Business-Organizations

Three Differences between public and private sector?

Public sector- Owned by the state

Public Corporations

Municipals

Private Sector- Owned by private individuals.

Sole Trader/Sole Partnership

What is a sole trader?

A sole trader is a business owned and run by one individual who is personally responsible for all aspects of the business and enjoys all profits.

Advantages and Disadvantages of the sole trader business?

Advantages-

Very little needed to start

All the profit belongs to the soul proprietor

Make own decisions

Disadvantages-

Unlimited liability

lack of continuity

difficult to get loan

What is a Partnership?

A legal structure where 2-20 people agree to share in profits and losses of a business they operate together

Look in book for partnership deed notes

Look in book for partnership deed notes

Advantages of a partnership?

Easily formed

More capital available than sole trader

Expenses and management of the business are shared

Disadvantages of Partnership?

Generally Unlimited Liability

Conflict of interest between partners

Each person is liable for the debts of the business

read notes in book for memorandum/Articles of Association

read notes in book for memorandum/Articles of Association

Private limited company?

An incorporated business venture which is separate and distinct from its owners

Main features of Private Limited company?

Usually small and owned by family members

2-50persons

Shares cannot be traded on the stop market

Limited Liability

Shareholders cannot sell their shares without agreement of the other shareholders

ONE EXAMPLE IS A FRANCHISE SUCH AS KFC

Financial Corporations? (CREDIT UNION IS MOST POPULAR ONE)

Provides members with different financial services at competitive rates. (A credit union resources can only be accessed by its members.)

Advantages of financial corporations?

Members have limited liability

Profit is shared among members

Members have equal say in the operations of the business

Opportunity to earn interest on investment

Disadvantages of financial corporations?

Profits may be minimal or non existent

Possibility of conflict among members

Longer decision-making process

Public Sector -Public corporation?

Enterprises/businesses that are owned by the state are referred to as public corporations

What are the features of Public corporations?

Funded mostly from grants

Main aim is not to make profits

Managed by directors appointed by the state

Unlimited Liability (The state bears its debts)

Controlled by a minister of government who will appoint board of directors to deal with day-to-day operations.

Objectives Of public Corporations?

To create employment for citizens

Provide goods and services needed in the country

To keep prices affordable to all

Nationalized Industries?

Entities that have been taken over by the government from private sector organizations

Reasons for nationalizing an entity?

To save an essential enterprise in danger of closure

To provide goods/services that would not otherwise be produced by the private sector. exp:transportation

To protect consumers’ interest

To ensure profits remain in country

Advantages of Nationalizing an entity?

Products and services are usually lower in price than that of other firms

Increase employment opportunities

Products are standardized and uniformed

Resources are used in ways to benefit the community

Disadvantages of Nationalizing an Entity?

Large debts may cause a burden on tax players

Some stage run enterprises suffer from gross inefficiencies

Politics may interfere with the running of these businesses