Business structures

This topic in comepent one cover the private and public sector, including their aims and their roles. it will also include the range of legal structures and their features.

Private sector definition

The segment of the economy that is owned and operated by private individuals or shareholders, rather than the government.

Public sector definition

Consists of organisations owned and run by the government for the benefit of everyone.

Public goods

Goods that would not be provided in the free-market system because firms could not charge for them.

Non-excludability

Refers to how it would be impossible to stop people who haven't paid for them from using them

Non-rivalry / non-rivalrous

Refers to how one individual using the good/service wouldn’t prevent others from enjoying the same benefits

Merit goods

Goods that could be provided by the free market, but policymakers recognise that they would be under-consumed. Merit goods are said to have positive externalities, which means they will have positive effects on the individual and on society in general.

Public sector features

Owned/control by the government, providers merit goods, provides employment to all UK residents, funded through taxation ect

Public sector aims

To satisfy needs of society, ensure effective provision for public goods, and promote economic and social welfare by providing jobs, reducing crime, improving the quality of education

Private sector aims

To make profit , survival, share value, market share (growth), ethics

Features of a sole traders

One owner, registered with HMRC, unlimited liability, quick to set up, greater control, limited resources

Features of a Partnerships

Multiple owners, share profit, shared decision making (slow), unlimited liability, have deed of partnership, risk of disputes

Features of a private limited companies (LTD)

Limited liability, separate legal entity (incorporated), shareholders must be invited, financial accounts are published

Features of a public limited companies (PLC)

Limited liability, available on the stock exchange, financial accounts are published, can raise significant funds

Not-for-profit definition

Are run according to regular business principles (but the primary aim isn’t to maximise profits). Instead, they focus on a social or ethical objective.

Co-operatives features

Owner by its members, ran by board of directors, members have equal votes and can receive dividend

Charity features

Primarily aims to benefit the public, operates without profit motive, relies on donations and grants.

Social enterprise features

Aim to generate revenue while addressing social issues, often reinvest profits into the mission.

Societies features

Member-driven organisations focused on common goals/interests, often provide support and services to their members. (can be for profit or not for profit)