Chapter 2 - Forms of Business, regulation and governce

3 types of enterprise

1. public enterprise

2. private enterprise

3. not for profits

public enterprise def

owned and controlled by government (hence why public) at national or local level

private enterprise def

owned by individuals or shareholders and operate for profit

not for profit def

achieve a social,cultural or community goal rather than making profit for owner/shareholder

eg gofundme

8 ownership types

1. sole trader

2. partnership

3. private limited company

4. designated area company (DAC)

5. Public limited company

6. Co operatives

7. franchises

8. public sector

Sole trader

public sector

co operatives def

Sole Trader - 1 owner - easy to set up - unlimited liability - private accounts

Public Sector - Government owned - provide essential services in state

Co Operatives - Democratically controlled - (ONE MEMBER ONE VOTE) Jointly owned by members for common goal (hence co op) - Limited liability - limited finance and not profit driven

Partnership

Public Limited Company and

Franchises def

partner ship - 2-20 owners - unlimited liability - private accounts

Public Limited Company - Shares sold on stock exchange - unlimited owners - published accounts - limited liability - CONTUNITY OF EXISTANCE

Franchises - Franchiser (mcdonalds) give permisson to franchisee to use their brand in return for % of profit + mentoring + existing customer base + costly and reduced creativity

Designated area company

private limited company def

DAC - limited company made for 1 purpose in a regulated industry like banking

Private limited company - 1-149 owners - limited liability - CONTUINITY OF EXISTANCE

why ownership changes over time? (6)

1. Limited liability -Move from unlimited to limited (sole trader to Private limited company)

2. continuity of existence - company ends due to death of owner

3. expansion - access to capital (eg Priv LC 1-149 vs partnerships (2-20) or sole trader (1))

4. tax benefits -

5. privatization - semi state may be sold to private investors so it can raise more capital to compete

6. nationalism - Government may take over a private business that could fail to protect the industry or economy from collapse (eg nationalizing banks to prevent them from failing)

Regulation in business

Purpose of regulation and what does good regulation do

ensures business operates safley , ethically and sustainably

Protects stakeholders

Good regulation builds trust and reduces risk

internal regulation (4)

1. Internal Audit - Independant examination of firm (Financial and enviromental)

2. Risk Managment - identifys all risk and potential losses it faces (Minimizes the risk)

3. Compliance - Procedure to make sure they are following the law and the internal policys

4. Corporate Goverence - systems and processes used to manage a company

external regulation (4)

Government regulators - CCPC/WRC/EPA ensure business comply with rules

Legal Compliance - laws business must follow

External Audit - Outside business examine internal processes and report on it

European laws - Regulations and directives irish businesses must follow

GOVERNCE def

refers to system system of rules, practices and processes used to direct and control business

it identify’s who makes decisions and who has authority and where accountability for how business behaviour and performs lie

FACTORS CONSIDERED IN ESG REPORT

environmental

social

governce