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1.2 Types of Organizations

Private & Public Sectors

Private Sector Businesses

goal is profit-maximization
owned and controlled by private individuals and businesses
Examples:
- Law firms
- Estate agents
- Newspapers or magazines
- Financial Services

Public Sector Businesses

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

Profit-Based Organizations

Sole Trader

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

Companies/Corporations

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

For-Profit Social Enterprises

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

Cooperatives

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

Microfinance Providers

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

Public-Private Partnerships [PPP]

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