Types of business organisation

Sole trader

One owner makes decisions quickly → can respond rapidly to customers → greater flexibility → may gain a competitive advantage.

Partnership

Partners contribute skills, finance and ideas → workload and responsibilities are shared → decisions may improve → business performance may increase.

Private limited company (Ltd)

Shares can be sold privately to raise capital → business can fund expansion → limited liability reduces shareholders' personal financial risk → more people may be willing to invest.

Public limited company (plc)

Shares can be offered to the public → potentially large amounts of capital can be raised → major expansion becomes possible → market share may increase.

Franchise

Franchisee uses an established brand and business model → customers may already recognise the brand → sales may build more quickly → failure risk may be lower than for an unknown start-up.

Joint venture

Two businesses share investment, expertise and risk → each contributes resources the other may lack → a new market or project becomes easier to enter → growth may accelerate.

Social enterprise

Trading income funds a social or environmental mission → the organisation can generate funds through sales → it can become less dependent on donations → its social impact may grow.

Public sector organisation

Focuses on providing a service rather than maximising private profit → essential services may be provided to the public → living standards and access to services may improve.

Evaluation chains-Types of business organisation

Limited liability is valuable when a company needs investment, but incorporation brings legal and administrative responsibilities.

Franchising may reduce the risks of starting a business, but franchise fees and royalties reduce the franchisee's profit and independence.

A partnership brings complementary skills, but disagreements between partners can delay decisions.

A plc can raise substantial finance, but shareholders may expect dividends and strong financial returns.