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Classify the business according to its ownership, and explain the benefits and constraints of this type of ownership.

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Introduction

Classify the business according to its ownership, and explain the benefits and constraints of this type of ownership. British airways is a Plc (Public Limited Company), which is incorporated, other types of business are Ltd (Private Limited Company), which is also incorporated. There is also unincorporated business, which are a sole traders and partnerships. Unincorporated businesses: An unincorporated business has unlimited liability and the owners are the business, Which means in law an unincorporated business is libel for all of its debts and is personally responsible for repaying those debts. Sole traders: A sole trader is an individual trading in his or her name, or under a suitable trading name. Advantages are: You are your own boss which gives you freedom, there are no legal formalities required before you can start which makes it simple, there is less form filling and there are no legal costs i.e. ...read more.

Middle

Advantages are: there are more possible sources of capital then if you were a sole trader as there are more people to contribute money, they could have a wider range of expertise as different people can specialise on different aspects of the business, there are people to cover for you if you're sick and unlike a limited company a partnership doesn't have to make its accounts available to the public. Disadvantages are: limited liability which means that each partner is liable for a debt and disagreements can occur between partners which could break up the business. Some examples of Partnerships are: Firms of solicitors, accountants and architects. Incorporated business: An incorporated business has limited liability and the owners are separate from the business, which means that if the business was to go into debt ...read more.

Conclusion

In a Plc the shareholders have a say in what goes on the business. Advantages are: limited liability, Huge amounts of money is raised from sale of shares, production costs are lower due to economies of scale and because they are so big they can dominate the market. Disadvantages are: anyone can buy a share in the business, there not able to deal with customers at a personal level due to there size, the way they operate is controlled by various company acts to protect shareholders, there may be a divorce of ownership and control which might lead to the interests of shareholders being ignored and they can be inflexible due to size as well. Some examples of Plc are: large companies such as ICT, Tesco, British steel and of course British Airways. Gary Harrison ...read more.

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