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1.2 Types of Organisations (For-profit Organisations (Partnership : A…
1.2 Types of Organisations
Type of sector
Public sector :
Comprises organisations controlled by central or local government
Private sector :
comprises businesses owned and controlled by individuals or group of individuals
Public Sector Enterprises
Advantageous
Loss-making services might still be kept operating if the social benefit is great enough
Finance raised mainly from the government so not subject to limitations from banks or shareholders
Managed with social objectives rather than profit objectives
Disadvantageous
Subsidies from government can encourage inefficiencies
Government may interfere in business decisions for political reasons
Tendency towards inefficiency due to lack of strict profit targets
For-profit Organisations
Partnership :
A business form by two or more people to carry on a business together and shared responsibilities
Advantageous
Additional capital injected by each partner
Business loss shared between partners
Shared decision making
Disadvantageous
Profits are shared
Not possible to raise capital from selling shares
Unlimited liability for all partners
Sole Trader :
A business in which one person has full control of the business
Advantageous
Owner has complete control
Easy to set up
Owner keep all profits
Disadvantageous
Competition from bigger firms
Difficult to raise additional capital
Unlimited liability
Limited Company
Public Limited Company :
Often a large business with legal right to sell shares to the general public
Advantageous
Separate legal identity
Continuity
Limited liability
Disadvantageous
Risk of takeover
Directors influenced by short-term objectives of major investors
Legal formalities
Private Limited Company :
A small to medium-sized business that is owned by shareholders who are often members of the same family; they cannot sell shares to the general public
Advantageous
Original owner is still often able to retain control
Separate legal personality
Shareholders have limited liability
Disadvantageous
Capital cannot be raised by sale of shares to the general public
Legal formalities involved
Difficult for shareholders to sell shares
For-profit Social Enterprises
Cooperative :
A group of people acting together to meet the common needs and aspirations of its member
Groups
Agricultural Cooperative
Worker Cooperative
Retail cooperative
Microfinance institutions :
The provision of very small loans by specialist finance businesses.
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Providing small capital sums to entrepreneurs in low-income countries
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Aim to help to start business
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The interest rates can be quite high
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If the business fail, the scheme encouraged very poor people to take on debts
Social Enterprise :
A business with mainly social objectives that reinvests most of its profits into benefiting society rather than maximising returns to owners
FEATURES
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They directly produce goods or provide services
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They have social aims and use ethical ways of achieving them
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They need to make a surplus or profit to survive
AIMS
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Economic: make profit to reinvest back to business
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Social: provide jobs
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Environment: protect environment
Non-profit Social Enterprise
: Any organisation that has aims other than making and distributing profit and usually governed by a voluntary board.
Non-governmental organisation:
A legally constituted body with no participation or representation of any government which has a specific aim and purpose
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Not for profit group which independent from government
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A task-focused and made up of people sharing interest
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Perform variety of services and humanitarian functions
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Focus on social, environmental or humanitarian objectives
Charity :
An organisation set up to raise money to help people in need or to support causes that require funding
Activities accepted as charity purpose
Advancement of Religion
Advancement of health or the saving of lives
Advancement of education
Advancement of the arts, culture, heritage or science
Prevention or relief of poverty
Public-Private Partnership
: Involvement of the private and public sectors projects aimed at benefiting the public
Types of Public-Private Partnership
Private sector-funded
Government-directed but with private sector finance and management
Government-funded