UB2 : Types of Organisations

Question 1

Private Limited Companies Adv

Answer 1

• Limited Liability = Owners are not personally liable for businesses debt etc
• More tax efficient than a Sole Trader or Partnership business

Question 2

Private Limited Companies Disadv

Answer 2

• Assets and profits all belong to the company.
• High set-up costs (legal and administrative)
• Harder to motivate and control workers

Question 3

Public Limited Companies Adv

Answer 3

• Option to offer shares to the public via the stock exchange.
• Receive investment through the sale of shares commonly from investment banks, pension funds and wealthy individuals.

Question 4

Public Limited Companies Disadv

Answer 4

• Increased legal requirements and paperwork.
• Original owners can lose control and ownership of the business.

Question 5

Private Sector - Sole Trader

Answer 5

A sole trader is a business owned by one person, usually small in size. Hairdressers, butchers, and electricians often operate as sole traders.
Sole traders rely on their own savings, bank loans or loans from friends and family to finance their business.
Adv - Easy to set up
-Sole Trader retains all profits
- Sole Trader makes all decisions
Disadv - May be Difficult to raise finance
- Unlimited liability
- Heavy workload

Question 6

Private Sector - Partnerships

Answer 6

Partnerships can have a minimum of 2 and a maximum of 20 partners.
Lawyers, estate agents, doctor and dental practises often operate as partnerships.
A partnership is a business set up by the deed of partnership document.
Adv:
- More equity for business available compared to sole trader.
- Different partners bring different Skills.
- Workload is shared.
Disadv:
- Unlimited liability
- Profit shared between partners
- Partners may not always agree

Question 7

Private Sector - Multinationals

Answer 7

A company which has its headquarters in one country but has assembly or production in other countries.
Increases Market Share
Avoids tax or trade barriers
Cheaper premises and Labour

Question 8

Private Sector - Franchises

Answer 8

Buying into an existing business and acquiring the right to use their ideas.
Between a Franchisee(buys the business from a franchisor to copy business format)
Franchisor (sells right to use a business idea in a particular location)
Less risky than setting up as an independent retailer because it is adopting a proven business model and selling well known products.

Question 9

Public Sector

Answer 9

The organisations run by government that exist to provide a service for the population and communities.
Money to pay for these is raised through a variety of taxes.

Question 10

Third Sector - Charities

Answer 10

An organisation set up for a specific cause.
Receive grants from many fund raising organisations, by sales in charity shops and public donations.
All money goes to the specific cause or pay for running of the charity.
Controlled by elected or appointed trustees.

Question 11

Third Sector - Community Groups

Answer 11

Exist to provide a service for people. Non profit making and all profit goes back to the organisation to ensure it can keep running.
(clubs)

Question 12

Third Sector - Social Enterprise

Answer 12

Exists with a clear goal to help the community but organisations runs like a business. All profit is reinvested back into organisation.