Topic 1.2 - Types of organizations Flashcards
Charities
non-profit social enterprises that provide voluntary support for good causes
Cooperatives
for-profit social enterprises set up, owned and run by their members, who might be employees and/or customers
Company (corporation)
a business that is owned by shareholders
Deed of partnership
The legal contract signed by the owners of a partnership. The formal deeds specify the name and responsibilities of each partner and their share of any profits or losses.
Incorporation
There is a legal difference between the owners of a company and the business itself. This ensures that the owners are protected by limited liability.
Initial Public Offering (IPO)
occurs when a business sells all or part of its business to shareholders on a stock exchange for the first
Limited Liability
a restriction on the amount of money that owners can lose if their business goes bankrupt, i.e. shareholders cannot lose more than they invested in the company
Micro finance
a type of financial service aimed at entrepreneurs of small businesses
Non-governmental organizations (NGO)
private sector not-for-profit social enterprises that operate for the benefit of others rather than primarily aiming to make a profit
Partnerships
a type of private sector business owned by 2-20 people.
Private limited company
a business owned by shareholders with limited liability but whose shares cannot be bought by or sold to the general public
private sector
the part of the economy run by private individuals and businesses, rather than by the government, e.g. sole traders, partnerships, companies and cooperatives
Public limited company
an incorporated business that allows the public to buy and sell shares in the company via a stock exchange
Public-private partnerships
occur when the government works together with the private sector to jointly provide certain goods or services
Public sector
the part of the economy controlled by the government
Sole trader
a self-employed person who runs and controls the business and is the sole person held responsible for its success or failure
Social enterprises
revenue-generating business with social objectives at the core of their operations
state-owned enterprises
organizations wholly owned by the government
Stock exchange
a market place for trading stocks and shares of public limited companies
Unlimited liability
a feature of sole traders and ordinary partnerships who are legally liable for all monies owed to their creditors, even if this means that they have to sell their personal possessions to pay for their debts
Advantages of charities
Social benefits, tax exemptions for NPOs, tax incentives for donors, limited liability, public recognition and trust
Disadvantages of charities
Bureaucracy, disincentive effects, charity fraud, inefficiencies, limited sources of finance
Advantages of micro finance providers
Accessibility, job creation, social well-being
Disadvantages of micro finance providers
immorality, limited finance, limited eligibility
Advantages of cooperatives
Incentives to work, decision-making power, social benefits, public support
Disadvantages of cooperatives
disincentive effects, limited sources of finance, slower decision-making, limited promotional opportunities
Advantages of companies/corporations
raising finance, limited liability, economies of scale, productivity, tax benefits
Disadvantages of companies/corporations
communication problems, added complexities, compliance costs, disclosure of information, bureaucracy, loss of control
Advantages of partnerships
financial strength, specialization and division of labour, financial privacy, cost-effective
Disadvantages of partnerships
Unlimited liability, a lack of continuity, prolonged decision-making, lack of harmony
Advantages of sole proprietorships
few legal formalities, profit taking, being your own boss, personalized service, privacy
Disadvantages of sole proprietorships
Unlimited liability, limited sources of finance, high risks, workload and stress, limited economies of scale, lack of continuity
