1.2 - Types Of Organisations Flashcards
Define the private sector
- A part of the economy controlled by private individuals or businesses rather than the government.
- Businesses in the private sector aim to earn profits for their owners/shareholders.
State contribution, operations and examples of the PRIVATE SECTOR
Examples:
Sole traders, partnerships, private limited companies (Ltd), public limited companies (PLC), social enterprises, and multinational corporations (MNCs).
Operations:
Operates based on market demand and supply.
Funded by private investment or internal finance.
Contribution:
Major employer globally.
Drives innovation and economic growth.
Define the PUBLIC SECTOR
Comprises organisations owned + operated by regional or national governments.
Its main aim is to provide essential goods and services to the public, not profit
State contribution, operations and examples of the PUBLIC SECTOR
Examples:
Infrastructure services (roads, transport), public education, healthcare, emergency services.
Operations:
Funded by taxation and operates under government regulation.
Contribution:
Provides stability and public welfare.
Significant employer in most countries.
Define a sole-trader
- A for-profit business owned and operated by one individual who bears full responsibility.
- Has unlimited liability, meaning personal assets are at risk if the business fails.
Evaluate operating as a sole trader
✅ Full control over decisions.
✅ Easy to set up with minimal legal requirements.
✅ Owner keeps all profits.
❌ Limited sources of finance.
❌ Heavy workload and full responsibility.
❌ High risk due to unlimited liability.
Define ‘partnership’
- A private sector business that strives to earn a profit for its owners.
- Owned by two or more partners who share ownership, decision-making, profits, and liability
Evaluate a ‘partnership’
✅ Shared workload, risk, and decision-making.
✅ Broader skillset and expertise.
✅ More access to finance than sole traders.
❌ Unlimited liability
❌ Potential for conflict.
❌ Profit must be shared.
Define a private limited company
A business owned by shareholders with limited liability.
Shares are not available to the public (not sold on stock exchange) + are usually owned by family or close associates.
Evaluate a private limited company
✅ Limited liability protects personal assets.
✅ Easier to raise finance than sole traders or partnerships.
✅ More control over ownership.
❌ Cannot raise capital from the public.
❌ More legal formalities than sole traders.
❌ Profits must be shared among shareholders.
Define a public limited company
- A company that sells shares on the stock exchange to the general public.
- Has limited liability and can raise large amounts of capital.
- Ownership is divided among public shareholders who may buy or sell shares freely.
Define for profit social enterprises
Businesses that aim to generate profit while also fulfilling a social mission
Profit is often reinvested to support social objectives rather than maximise shareholder returns.
What are types of for-profit social enterprises?
Public sector companies (like micro finance providers)
Private sector companies
Cooperatives
Define public sector companies
- a for-profit organisation controlled by a gov.
- Operates commercially to generate profit while serving public or national interests
- Profits oftener reinvested into public services or state development rather than distributed to private shareholders
Evaluate public sector companies
✅ Reduces debt burden on the economy by generating revenue for the state
✅ Create secure employment
✅ Can be ⬆️ stable bc. of backing from gov.
❌ unpredictable rates of return of investment —> difficult to find investors or partners
❌ linked to bureaucratic policies & procedures = follow strict rules & many approval steps = slow process
Define private sector companies
- for-profit business owned by private individuals or organisations, not the state
- Uses commercial strategies to generate revenue while also pursuing social or ethical objectives
- Balances financial return return w/ positive impact on society or the environment
Evaluate private sector companies
✅ can attract ethical investors + socially conscious consumers
❌ risk of “mission drift” if profit is prioritised too heavily
Define cooperatives
- Owned and operated by members (workers, customers, producers).
- Run democratically — each member has one vote, regardless of investment size.
- Members work together to achieve shared economic and social goals.
Evaluate cooperatives
✅ Absence of pressure from external investors= members can run business to their own interests
✅ More likely to succeed bc all members expected to help
✅ Social aims can enhance reputation.
❌ Slower decision-making
❌ Limited access to finance (bc depend on amount contributed by members)
❌ Lack of strong profit incentives may affect productivity + motivation
Define non-profit social enterprises
- organisation that operates like a business but does not aim to make profit for owners or shareholders
- Surplus reinvested to social /community objectives rather than being distributed as dividends
- Examples include NGOs & Charities
Define NGO’s
- non-profit, voluntary organisation that operates independently from the government
- Aims to support humanitarian, environmental, or social causes on a local or global scale
- Funded mainly through donations, grants, and memberships, not by selling goods or services
Define charities
- non-profit organisation set up to raise funds and awareness for a specific cause, such as poverty, health, or education.
- Relies on voluntary donations, fundraising, and grants, with legal status allowing tax exemptions in many countries
- Main goal is to support disadvantaged groups or promote public benefit, not to generate profits.
Evaluate non-profit social enterprises
✅ Strong public trust + ethical branding
✅ Exempt from certain taxes (charities).
✅ Improve social welfare and address inequality.
❌ Strict regulations.
❌ Reliant on unpredictable donations or grants (difficult to get donations for new unknown charities)
