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Content
Types of Organizations
Profit, non-profit and non-governmental
Sole Trader/Proprietors
Partnerships
Companies/Corporations
Classifications of Business
Private and Public sectors
Profit-based and non-profit based
Public
Private
plc
Ltd
The Sole Trader/Proprietor
This is the most common form of business
organization. One person provides the finances
and in return, has full control of the business and
is able to keep all the profits.
Identify some of the advantages…………
The Sole Trader/Proprietor Advantages
Easy to set up-no legal formalities.
Owner has complete control –not answerable to
anybody else.
Owner keeps all profits.
Able to choose times and patterns
of working.
Able to establish close personal
relationships with staff
(if any are employed) and customers.
The business can be based on the
interest and skills of the owner –
rather than working as an employee
for a larger business.
The Sole Trader/Proprietor
Identify some of the disadvantages…………
The Sole Trader/Proprietor Disadvantages
Unlimited liability – all of the owner’s a assets are
potentially at risk.
Often faces intense competition from bigger firms, for
example, food retailing.
Owner is unable to specialize in areas of the business
that are most interesting – it is responsible for all
aspects of management.
Difficult to raise additional capital.
Long hours often necessary to
make business pay.
Lack of continuity- as the
business does not have separate
legal status, when the owner dies,
the business ends too.
Partnership
Partnerships are agreements
between two or more people
carry on a business together,
usually with a view of making a profit.
The Deed of Partnership establishes the rights
and privileges of the partners. This document
includes issues such as voting rights,
distribution of profits, The management role of
each partner and who has the authority to sign
contracts.
Partnership
1. Limited Liability
2. Legal Personality
3. Continuity
What is limited liability?
Financial protection in the event that
the company fails. The financial
liability is limited.
Examples:
PBS
(Public Broadcasting Service)
United States Postal Service
Public Corporations
Advantages Disadvantages
Managed with social
objectives rather than Tendency towards
inefficiency because
profit no profit targets
Loss-making services Subsidies from
might be kept government can
operating if the social encourage
inefficiencies
benefit is great
Government may
Finance raised mainly interfere in business
from the government decisions for political
reasons
Non-Profits
Non-Governmental
Organizations (NGOs)
Charities
Pressure Groups
Social Enterprise
Charity
Profit is not the
objective
Money raised is
used to support or
bring attention to
cause
Pressure Group
Pressure groups
are charities
Their goal is to
change behaviors
in:
Citizens
Business
Governments
Social Enterprise
A company with an
objective to reinvest or use
profits to benefit society.
Triple bottom line:
Environmental: Manage
business in a sustainable
way
Public-Private Partnerships (PPP)
Private sector management and
financing in public sector projects
that benefit the public
Government Funded PPP
Government provides all or part of
the funding
Private management to control costs
and be efficient
Private Sector Funded (PPP)
Large projects that are financed in
the private sector releasing the
government from the burden of
funding.
The gov’t then leases or pays rent
Known as PFI – Private Finance
Initiative
Govt Directed with Private
Financing and Management (PPP)
Private sector funding and private
sector management of public
projects.
Example: London hospital was built
with private financing, then leased to
the government which manages and
control hospitals health care
services.
PPP Costs and Benefits
Costs
Benefits
If managed by the
private sector, can cut Schools, roads,
wages and benefits prisons, and hospitals
and workers no longer have been built with
have protection of this scheme
being employed by The goal is for private
the public sector sector to make a
Reputation of large profit causing cost
business earning large efficiency not seen
profits paid by with government
taxpayers supervision
Private sector may Public service
lack experience improvement without
managing such large increasing taxes for
scale projects capital improvements