1.2 Types of Business Organization

Sandra Vazquez
Mind Map by Sandra Vazquez, updated more than 1 year ago
Sandra Vazquez
Created by Sandra Vazquez over 6 years ago
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Business and Management IB Program 1.2 Types of Business Organizations

Resource summary

1.2 Types of Business Organization
  1. Body that is set up to meet needs
    1. Try to achieve objectives
      1. Use resources
        1. Need to be directed
          1. Have to be accountable
            1. Have to meet legal requirements
              1. Have a formal structure
    2. Private Sector B. Organization
      1. Unincorporated B.
        1. Sole Trader
          1. One owner
            1. More common
              1. No legal formalities
                1. Legal responsibilities
                  1. Need special permissions
            2. Advantages
              1. No legal restrictions
                1. Money for owner
                  1. Complete control
                    1. Choose hours of work
              2. Disadvantages
                1. Unlimited liability (accountable)
                  1. Continuos problems
                    1. Difficulty to raise money
                      1. Illness can stop work
                        1. Can be sued
                          1. Difficult to have specialists
                            1. No economies of scale
              3. Partnership
                1. More than one owner
                  1. Share responsibilities and profit
                    1. Second most common
                      1. No legal formaliies
                  2. Advantages
                    1. No legal formalities
                      1. No publish of accounts
                        1. More finance
                          1. Work is shared
                            1. Partners can specialize
                    2. Disadvantages
                      1. Unlimited liability
                        1. Size is limited to # of partners
                          1. Decisions afect all
                        2. Profits are shared
                          1. Disagreements
                            1. Can be sued
                    3. Incorporated B.
                      1. Companies
                        1. Private Limited Company
                          1. Small B.
                            1. Shares transfered privately
                              1. Family owned
                            2. Advantages
                              1. Limited liability
                                1. No limit of shareholders
                                  1. Tax advantages to owners
                                    1. More organized
                              2. Disadvantages
                                1. Profits are shared
                                  1. Legal procedure to set up B.
                                    1. Shares cant be sold to the public
                                      1. Finance information viewed by everyone
                                        1. Shares not easy to be sold
                              3. Public Limited Company
                                1. Large B.
                                  1. Publish a Prospectus (information of B.)
                                    1. Expensive, legal formalities
                                  2. Advantages
                                    1. Sale of shares = many money
                                      1. Production cost can be lowerd
                                        1. Can dominate the market (size)
                                          1. Institutions lend money
                                            1. Public pressure = well performace of executives
                                    2. Disadvantages
                                      1. Setting cost = expensive
                                        1. Outsiders can take control
                                          1. Companies accounts are public
                                            1. Less able to deal with customers
                                              1. Operations are controlled
                                                1. Inflexible due to sieze
                                    3. Legal separate identity from owners:
                                      1. Own assets, Form contracts, Employ people
                                        1. Can sue and can be sued
                                          1. Limited liability
                                            1. Capital divided in shares
                                              1. Run by directors
                                                1. Pay corporation tax
                                    4. Exiting Stock Market
                                      1. From public limited to private limited
                                        1. Causes
                                          1. No toleration of external shareholders interferance
                                            1. Bought by private individual
                                              1. Lose favor in stocck market
                                      2. Not-for-profit Organization
                                        1. Organization that runs a business but doesn't look for profit
                                          1. Surpluses (extra) from traiding is shered
                                            1. Factors that affect choices
                                              1. Degree of control
                                                1. Need of finance
                                                  1. Nature of B.
                                                    1. Size
                                          2. Co-Operatives
                                            1. Operate as consumer or retail co-operatives:
                                              1. Controlled by owners
                                                1. Shares not sold in stock market
                                                  1. Surpluses are divided
                                                    1. Other form is worker co-operative
                                            2. Charities
                                              1. Specialized aims
                                                1. Raise money for good
                                                  1. Rely on donations
                                                    1. Run by business principles
                                                      1. Staff are volunteers
                                                        1. Don't pay taxes
                                              2. Pressure Groups
                                                1. Groups of people that influence decision makers in politics, business and society
                                                  1. Different aims, objectives and size
                                              3. Public Sector B. Organization
                                                1. Government (Publicly Owned)
                                                  1. Public corporations set up by law to run services or indutries
                                                  2. Privatization
                                                    1. Change from public sector to private sector
                                                    2. Owned or controlled by central or local government or public corporations
                                                      1. Certain public goods provided by public sector organizations
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