Notes: 1.2 Types of business entities

Vocabulary flashcards covering key concepts from the lecture notes on types of business entities, including private/public sectors, ownership, liability, and examples of different organizational forms.

Private sector

That portion of the economy owned and operated by private individuals or businesses, driven by profit and market forces.

Public sector

Government-owned organizations and state enterprises that provide services to the public, guided by government decisions and policy.

Sole trader

A business owned and run by one person; profits go to the owner; unlimited liability.

Unlimited liability

Owner is personally liable for all debts of the business; personal assets can be used to cover losses.

Partnership

A business owned by two or more partners who share profits and responsibilities; one or more partners may have unlimited liability; formalised by deed.

Deed of partnership

A legal document that sets out profit sharing, responsibilities, and terms of partnership.

Limited liability company (private limited / Pvt Ltd)

A company separate from its owners; shareholders have liability limited to their shares.

Privately held company

A company whose shares are owned by private individuals or families and are not traded publicly.

Publicly held company

A company whose shares are traded on a stock exchange and held by the general public; must publish final accounts.

Cooperative

Member-owned and member-controlled enterprise where profits are shared and each member typically has a vote.

One member, one vote

Democratic control principle in most cooperatives: each member has equal voting rights regardless of investment.

Cooperative members

Owners, workers, and beneficiaries who have a say in decision-making through membership.

For-profit social enterprise (private sector)

A revenue-generating business with social objectives, operating to earn profits while pursuing social aims.

Public sector for-profit social enterprise

State-owned enterprises operating commercially to raise government revenue and provide services.

Private sector for-profit social enterprises

Private sector firms that pursue social aims while operating to make a profit.

NGO (non-governmental organization)

Private-sector organizations delivering goods/services usually provided by the public sector; funded by donations/grants.

Triple bottom line

An accounting framework measuring social, environmental, and financial performance.

Porter’s generic strategies

Competitive framework with three options: cost leadership, differentiation, and focus.

STEEPLE analysis

Analytical tool assessing social, technological, economic, environmental, political, legal, and ethical factors.

Distinction between private and public sectors

Differences in ownership, motive, organizations, and operating mechanisms between sectors.

Shares

Units of ownership in a company; transferable; traded on stock exchanges for publicly held firms.

Limited liability

Liability limited to the amount invested; owners' personal assets are protected.

Market share

The proportion of total market sales controlled by a firm; difficult to measure for cooperatives due to diverse markets and member focus.

State Farm Insurance

Large US cooperative example of a member-owned enterprise with high turnover.

Privately held vs publicly traded shares

Privately held shares aren’t sold on public markets; publicly traded shares are bought/sold on exchanges.

NGO services

Goods/services provided by NGOs to fill gaps left by governments in essential areas.

Cooperative ownership structure

Owned by members who vote and share profits; decision-making is democratic, not driven by external shareholders.