1728609
Description
Mind Map by queeniechan, updated more than 1 year ago
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Created by queeniechan
over 9 years ago
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Types of Business Organization
- Public Sector Businesses
- Joint Ventures
- Benefits
- reduces the risk for each
business and cuts costs
- each business brings different
expertise to the joint venture
- Market and product
knowledge can be
shared to the benefit
of the business in
the joint venture
- reduces the risk for each
business and cuts costs
- Limitations
- Mistakes made may
damage the reputation
of all firms in the joint
venture, even if they
were not the cause of
the mistake
- The business may
have different
business cultures
or styles of
leadership,
making decision
making difficult
- Mistakes made may
damage the reputation
of all firms in the joint
venture, even if they
were not the cause of
the mistake
- Benefits
- Sole Trader
- A
business
owned and
managed
by one
person
- Why?
- Be their own boss
and make their
own decisions
- Decide when
and how
many hours
to work
- Have a business
that uses their
skills and
interests
- Be their own boss
and make their
own decisions
- Advantages
- Easy to
set up
business
- Makes
all the
decisions
- Has
complete
control
- Keeps
the
profit
- Easy to
set up
business
- Disadvantages
- Unlimited
liability
- May not
be able to
raise
funds to
expand
the
business
- May have
to work
long hours
- Difficult to
compete with
larger firms
- May not have
business skills
to run a
business
- Unlimited
liability
- A
business
owned and
managed
by one
person
- Limited Companies
- Private Limited Company
- Usually a very small number of
shareholders. Often members of the
same family or friends
- Usually fairly small
- can only be
sold privately,
often to
family
members,
friends or
employees
- Only a few shareholders. One
shareholder may own 51% of
the shares in the company and
so has control over major
decisions. Ownership is not
separated from control
- Even if successful it may be difficult
to raise additional capital as shares
cannot be sold to the general public
- Often find it difficult to raise finance as
unincorporated businesses because they
are usually small business with low value
assets to offer as security - known as
collateral
- Usually a very small number of
shareholders. Often members of the
same family or friends
- Public Limited Comany
- Usually a
very large
number of
shareholders
- Most
common
form of
organisations
for very large
companies
- Can be
offered for
sale to the
general
public and
other
organisations
- Quick and easy to sell as
they can be offered for
sale to the public
- Often thousands
of shareholders.
The board of
directors
appointed by
shareholders at
the annual
general meeting
control major
decision.
Ownership and
control are
separated
- If successful then can
often raise very large
sums quite easily through
the sale of additional
shares
- Can often raise
very large sums
at good rates of
interest
because of
their
reputation and
valuable
collateral
- Usually a
very large
number of
shareholders
- Private Limited Company
- Franchises
- Benifits
- Franchisor often provides advice and
training to the franchisee as part of the
franchise agreement
- Less chance of
business failure
because the
product and brand
are already well
established
- Franchisor will
finance the
promotion of the
brand through
national
advertising
- The franchisor will
already have
checked the quality
of suppliers, so the
franchisee is
guaranteed quality
suppliers
- Franchisor often provides advice and
training to the franchisee as part of the
franchise agreement
- Limitations
- Initial cost
of buying
into a
franchise
can be
very
expensive
- franchisor will take
a percentage of the
revenue or profits
made by the
franchisee each
year
- Very strict controls over
what the franchisee is
allowed to do with the
product, pricing and store
layout
- franchisee will still
have to pay for any
local promotions if
they decide to do
- Initial cost
of buying
into a
franchise
can be
very
expensive
- Benifits
- Parternership
- A business
owned and
managed by
two or more
people
- Formed to
overcome
some
disadvantages
of sole traders
- Advantages
- Easy to set
up a deed
of
partnership
- Partners
invest in the
business so
greater access
to funds
- Shared
decision
making
- Shared
managements
and workload
- Easy to set
up a deed
of
partnership
- Disadvantages
- Unlimited
liability
- Share the profits
- Business
ceases to
exist if one
parter leaves
- Decisions
binding
on all
partners
- Difficult
to raise
finance
- Unlimited
liability
- A business
owned and
managed by
two or more
people
- Joint Ventures
- Public cooporations
- They are
owned and
controlled
by the
state
- They are financed
mainly through taxation
- In many countries they
have social objectives
rather than profit
objectives
- The services
of public
corporations
are often
provided free
or at a low
price to the
population
- They are
owned and
controlled
by the
state
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