1.2 Types of Business Organization

Body that is set up to meet needs
1. Try to achieve objectives
  1. Use resources
    1. Need to be directed
      1. Have to be accountable
        Have to meet legal requirements
        Have a formal structure
Private Sector B. Organization
1. Unincorporated B.
  1. Sole Trader
    1. One owner
      1. More common
        No legal formalities
        Legal responsibilities
        Need special permissions
    2. Advantages
      1. No legal restrictions
        Money for owner
        Complete control
        Choose hours of work
    3. Disadvantages
      1. Unlimited liability (accountable)
        Continuos problems
        Difficulty to raise money
        Illness can stop work
        Can be sued
        Difficult to have specialists
        No economies of scale
  2. Partnership
    1. More than one owner
      1. Share responsibilities and profit
        Second most common
        No legal formaliies
    2. Advantages
      1. No legal formalities
        No publish of accounts
        More finance
        Work is shared
        Partners can specialize
    3. Disadvantages
      1. Unlimited liability
        Size is limited to # of partners
        Decisions afect all
      2. Profits are shared
        Disagreements
        Can be sued
2. Incorporated B.
  1. Companies
    1. Private Limited Company
      1. Small B.
        Shares transfered privately
        Family owned
      2. Advantages
        Limited liability
        No limit of shareholders
        Tax advantages to owners
        More organized
      3. Disadvantages
        Profits are shared
        Legal procedure to set up B.
        Shares cant be sold to the public
        Finance information viewed by everyone
        Shares not easy to be sold
    2. Public Limited Company
      1. Large B.
        Publish a Prospectus (information of B.)
        Expensive, legal formalities
      2. Advantages
        Sale of shares = many money
        Production cost can be lowerd
        Can dominate the market (size)
        Institutions lend money
        Public pressure = well performace of executives
      3. Disadvantages
        Setting cost = expensive
        Outsiders can take control
        Companies accounts are public
        Less able to deal with customers
        Operations are controlled
        Inflexible due to sieze
    3. Legal separate identity from owners:
      1. Own assets, Form contracts, Employ people
        Can sue and can be sued
        Limited liability
        Capital divided in shares
        Run by directors
        Pay corporation tax
  2. Exiting Stock Market
    1. From public limited to private limited
      1. Causes
        No toleration of external shareholders interferance
        Bought by private individual
        Lose favor in stocck market
Not-for-profit Organization
1. Organization that runs a business but doesn't look for profit
  1. Surpluses (extra) from traiding is shered
    1. Factors that affect choices
      1. Degree of control
        Need of finance
        Nature of B.
        Size
2. Co-Operatives
  1. Operate as consumer or retail co-operatives:
    1. Controlled by owners
      1. Shares not sold in stock market
        Surpluses are divided
        Other form is worker co-operative
3. Charities
  1. Specialized aims
    1. Raise money for good
      1. Rely on donations
        Run by business principles
        Staff are volunteers
        Don't pay taxes
4. Pressure Groups
  1. Groups of people that influence decision makers in politics, business and society
    1. Different aims, objectives and size
Public Sector B. Organization
1. Government (Publicly Owned)
  1. Public corporations set up by law to run services or indutries
2. Privatization
  1. Change from public sector to private sector
3. Owned or controlled by central or local government or public corporations
  1. Certain public goods provided by public sector organizations

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1.2 Types of Business Organization

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	Created by Sandra Vazquez about 9 years ago