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PUBLIC AND PRIVATE SECTORS - Coggle Diagram
PUBLIC AND PRIVATE SECTORS
PRIVATE SECTOR
(comprises business owned and controls by individual of groups of individual
partnership
=a business form by two or more people to carry on a business together with shared capital investment and usually hared responsibilities
disadvantages
unlimited liability for all partner
profits are shared
bound by decision of any one of them
not possible to raise capital from selling shares
lose indipendence of decision making
advantages
additional capital injected by each partner
losses shared between partner
shared decision-making
greater privacy and fewer legal formalities
may specialise in different areas of business management
limited company
private limited company
(a small to medium-sized business that is owned by shareholder who are often members of the same family;cannot sell shares to general public
advantages
continuity in event of death of the shareholder
original owner still able to to retain control
separate legal personality
able to raise the capital by selling shares to family,friends and employees
shareholder have limited liability
greater status than an uncorporated business
disadvantages
capital cannot be rise by sales of share to general public
quite difficult for the shareholder to sell share
legal formalities involved
end of year accountants must be sent to Companies House
public limited company
(a limited company,often a large business with the legal right to sell share to the general public
disadvantages
legal formalities in formation
cost of business consultant and financial adviser
share prices subject to fluctuation
risk of takeover
directors influenced by short-term objectives of major investors
advantages
limited liability
separate legal identity
continuity
ease of buying and selling of sharefor shareholder
access to substantial capital sources due to the ability to issue a prospectus to the public and offer shares for sales
characteristics :
legal personality
limited liability
continuity
sole trader
= a business in which one person provide the permanent finance and in return has full control of the business and able to keep all the profits
advantages
owner keeps all profit
able to choose time and patterns of working
owner has complete control
able to established close personal relationship with saff and customers
easy to set -up and-no legal formalities
business can be based of the interests or skills of the owner
disadvantages
difficult to raise additional capital
long hours
unable to specialise in areas of the business that are most interesting
lack of continuity
face intense competition of bigger firms
unlimited liability
cooperatives
PUBLIC SECTOR
Public corporation
(a business enterprise and controlled by the state-also known as nationalised industry
advantages
loss-making services might still be kept operating if the social benefits is good enough
finance raised mostly by the government
managed with social objectives
disadvantages
government may interfere in business decision for political reasons
subsidies from government encourage inefficiency
tendency towards inefficiency due to lack of strict profit target