1.2 Types of Organizations
goal is profit-maximization
owned and controlled by private individuals and businesses
Examples:
Law firms
Estate agents
Newspapers or magazines
Financial Services
provides essential goods and services that is inefficiently being provided by the private sector
owned and controlled by the government
Examples:
Healthcare
Public Education
Museums
Armed forces
business is owned and controlled by one person
the simplest form of businesses
owned by a single owner who takes all profits and liabilities
Advantages | Disadvantages |
|---|---|
financial strength, more start-up capital | unlimited liability |
shared responsibility | slower decision making |
less pressure | disagreements & conflicts |
businesses owned by shareholders, those who have invested money to provide capital for a company
there is a legal difference between the owners’ and the business’ identity
Limited Liability - shareholders only lose the value of their investment, not their personal belongings
more bureaucracy
two types: Private & Public
Private Limited Company:
shareholders are usually family, friends, and business partners
shares are not traded on a public stock exchange
unless elected to the Board of Directors; the shareholders aren’t involved in running the business
Advantages | Disadvantages |
|---|---|
limited liability | more legal restrictions |
higher capital, expansion capacity | corporate taxes |
no limit on the number of shareholders | profit has to be shared among many people |
Public Limited Company:
shared are traded on a public stock exchange
required to publish financial accounts and reports to the public
Advantages | Disadvantages |
|---|---|
limited liability | vulnerable to takeovers |
more capital, expansion capacity | value of shares can go down |
shares can be bought and sold easily | rules and restrictions |
value of shares can increase | expensive to set up |
Social Enterprises: Revenue generating businesses with social objectives at the core of their objectives
Main Goals:
to achieve social objectives
earn revenue in excess of costs
jointly owned and run by members who share profits and benefits
Consumer Cooperatives | Worker Cooperatives | Produces Cooperatives |
|---|---|---|
owned by the customers who buy the goods and/or services for personal use | set up, owned, and organized by their employee members | join and support each other to process or market their product |
Advantages | Disadvantages |
|---|---|
incentives to work | limited sources of finance |
social benefits | slower decision-making |
public support | limited promotional opportunities |
small loan providers to poor businesses who have no access to conventional banking services
Advantages | Disadvantages |
|---|---|
job creation | limited finance |
social well-being | limited eligibility |
government jointly works with the private sector companies
Advantages | Disadvantages |
|---|---|
more productive while also proving merit goods | government must support financially when costs increase for the business |
conflict between public & private sector intents & goods |
organizations operating for public welfare, not profit
exempt from many taxes
exists in the private sector
participates in humanitarian, educational projects, etc
WWF, UNESCO, Red Cross
non-profit organization that is exempted from taxes
charitable objectives
reducing poverty
environmental degradation
Advantages | Disadvantages |
|---|---|
social benefits | bureaucracy |
tax exemptions | charity frauds exist |
public recognition | limited sources of finance |
limited liability | disincentive effects |
goal is profit-maximization
owned and controlled by private individuals and businesses
Examples:
Law firms
Estate agents
Newspapers or magazines
Financial Services
provides essential goods and services that is inefficiently being provided by the private sector
owned and controlled by the government
Examples:
Healthcare
Public Education
Museums
Armed forces
business is owned and controlled by one person
the simplest form of businesses
owned by a single owner who takes all profits and liabilities
Advantages | Disadvantages |
|---|---|
financial strength, more start-up capital | unlimited liability |
shared responsibility | slower decision making |
less pressure | disagreements & conflicts |
businesses owned by shareholders, those who have invested money to provide capital for a company
there is a legal difference between the owners’ and the business’ identity
Limited Liability - shareholders only lose the value of their investment, not their personal belongings
more bureaucracy
two types: Private & Public
Private Limited Company:
shareholders are usually family, friends, and business partners
shares are not traded on a public stock exchange
unless elected to the Board of Directors; the shareholders aren’t involved in running the business
Advantages | Disadvantages |
|---|---|
limited liability | more legal restrictions |
higher capital, expansion capacity | corporate taxes |
no limit on the number of shareholders | profit has to be shared among many people |
Public Limited Company:
shared are traded on a public stock exchange
required to publish financial accounts and reports to the public
Advantages | Disadvantages |
|---|---|
limited liability | vulnerable to takeovers |
more capital, expansion capacity | value of shares can go down |
shares can be bought and sold easily | rules and restrictions |
value of shares can increase | expensive to set up |
Social Enterprises: Revenue generating businesses with social objectives at the core of their objectives
Main Goals:
to achieve social objectives
earn revenue in excess of costs
jointly owned and run by members who share profits and benefits
Consumer Cooperatives | Worker Cooperatives | Produces Cooperatives |
|---|---|---|
owned by the customers who buy the goods and/or services for personal use | set up, owned, and organized by their employee members | join and support each other to process or market their product |
Advantages | Disadvantages |
|---|---|
incentives to work | limited sources of finance |
social benefits | slower decision-making |
public support | limited promotional opportunities |
small loan providers to poor businesses who have no access to conventional banking services
Advantages | Disadvantages |
|---|---|
job creation | limited finance |
social well-being | limited eligibility |
government jointly works with the private sector companies
Advantages | Disadvantages |
|---|---|
more productive while also proving merit goods | government must support financially when costs increase for the business |
conflict between public & private sector intents & goods |
organizations operating for public welfare, not profit
exempt from many taxes
exists in the private sector
participates in humanitarian, educational projects, etc
WWF, UNESCO, Red Cross
non-profit organization that is exempted from taxes
charitable objectives
reducing poverty
environmental degradation
Advantages | Disadvantages |
|---|---|
social benefits | bureaucracy |
tax exemptions | charity frauds exist |
public recognition | limited sources of finance |
limited liability | disincentive effects |
