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Private Sector Organisations (Private Limited Company (Ltd) (Advantages…
Private Sector Organisations
Sole Trader
Organisation owned and run by a
single individual
Advantages
Owner keeps all the
profits
Owner has complete
control
No legal formalities so
easy and cheap to set up
Disadvantages
Unlimited liability
Difficult to raise
finances
No shared responsibility
Partnership
A business formed by between
two to twenty people
Advantages
Shared responsibilities
Partners can specialise in their areas of expertise
Larger amount of capital is available
Disadvantages
Private Limited Company (Ltd)
Organisation that only sell shares to people who have been
invited to buy shares
Normally family businesses
Advantages
Owners keep
control
Can raise
more money
than a sole trader
Limited liability
Disadvantages
Larger so
difficult to manage
Must disclose some financial information
Public Limited Company (plc)
Shares can be
bought and sold by anyone
on the stock exchange
Advantages
Limited liability
Shares can be resold
on stock exchange so there will be more people investing
Disadvantages
Costly legal procedures
during set-up
They can grow large so
difficult to manage
and
inflexible
Multinational Corporations
Organisations that have
branches in more than one country
Major employers in many countries
Advantages
Increase market share
Cheaper labour
Minimise tax
Disadvantages
Accused of exploitation
May force local firms out of business
Franchise
A business run under the name of another
Franchiser
Advantages
Reliable revunue
Risk and uncertainty shared between franchiser and franchisee
Disadvantages
Reliant on franchisees to maintain image
Franchisee
Advantages
Little advertising costs
Reduced business failure risk
Diadvantages
have to pay franchiser
Dictated products