1.2 Types of Business Entities Flashcards
Private Sector
> Organisations owned by individuals or a group
Consists of private and public companies
Public Sector
> Government owned and managed organisations
Funded by government > taxes
e.g. Healthcare, Education
Privatisation
A public sector organisation going into private sector, to allow government to allocate funds to other priorities
Overlap of public and private sector
PPP’s (Private Partnerships)
> Purpose to deliver services traditionally provided by the public sector
What sector is for-profit commercial enterprises under?
Private sector
What goes under for-profit commercial enterprises?
> Sole trader
Partnerships
Private/Public companies
Sole trader
> For-profit commercial
One individual runs and owns entire business
Partnership
> For-profit commercial
Made up of two or more people who distribute income/losses with each other
Private company
> For-profit commercial
Owned by small group of founders, private investors
Does not sell stock shares to the public
Public company
> For-profit commercial
Open to investment by public
Sells shares to the public at large on market (NY Stock Exchange)
Business vs Company
Business: All entities
Company: Corporated and owned by shareholders and only two types (public/privately held)
Incorporation
> Legal process of a sole trader becoming a company/corporate entity
The owner is now a shareholder
Limited liability - to company not to personal assets of the owner
Legal separation of owner and business
What goes under for-profit social enterprises?
> Public and private sector companies
Cooperatives
Cooperatives
> For profit social enterprise run by their members (employees, customers)
Common goal of creating value for members
All members contribute to decision making and profits are shared between members
Social vs Commercial for-profit enterprises
> Social (SPO’s): Main purpose is around social objectives, profits redirected to social objective
Commercial: Purpose is to create profitable operations for private gain
Corporated structures
Private and public company
Unincorporated structures
Sole trader and partnership
Shares and shareholder
> Part of company owned by shareholder
Person who owns part of company
Dividends
The part of company’s profit returned to shareholders as reward for their investment
Shareholder benefits
> Share price
Limited liability
Dividends
AGM (Annual General Meeting)
> All companies must hold
Allows owners to have say in the running of the business
Shareholders get to vote on
> Resolutions + re-elections of BOD
> Ask Q’s to CEO
> Approve financial accounts of prev years
Private or Public: Pty Ltd and Ltd
> Private: Pty Ltd
Public: Ltd
What is a non-profit social enterprise?
> Uses surplus revenues to achieve their social goals - NOT distributed as profits to shareholders
What are NGO’s?
Non-gov organisations
> Main type of non profit social enterprise
> Private organisations that strive to benefit each other
Two types of NGO’s
> Operational NGO’s: Established from given purpose - involved in community projects
Advocacy NGO’s: Aggressive approach defending a particular cause, striving to raise awareness through direct action
