Business

• Sole Trader/Sole Proprietorship is a business organization owned and controlled by one person.
• Sole traders can employ other workers, but only they invest and own the business.
• Sole traders have the advantage of easy set up with very few legal formalities involved in starting and running a sole proprietorship.
• A less amount of capital is enough by sole traders to start the business.
• Sole traders have full control over the business and decision-making is quick and easy as there are no other owners to discuss matters with.
• Joint stock companies have shareholders with limited liability.
• The notes are tailored to the old syllabus and are currently being updated for the new syllabus.
• Franchising and public cooperation are missing from the notes.
• Sole trader receives all profit as there is only one owner, he/she will receive all of the profits the company generates.
• Since it is a small form of business, the owner can easily create and maintain contact with customers, which will increase customer loyalty to the business and also let the owner know about consumer wants and preferences.
• Sole traders have the disadvantage of unlimited liability, where if the business has bills/debts left unpaid, legal actions will be taken against the investors, where their even personal property can be seized, if their investments don’t meet the unpaid amount.
• Sole traders have full responsibility as there is only one owner, the sole owner has to undertake all running activities.
• Sole traders have a lack of capital as only one owner/investor is there, the amount of capital invested in the business will be very low.
• Public Limited Companies are companies where the shares can be sold to any individual/organization in the general public through stock exchanges.
• Companies enjoy continuity, unlike partnerships and sole traders, as the business will continue even if one of its owners retires or dies.
• Shareholders elect a board of directors to manage and run the company in its day-to-day activities.
• Private Limited Companies are companies where the shares can only be sold to people they know with the agreement of other shareholders.
• Advantages of companies include limited liability, the ability to raise huge amounts of capital, and the ability to advertise their shares in a prospectus.
• Unincorporated shareholders have unlimited liability and don't have a separate legal identity from their business.
• Disadvantages of companies include being required to disclose financial information, not being able to sell shares to the public, and requiring a lot of legal documents and investigations before being listed on the stock exchange.
• The more shares a shareholder has, the more their voting power.
• Sole traders have a lack of continuity, if the owner dies or retires, the business dies with him/her.
• Public and Private Limited Companies must hold an Annual General Meeting (AGM) where all shareholders are informed about the performance of the company and company decisions, vote on strategic decisions and elect board of directors.
• Fast food companies such as McDonald's and Subway operate around the globe through lots of franchises in different countries.
• Franchises are businesses where the owner of a business (the franchisor) grants a licence to another person or business (the franchisee) to use their business idea, often in a specific geographical area.
• Partnerships are legal agreements between two or more (usually, up to twenty) people to own, finance and run a business jointly and to share all profits.
• Partnerships have the advantage of easy set up with very few legal formalities required to start a partnership business.
• Partners can provide new skills and ideas, the partners may have some skills and ideas that can be used by the business to improve business profits.
• Partnerships have the disadvantage of conflicts, arguments may occur between partners while making decisions, which will delay decision-making.
• Partnerships have unlimited liability, similar to sole traders, partners too have unlimited liability- their personal items are at risk if business goes bankrupt.
• Partnerships have a lack of capital, smaller capital investments as compared to large companies.
• Partnerships have no continuity, if an owner retires or dies, the business also dies with them.
• Joint venture is an agreement between two or more businesses to work together on a project.
• Motivation might not be as high because profit is not an objective.
• Each business brings different expertise to the joint venture.
• Provide essential services to the people.
• Franchisee may not be as skilled as the franchisor.
• Franchisor needs to supply raw material/product and provide support and training.
• Market and product knowledge can be shared to the benefit of the businesses.
• Other businesses, considered natural monopolies, are controlled by the government, such as electricity and water.