1.2: Type Of Business Entities Flashcards
What is the public sector?
The public sector is controlled by the government and provides social benefits.
What are examples of services provided by the public sector?
Examples include housing and healthcare services.
What is the private sector?
The private sector is owned and controlled by individuals or groups of individuals.
What are two types of business organizations in the private sector?
Sole trader and partnership.
What is a sole trader?
A sole trader is a business organization owned and controlled by one person.
What are the advantages of being a sole trader?
Advantages include easy setup, complete control, receiving all profits, and choosing work patterns.
What are the disadvantages of being a sole trader?
Disadvantages include unlimited liabilities, inability to specialize, lack of capital, and intense competition.
What is a partnership?
A partnership is a legal agreement between two or more people with shared capital investment and responsibilities.
What are the advantages of a partnership?
Advantages include specialization in different areas, shared decision making, more capital investment, and greater privacy.
What are the disadvantages of partnerships?
Unlimited liability
Conflict over profits
Disagreement between partners
What are Privately Held Companies?
A business owned by individuals, family members, etc. its shares are not sold to the general public.
What are the advantages of Privately Held Companies?
• Better control
• Continuity
• Greater privacy than publicly held companies
• Limited liability
What are the disadvantages of Privately Held Companies?
• Can only sell shares to family, friends, or employees
• More expensive to operate
• Vulnerable to takeover by larger companies
What are Publicly Held Companies?
A business whose shares are sold to the general public
What are the Advantages of Publicly Held Companies?
• Can raise additional finance through share issues
• Easier to obtain bank loans and mortgages
• Limited liability
• Benefits from economies of scale
• Continuity
What are the Disadvantages of Publicly Held Companies?
• Lack of privacy
• High administrative costs and complexity
• Vulnerable to takeovers
• Can suffer from diseconomies of scale
What is a For-Profit Social Companies?
A business which uses profit to support a cause while aiming to make a profit.
What are the key characteristics of Social Enterprises?
• Address social or environmental issues
• Focus on achieving social objectives
• Require financial support and skilled human resources
• Include charities, cooperatives, and NGOs
• Aim to create social benefits
What is the Triple Bottom Line?
• Economic: Earn profit to fund activities and growth
• Social: Provide social benefits to local communities
• Environmental: Protect the natural environment
What are the key characteristics For Profit Social Companies in the Private Sector?
• Revenue-generating organizations with a focus on social goals
• Use ethical practices to achieve social objectives
• Earn revenue in socially responsible ways to benefit society or the environment
What are the key characteristics of For Profit Social Companies in the Public Sector?
• Government-owned or controlled businesses
• Generate profit to benefit society
• Profits are used for public benefit
What are the advantages of For Profit Social Companies in the Public Sector?
• Can finance projects through profits by charging fees
• Helps reduce debt and tax burden
• Creates secure jobs and promotes economic development
What are the disadvantages of a For Profit Social Companies in the public sector?
• Expensive to operate (high setup and running costs)
• Difficult to attract private sector investment
• Balancing profits and social goals can be difficult
What is a Public Private Partnership?
A long term agreement where the private sector helps fund, manage and operate public services or projects, etc with the government.
