Organizations in capitalist Economic Systems

Business Firms

• Can be run under one person (sole proprietorship)

• Run by few people (partnership)

• Bigger companies (incorporated businesses)

Sole Proprietorships

• Run and owned by one individual

• Unincorporated

• No legal difference between owner and the business

• Liable for all debts and losses

• Small businesses, contractors, consultants

• Eg. Independent photographer

• “You are the business”

Partnerships (Not incorporated)

• Two or more people in business operating on and share profits and liabilities

• General Partnerships: partners share labilities and profits equally

• Limited partnership: at least one partner has unlimited liability and the other has limited liability

• Silent partner: someone’s invested in the business but not involved with everyday operations

• Eg. Bakeries, restaurants with multiple founders/owners

Corporations

• Company or group of people authorized as a single entity (legally a person) and recognized in law

• Solo or partnerships: owners are fully responsible for business

  • Get all profits and loss/blame

  • Most businesses are incorporated, makes it harder to stay responsible

Different types of Corporations

• Privately owned

  • Founders, founding family

  • Pro: No shareholders

  • Cons: raise capital privately

  • Ex. Samsung

• Publically-traded

  • On the stock market

  • Pro: can raise capital on stock market

  • Con: must answer t shareholders

  • Eg. Apple

Who Runs corporations (corporate governance)

• Owners

  • Direct ownership (shareholders

  • Indirect ownership (mutual fund holders)

• Boards of directors

• Managers

Non-profit organizations

Uses its revenues back into purpose rather than distributing profit

Eg. Ted Talk

Cooperatives

Business owners and operated by a group of individuals

• Consumer cooperatives eg. Co-op gas and food stores

• Owned by members who use their service or purchase their products

• Can be for profit or no profit

• Owners are stakeholders of business