Types of business organizations

Question 1

Social enterprise

Answer 1

Social objectives and ethical aims for the betterment of a community:

+ Committed employees
+ Job satisfaction
+ Positive change

-Less competitive

Types:
- Not-for-profit
- Charities

Question 2

Franchisees

Answer 2

Buy rights to use franchisors brand name and product/service.

+ Chances of success
+ Provides support
+ Contribute funds or marketing
+ Easy to get loans

-Limited control
-Initial cost
-Pay fee and percentage of revenue

Question 3

Co-operative

Answer 3

Managed by consumers, workers or producers.

+ Common interest (less conflict)
+ Democratic
+ Tax relief
+ Limited liability
+ Death doesn’t affect

-Hard to raise finance
-Lack of skills
-Public accounts

Question 4

Limited company

Answer 4

Incorporated business owned by shareholders:

+ Limited liability
+ Easy to raise finance
+ Continues after death of owners

-Hard to set up
-Lose control
-Public accounts

Types:

• Private
• Public

Question 5

Partnership

Answer 5

Unincorporated business owned by 2 or more:

+ Quick, cheap, simple to start
+ All profits
+ Full control
+ Shared workload

-Unlimited liability
-Hard to finance
-Disagreements between partners
-Decisions legally bind all

Question 6

Sole trader

Answer 6

Unincorporated business run by 1 person:

+ Cheap, quick to start
+ All profits
+ Full control

-Unlimited liability
-Hard to raise finance