types of business entities 1.2

private sector

the portion of an economy not owned or directed by the government

public sector

the portion of the economy controlled or owned by the government such as government services, schools and state-owned businesses

sole trader

A business owned and run by one person; there is no legal separation between the owner and the business.

partnership

A business owned and run by two or more people who share the responsibility for the business and the profits

value

all the benefits that a business creates for the stakeholders involved

multinational companies

A company that operates in at least two countries, one of which is not the company's home country

features of the private sector

private ownership and control, profits can be earned by owners, little or no government involvement, largely privately funded

private sector is important for economy because

creating employment, helping the development and growth of the economy, providing a wide variety of goods and services

private sectors consists of

sole traders, partnerships, privately held companies and publicly held companies

publicly held company

A company that is publicly owned and and has many shareholders who can buy and sell their shares through a stock exchange.

privately held company

A company that is privately owned and often has family or friends as the shareholders; the shares are not sold to the wider public and are not traded on a stock exchange.

for-profit social enterprise

A type of social enterprise that earns revenue and profits, but integrates social and/or environmental impact directly into its business model.

non-profit social enterprise

A type of social enterprise that produces goods and services to meet human needs, but where any surpluses earned must, by law, be reinvested back into the business.

for-proft commercial enterprise

A type of business that earns profits, which are distributed to owners or shareholders; profits may have prioritity over other objectives.

cooperative

A business owned and operated by its members, who share the profits.

non-governmental organization

A type of non-profit social enterprise that often operates on a large scale, nationally or internationally.

features of the public sector

provide essential goods and services, government owned and controlled, financed by gov taxes, public can alter decisions.

silent partners

provide some finance and expect a share of the profit but take no part in the running of the business

deed of partnership

contract between partners

partnership advantages

greater finance and diverse skills

disadvantage of parternship

clash of opinions and less control

limited liability

the owners of a business are not personally responsible for the debts of the business if it fails; the owners and the business are legally separated.

unlimited liability

the owners of a business are personally responsible for all the debts of the business if it fails; the owners and the business are not legally separated.

memorandum of association

activity of the business and initial share capital

articles of association

internal operation of business - roles and responsibilities

for-profit commercial enterprise example

amazon, apple, stores

for-profit social enterprise example

baron fig: buy a book plant a tree, wary Parker: glasses for needy

non-profit social enterprise example

goodwill, kiva

initial public offering (IPO)

A situation where a company sells all or part of the business to external shareholders for the first time.

documents required before privately held companies can start operating

• the Memorandum of Association, which states the details of the company

• the Articles of Association, which states the internal roles and responsibilities of the board of directors and shareholders