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Types of Business Organisations

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Types of Business Organisations There are two Business Sectors: Public Sector These are businesses owned and run by the government. Some examples of Services provided in the public sector are the postal service, schools, colleges, housing environment, some bus and train services, fire, police, ambulance and local justice and social services. Their method of raising capital is different as Private Sector businesses have to raise their own capital e.g. their own money, a bank loan etc. The Public Sector business can get the money required from the Treasury or from local rates. There is no individual owner in the Public Sector. Advantages: * Their main aim is to provide a service, not to make a profit * They will still run even if there is few people using the service * Government is in a good position to plan the overall provision for the country Disadvantages: * It is difficult to motivate employees in an impersonal business such as this * The tax payer has to meet higher tax payments if the business makes a loss * The running of the business can be politically influenced. Private Sector These are businesses owned and run by private people. To start a business in the Private Sector, they have to raise their own capital in order to pay for rent, stock, machinery etc. Some of these businesses can be small and owned and run by one person, other businesses can be larger and run by a group of people. Forms of Private Sector ownership are: Sole Trader, Partnership, Private Limited Company, Public Limited Company, Franchisee, and Co-operatives. Sole Trader These are businesses are the most common form of business ownership mainly because they are easy to set up and are their own bosses. ...read more.


state the official name of the company, the country in which the company is situated, the work the business will be doing, and the amount of capital the business has to start. The memorandum of association states that members' liability is limited and association section which is a declaration by at least two people if they wish to form a company. Articles of Association This shows the voting rights of the shareholders, the method of election of directors, how profits are to be divided, how meetings are to be conducted and the duties of the directors. Public Limited Company The Public Limited Company is the largest type of private sector organisation and the minimum amount of capital required needed is �50,000. The shares in a Public Limited Company may be sold to members of the public - which is where they get their name. Values of shares depend on how successful the company is doing at that particular time and may also rise or fall depending on the general economic conditions in the country. Shares are sold and bought on the stock exchange all the time, although the ownership of shares may change, the amount of capital in the business doesn't change. The company may have thousands of owners but the shares owned by each individual are very small. The liabilities of the shareholders are limited to the amount in which they have invested and they will have confidence that they will only lose that. A dividend is declared each year and shareholders are paid a share of it according to how many shares they own. The official name of the company includes 'plc' to show that the liabilities of the owners are limited. ...read more.


A medium sized business consists of between 50 and 250 employees. Large Businesses Organisations grow larger and technology becomes more intricate, it also becomes more difficult to manage the people involved in an enterprise. Beyond a certain size it is unattainable for one person to know what people are doing or even remember their names. A particular business would consist of more than 250 employees and operate out of a business around 25,000 to 100,000 sq. ft. Limited and Unlimited Liability Any co-operatives or shareholders within a company have the legal protection of limited liability. Sole traders and partners (not sleeping partners) do not have limited liability. Limited liability means that if the business goes bankrupt then the most that they will lose is that capital they have invested into the business. When the risk of running their particular business is high then they feel that it is important to change the status of the business to one which gives them limited liability. This is why many small businesses that have only a small number of partners will change their business ownership and become a private limited company. Background Information When Mac and Dick McDonald first ran their restaurant in San Bernardino successfully for 21 Years it was a form of partnership, in which they made high profits which they were happy with. Most successful businesses like this would expand but Mac and Dick McDonald didn't. It only expanded when Ray Kroc had brought McDonalds from Mac and Dick McDonald. In other words if Mac and Dick McDonald had their own way McDonalds would never have been a global multi-billion dollar business. We can clearly see that because the size of McDonalds had increased this has caused the type of ownership to change from partnership to public limited company. ?? ?? ?? ?? Kim Gieng ...read more.

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