which you might categorise these businesses. Make a note of these criteria and any examples you have thought of.

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You may have thought about a number of different criteria, such as size, the type of business they do, where they are located, who owns them, etc. Here are some commonly used criteria for categorising businesses:

  • Size – this is a fairly obvious but important category. A local greengrocer’s store, run by the owner and employing perhaps two further people, would be an example of a so-called micro-business. A large supermarket chain with stores in multiple locations in several countries and employing dozens of people in each store, as well as many more in its headquarters, warehouses and transportation fleet, would be an example of a large multinational business. And then there are many medium-sized enterprises in between.
  • Industry sector – a fashion retailer, a hairdresser, someone running a market stall, a farm, a machine tool manufacturer and a commercial cleaning business are all very different businesses, and what they do to a large extent influences how they operate.
  • Ownership – this is not always obvious from the outside but different businesses often have very different ownership structures. Some are owned by private individuals, others by groups of shareholders, others are owned by the state, and some have yet different types of owners, such as their own employees or customers, or charitable foundations.

There are other ways of classifying businesses but size, industry sector and ownership structure are some of the more obvious categories to start with.