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C4: TYPES OF BUSINESS ORGANISATION - Coggle Diagram
C4: TYPES OF BUSINESS ORGANISATION
SOLE TRADER
CHARACTERISTICS
UNINCORPORATED
SHARE DECISION MAKING
UNLIMITED LIABILITY
COULD LOSE PERSONAL ASSETS
ADVANTAGES
SHARE RESPONSIBILITY
SHARE DECISION MAKING
RAISE MORE CAPITAL
DEFINATION
2 / MORE PEOPLE AGREE TO JOINTLY OWN A BUSINESS
DISADVANTAGES
UNLIMITED LIABILITY
NO SEPARATE LEGAL IDENTITY
POTENTIAL CONFLICT
SHARE PROFIT
PARTNERSHIP
CHARACTERISTICS
UNINCOPORATED
KEEP ALL PROFITS
UNLIMITED LIABILITY
ADVANTAGES
DECISION MAKING
KEEP ALL PROFITS
CONTROL / FREEDOM
DEFINATION
OWNED BY ONE PERSON, UNLIMITED LIABILITY
DISADVANTAGES
LACK OF CAPITAL
NO CONTINUITY
UNLIMITED LIABILITY
PUBLIC LIMITED COMPANY
CHARACTERISTICS
LIMITED LIABILITY
SEPARATE LEGAL IDENTITY
CONTINUITY
ADVANTAGES
LIMITED LIABILITY
EASY TO SELL SHARE / ATTRACT SUPPLIER
ABLE TO RAISE HUGE CAPITAL
DEFINATION
CAN SELL SHARES TO PUBLIC; LIMITED LIABILITY
DISADVANTAGES
NO PRIVACY
ORIGINAL OWNER LOSS CONTROL
LEGAL FORMALITIES
FRANCHISING
FRANCHISOR
ADVANTAGES
BRAND NAME
NO OPERATION OF RETAIL UNITS
RAPID EXPANSION
DISADVANTAGES
POOR MANAGEMENT OF 1 OUTLET AFFECT WHOLE NAME
FRANCHISEE
ADVANTAGES
ADVERTISING PAID BY FRANCHISOR
TRAINING PROVIDED
SUPPLIES FROM SINGLE SOURCE
DISADVANTAGES
LESS INDEPENDENT
MAY BE UNABLE TO MAKE DECISION
POSSIBLE A % OF ANNUAL TURNOVER
LICENSE FEE TO FRANCHISOR
DIFFERENCES BETWEEN LIMITED & UNINCORPORATED COMPANIES?
UNINCORPORATED BUSINESS
OWNERS LEGALLY RESPONSIBLE FOR BUSINESS ACTIVITIES
OWNERS HAVE UNLIMITED LIABILITY FOR DEBT OF BUSINESS
NO SEPARATE LEGAL IDENTITY
INCORPORATED BUSINESS
COMPANY IS LEGALLY RESPONSIBLE FOR BUSINESS ACTIVITIES
OWNERS HAVE LIMITED LIABILITY FOR DEBT OF BUSINESS (CAN ONLY LOSE MONEY PAID FOR IN SHARES)
SEPARATE LEGAL IDENTITY
JOINT VENTURE
ADVANTAGES
SHARED RISK
REDUCED COST
SHARE RESEARCH & DEVELOPMENT COST
POSSIBLE PROFIT SHARING
LOCAL KNOWLEDGE WHEN JOINT VENTURE COMPANY IS ALREADY BASED IN THE COUNTRY
DEFINATION
2 OR MORE BUSINESS WORK CLOSELY TOGETHER IN 1 PROJECT
DISADVANTAGES
POLICY & MANAGEMENT
DISAGREEMENT
CONFLICT
PRIVATE LIMITED COMPANY
CHARACTERISTICS
LIMITED LIABILITY
SEPARATE LEGAL IDENTITY
CONTINUITY
ADVANTAGES
MORE ABILITY TO RAISE CAPITAL
SELLS SHARES
LIMITED LIABILITY
DEFINITION
SELLS SHARES TO FAMILY; FRIENDS
DISADVANTAGES
LESS PRIVACY
SELL SHARES TO ONLY A CERTAIN GROUP
TRANSFER OF SHARE NEEDS CONSENT
RECOMMEND A SUITABLE FORM
ATTITUDE TOWARDS FINANCIAL RISK
(WANT TO RISK PERSONAL WEALTH?)
HOW QUICKLY THEY WANT TO START OPERATING (UNINCORPORATED → FASTER)
OWNER'S ROLE IN MANAGEMENT
POTENTIAL SIZE OF BUSINESS
BUSINESS ORGANISATIONS IN THE PUBLIC SECTOR (eg. public corporations)
owned & controlled by state
financed mainly thru taxation
mostly social rather than profit objectives
services provided to public for free / low price