Private Sector

PARTNERSHIPS:

• Group or association of 2 and 20 people who agree to own and run a business together.

• More capital could be invested
• Responsibilities would be shared
• Partners would be motivated to work hard because they both would benefit from the profits made.

• Unlimited liability
• Unincorporated business
• Partners can disagree on decisions and take time to consult all partners

PRIVATE LIMITED COMPANIES:

• Is a separate legal unit from its owners

• Shares can be sold
• All shareholders would have limited liability
• The people who started the company are able to keep control of it

• Many legal matters have to be dealt with
• Shares in a LTD cannot be sold or transferred to anyone else without the agreement of the other shareholders .
• Accounts of a company are much less secret

PUBLIC LIMITED COMPANIES:

• Most suitable for very large businesses

• Limited liability to shareholders
• Incorporated business
• No limit to the number of shareholders a PLC can have
• No restriction of transfer of shares
• Usually has high status

• Legal formalities are complicated and time consuming
• Become difficult to control and manage
• Selling shares to the public is expensive

CO-OPERATIVES:

• Groups of people who agree to work together
• All members have ONE vote
• Workload and decision making are shared
• Profits are shared equally amongst members

JOINT VENTURES:

• When two or more businesses agree to start a new project together

• Sharing of costs
• Local knowledge when joint venture country is already based in the country
• Risks are shared

• If the project is successful, then the profits have to be shared
• Disagreements over decisions might occur
• Partners may have different way of running a business

Close corporations:

• Limited to a maximum of ten people
• Very little needs to be done to set up the organization
• The members are also the managers
• Offers limited liability and continuity

• Not suitable form of organization for a large business
• Members may disagree over decision-making

Franchising

BUSINESS ORGANIZATIONS: THE public SECTOR

PUBLIC CORPORATIONS:

Objectives:

•  To keep prices low
•  To keep people in jobs
•  To offer a service to people in all areas of the country

• Owned by the state or central government

• Usually businesses which have been nationalized

• If an important business is failing, the government can nationalize it
• Government ownership is thought to be essential

• No private shareholders to insist on high profits, thus profit motive may not be that powerful
• Often there is no close competition so lack of incentive to increase consumer choice