Business structure

• Public Sector


  Organisations owned and controlled by the government
• Private Sector


  Business organisations owned and controlled by private individuals
• Free Market Economy


  Economic resources are owned and controlled largely by the private sector with very little state intervention
• Command/Planned Economy


  Economic resources are owned and controlled by the government
• Mixed Economy


  Economic resources are owned and controlled by both the state and the private individuals
• Sole Trader


  • Business run and controlled by a single individual
  • Direct control over everything
  • Profits are not shared
  • No separate legal identity
  • Limited sources of finance available
• Partnership


  • Business run and controlled by 2 or more partners
  • Losses are shared
  • Responsibility is shared
  • Influx of new ideas from partners
  • No separate legal identity
  • Profits are shared
• Private Limited Company


  • Small to medium size business
  • Owned and controlled by shareholders
  • Cannot list on the stock exchange or sell shares to the public
  • Limited liability
  • Higher status than sole trader and partnership in terms of capital
  • Legal formalities are involved
  • Shares cannot be sold to the public
• Public Limited Company


  • Often a large business
  • Legal right to sell shares to the general public
  • Limited liability
  • Huge capital can be raised as shares are sold to the public
  • Ease of shares trading for the public
  • Legal formalities
  • Share price fluctuates as shares are listed on the stock exchange
• Cooperative


  • All members contribute to running the business
  • Workload and responsibilities are shared
  • Decision-making is shared
  • Profits are shared equally
  • All members have one vote
  • Focus more on agriculture and retailing
• Worker/Employee Cooperative


  • Cooperative owned and self-managed by its workers
• Community Cooperative


  • The community are the owners of the business
• Retail Cooperative


  • The retailers are the owners of the business
• Franchise


  • Uses the name, logo, and trading systems of an existing business
  • Training of staff is offered by the franchisor
  • Fewer chances of failure as the franchised business is already known
  • Initial license fee has to be paid to the franchisor
  • Share of profits and revenues need to be split with the franchisor
• Joint Venture


  • Two or more businesses agree to work together on a project
  • Costs and risks of a new business are shared between the companies
  • Disputes might arise
  • Business failure of one partner would jeopardize the entire project
• Holding Company


  • Holds and controls a number of separate businesses but does not unite them into one unified company
• Social Enterprise


  • Aims to make profit in socially responsible ways
  • Economic (financial), social, and environmental objectives
  • Profit is not the sole objective
• Public Corporation


  • Owned and controlled by the state
  • Managed with social objectives rather than just making a profit
  • Financed by the government
  • Inefficiency through the organization exists due to the lack of profit as the main motive
• Unlimited Liability


  Owners are liable for the debts of the business
• Limited Liability


  Owners' liability towards the business is limited to the amount they have invested
• Memorandum of Association


  • Includes the name of the company, address of head office, maximum share capital, and declared official aims
• Articles of Association


  • Includes the internal working framework and control of the business, official procedures, and names of directors
• A sole trader is the simplest form of business ownership, with one owner who has complete control over their business.
• Disadvantages of Sole Traders include unlimited personal liability, difficulty raising finance, and no job security if the business fails.
• The advantages of partnerships include shared skills and resources, reduced risk due to multiple owners, and easier access to finance through partners' networks.