1. Types of Organization

2. Content Types of Organizations Profit, non-profit and non-governmental
Sole Trader/Proprietors
Partnerships
Companies/Corporations

3. Classifications of Business
Private and Public sectors
Profit-based and non-profit based
Private Sector First

4. The Private Sector of the Economy
The Private Sector comprises businesses owned and controlled by individuals or groups of individuals. In every country, most business activity is in the private sector.
Identify the private sector companies:

5. The Public Sector of the Economy
The Public Sector comprises Organizations accountable to and controlled by central or local government. These usually include:
Health and education services
Identify the Public Sector companies:

6. The Private Sector Outline
Types of Private Sector
Businesses
Cooperatives
Sole
Trader
Limited
Companies
Partnership
Public
plc
Private
Ltd

7. The Sole Trader/Proprietor
This is the most common form of business organization. One person provides the finances and in return, has full control of the business and is able to keep all the profits.
Identify some of the advantages…………

8. The Sole Trader/Proprietor Advantages
Easy to set up-no legal formalities.
Owner has complete control –not answerable to anybody else.
Owner keeps all profits.
Able to choose times and patterns
of working.
Able to establish close personal
relationships with staff
(if any are employed) and customers.
The business can be based on the
interest and skills of the owner –
rather than working as an employee
for a larger business.

9. The Sole Trader/Proprietor
Identify some of the disadvantages…………

10. The Sole Trader/Proprietor Disadvantages
Unlimited liability – all of the owner’s a assets are potentially at risk.
Often faces intense competition from bigger firms, for example, food retailing.
Owner is unable to specialize in areas of the business that are most interesting – it is responsible for all aspects of management.
Difficult to raise additional capital.
Long hours often necessary to
make business pay.
Lack of continuity- as the
business does not have separate
legal status, when the owner dies,
the business ends too.

11. Partnership Partnerships are agreements between two or more people
carry on a business together,
usually with a view of making a profit.
The Deed of Partnership establishes the rights and privileges of the partners. This document includes issues such as voting rights, distribution of profits, The management role of each partner and who has the authority to sign contracts.

12. Partnership
Identify advantages of a partnership

13. Partnership Advantages
Partners may specialize in different areas of business management.
Shared decision making.
Additional capital injected by each partner.
Business losses shared between the partners.
Greater privacy and fewer legal formalities that corporate Organizations (companies)

14. Partnership .
Identify disadvantages of a partnership

15. Partnership Disadvantages
Unlimited Liability for all partners.
Profits are shared.
There is, as with sole traders, no continuity and the partnership will have to be reformed in the event of the death of one partner.
Al partners are bound by the decision of any one of them.
Not possible to raise capital from selling shares.
A sole trader, taking on partners will loose independence of decision making.

16. Limited Company
3 Differences between limited companies and sole traders and partnerships
Limited companies have:
1. Limited Liability
2. Legal Personality
3. Continuity

17. What is limited liability?
Financial protection in the event that the company fails. The financial liability is limited.
Sole Traders and Partnerships are financially responsible for all claims against the company.

18. What is legal personality?
A company is its own entity having an identify separate of that of its owners.
“It is its own person” so to speak in the eyes of the law.

19. What is continuity?
The company will continue to exist in the event of the death of its owners.
A sole trader or partnership is automatically dissolved.

20. Who owns a limited company?
Shareholders The company issues shares. Each share is a small ownership in the company.
Shareholders own shares in a limited company.

21. What is a Private Limited Company? (Ltd.)
It is a company – has issued shares.
Its shares are not available for sale to the public.

22. Private Limited Companies
Tend to be relatively small companies.
Their business name ends in Limited or Ltd.
IE: JP Solutions Ltd.
Shares can only be transferred privately and all shareholders must agree to the transfer.
Private Limited Companies are often family businesses owned by members of the family or close friends.
The directors of these companies tend to be shareholders and are involved in the running of the business.
Many manufacturing firms are Private Limited Companies rather than Sole Traders or Partnerships

23. Private Limited Companies Advantages
Shareholders have limited liability.
More capital can be raised as there are no limits on the number of shareholders.
Control of companies cannot be lost to outsiders.
The business will continue even if one of the owners dies.

24. Private Limited Companies Disadvantages
Profits have to be shared out amongst a much larger number of members.
There is a legal procedure to set up the business. This takes time and costs money.
Firms are not allowed to sell shares to the public This restricts the amount of capital that can be raised.
Financial information filed with the
Registrar can be inspected by any
member of the public.
Competitors could use this to their
advantage.

25. What is a Public Limited Company? (Plc.)
It is a company – has issued shares.
Its shares are available for sale to the general public. Its share price is quoted on the stock exchange.
A board of directors control the management of the company appointed at an annual meeting.
Stockholders have voting rights at the annual meeting.

26. Advantages of a Corporations
Can raise money by issuing shares of stock.
Offers owners limited liability Owners are liable only up to the amount of their investments.
People can easily enter or leave the business by buying or selling their shares of stock.
The business can hire experts to professionally manage each aspect of the business.

27. Disadvantages of a Corporations
Start-up is costly – legal assistance is required as well as business consultants and financial advisors.
Corporations are subject to more government regulations than partnerships or sole proprietorships
Share prices fluctuate; risk of takeover
Income is taxed twice
Short-term profit objectives of major shareholders

28. Public Limited Companies
Disadvantages
Setting up costs can be very expensive.
Since anyone can buy shares, its possible for an outside interest to take control of the company.
All company accounts can be inspected by member of the public.
Because of their size they cannot deal with customers at a personal level.
The way they operate is controlled by various company acts which aims to protect shareholders.
There is divorce of ownership and control which might lead to the interest of owners being ignored to some extent.
Plcs inflexible due to their size.
Advantages
Huge amounts of money can be raised from the sale of shares to the public.
Production costs may be lower as firms gain economies scale.
Because of their size, plc can often dominate the market.
It becomes easier to raise finance as financial institutions are more willing l to lend to plcs.
Questions: What are the limitations of being a limited company in a highly competitive market?

29. Public Sector Organizations
Now the Public Sector

30. Public Sector Organisations
The Public Sector is made up or organizations which are owned and controlled by central or local government or public corporations. They are funded by government and in some cases from their own trading ‘surplus’ or profit.
Public Sector businesses still have important roles to play in certain areas of business activity.

31. Public Corporations
Public corporations are owned and controlled by the government.
Profit is not their main goal.
They are meant to serve or meet the needs of citizens.
Examples:
PBS (Public Broadcasting Service)
United States Postal Service

32. Public Corporations Advantages Disadvantages
Managed with social objectives rather than profit
Loss-making services might be kept operating if the social benefit is great
Finance raised mainly from the government
Disadvantages
Tendency towards inefficiency because no profit targets
Subsidies from government can encourage inefficiencies
Government may interfere in business decisions for political reasons

33. Non-Profits AKA: Non-Governmental Organizations (NGOs)
Charities
Pressure Groups
Social Enterprise

34. Charity Profit is not the objective
Money raised is used to support or bring attention to cause

35. Pressure Group Citizens Business Governments
Pressure groups are charities
Their goal is to change behaviors in:
Citizens
Business
Governments

36. Social Enterprise
A company with an objective to reinvest or use profits to benefit society.
Triple bottom line:
Economic: Make a profit to reinvest
Social: Provide job support for community
Environmental: Manage business in a sustainable way