1.2 Types of Organisations

Question 1

What are the Types of Business Ownerships?

Answer 1

1. Sole Trader
2. Partnerships
3. Public Limited Companies
4. Private Limited Companies
5. Public Corporations

Question 2

What are the Types of Business Organisations?

Answer 2

1. Franchises
2. Joint Ventures
3. Multinatonals
4. Social Enterprises

Question 3

What are Sole Traders, their advantages and disadvantages?

Answer 3

Sole traders are businesses owned, controlled, and managed by one person, with unlimited liability.

Advantages:

1. Full Control
2. Flexibility
3. All Profit is theirs
4. Easy to set up

Disadvantages:

1. Unlimited Liability
2. Hard to make decisions
3. May not have enough capital
4. Inexperienced
5. Longer Hours
6. Cannot Compete
7. Business ceases to exist when owner dies

Question 4

What are Partnerships, their advantages and disadvantages?

Answer 4

Partnerships are businesses owned by two or more individuals, with unlimited liability.

Advantages:

1. Easier to make capital
2. shared decision making
3. easy to start
4. Shared Workload

Disadvantages:

1. Shared Profit
2. One Bad apple, all rotten
3. Opinion Clashes
4. Unlimited Liability
5. Business is lost when one person leaves.

Question 5

What are Private Limited Companies, their advantages and disadvantages?

Answer 5

These are incorporated businesses with limited liability. A limited company is owned by the shareholders.

Advantages:

1. Limited Liability
2. Business Continues if a Shareholder dies
3. Can Raise FInances

Disadvantages:

1. Hard to Sell Shares, Must be close etc
2. Hard to set up, also expensive
3. dividends
4. financial documents must be submitted

Question 6

What are Public Limited Companies, their advantages and disadvantages?

Answer 6

These are incorporated companies with limited liability which can sell their shares publicly.

Advantages:

1. Easier to raise finances
2. generally more well known
3. If a shareholder dies its okay

Disadvantages:

1. Risk of Takeover
2. Financial Documents are Public
3. Expensive to start-up

Question 7

What are the main differences between Public and Private LLCs?

Answer 7

1. Ownership
   
   1. Pub → Large Number of Shareholders
   2. Priv → Small Number
2. Size
   
   1. Pub → Big
   2. Priv → Small
3. Sale of Shares
   
   1. Pub → Easy
   2. Priv → Hard
4. Control
   
   1. Pub → Board of Directors
   2. Priv → Shareholders

Question 8

How do you measure a business’ success?

Answer 8

1. Number of Employees
2. Value of Output
3. Profit
4. Personal Satisfaction
5. Market Share
6. Longevity Capital Employed

Question 9

What are the differences in risk and ownership in incorporation?

Answer 9

Unincorporated:

1. Business and Owner are one, owners can be sued for failures caused by the business.
2. Limited Liability means that banks can make owners use their personal funds to pay debts.

Incorporated:

1. Business and owner are separate identities, the company will be sued not the person.
2. Only risks the amount initially invested.

Question 10

What are the reasons for and against for Public Corporations?

Answer 10

For:

1. With Social Objectives, for the people
2. Can close income inequality
3. Reduce unfairness

Against:

1. Uses Tax Money
2. Can be Inefficient because of no motivation
3. May be a loss overall

Question 11

How do you choose the types of organisations?

Answer 11

1. Number of Owners Wanted
2. Owner’s Role in Management
3. Attitude Towards Risk
4. Potential Size
5. How quick operations start