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Types of business ownership (private (sole trader (Pros (quicker decision…
Types of business ownership
private
sole trader
have 1 or more employees
owned by 1 person - 100% ownership
why it
succeeds
sensitive to customers needs
cater needs of local people
: closer and so can
react more quickly
small businesses in local area can
build up following due to trust
offer specialist service
Pros
quicker decision making
cheap/quick to start up
total control by owner
keep all profit
Cons
difficult to raise finance
difficult to specialize,
cant enjoy economies of sale
unlimited liability - owner responsible for all debts of business' personal assets can be taken, riskier
issues with continuity if sole trader retires/dies
partnership
unincorporated business - not a seperate entity from its owners
between 2-20 members
Deeds of partnership
amount of capital each should provide
how profit/losses should be shared
how many votes each has
rules on taking on new partners
how partnership is brought to an end (if partner leaves/dies)
ownership of busness shared between partners
cons
less control over business
disputes
- workload/roles
share profit
problem if partner
disagrees
on business directions
pros:
spreads risk/debt
across more people
partners brings money + resources to business
e.g better premises
partners brings
new skills/ideas
increase credibility (customers/suppliers) - less risky
Public Limited company (
PLC
) - NOT owned by GOV
Limited
co. : owned by shareholders
run by directors
LIMITED LIABILITY
members of public can buy shares
public trade on stock market
public sect but owned by individuals
LIMITED LIABILTY
encourages people to invest
shareholders responsibilities limited to amount they pay not debts of businesss, don't have to sell their personal assets
company - a seperate legal person
Private limited company (
Ltd
)
Limited co.
shares not available to members of genral public - no loss of control
privately owned by individuals
franchise
a form of business in which a firm already has a
successful product or service sells the right to do business under the franchisor's trade name with franshisors help
franchisee
person who
buys the right to do business from the franchisor
advanatages
easier to raise money from bank to buy franchise - seen as less risky
given equipment
from frandchisor
tried and tested market place- have customer base
and so easier to survive during challenging economic times
advertising paid by franchisor
tried and tested business model
recieve training
franchisor
person who
sells the right to use their busnes to franchisee
disadvantages
Licence fee - has to pay royalty
Unable to make own choices that might suit local area
less control
co-operatives
marketing co-ops
worker co-ops
retail co-ops
unincorperated business - not a seperate legal indentity, unlimited liability
Corporations
pros
cntinuity
economies of scale
limited liability
raise more finance: shares
tax benefit
productive - hire specialist employs
cons
losss of control
compliance cost
communication problem
complex
public
public sector organisation
owned /
controlled by government
provides
goods/services to public free of charge
using money from taxpayers not consumers
WHY they exist
avoid duplication of resources
prevent job exploitation
provide
essential services not provided by private sector
protect jobs/
maintain key industries
link to coggle.it
publicly owne
d
why privatisation?
able to invest more in capital
than government
private
focus on profit, cut cost where possible =>profficient
CONS
less focus on social objectives
more unemployed
workers