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BUSINESS ORGANISATIONS - Coggle Diagram

- - - - The propietor can decide how to manage their business however they want to
      - The propietor can set their own schedule, holidays, etcetera
      - There are few legal requirements to start up a sole trader business
      - The propietor does not have to share profits with anyone after paying taxes
      - The propietor can have secrecy and privacy and only has to share information with the Tax Office
      - The propietor has a closer relationship with their customers.
    - - The propietor has no one to discuss business matters with
      - Sole trader businesses do not have limited liability, therefore making the propietor more susceptible to debt. If a sole trader business cannot pay its debt, then its creditors could impel the propietor to sell their own personal posessions to pay them
      - The money that can be invested in the business is restricted to the propietor's savings, the business's profits, and small back loans
      - Banks are usually unwilling to loan money to sole traders businesses
      - Sole trader businesses often stay small and its workers don't have big opportunities
      - If the propietor dies, then the business stops legally existing and cannot be passed down to the propietor's children
      - If the propietor is ill, then no one can take care of the business for them
- - - - The duties of the business are shared and the absence of an owner is not such a big deal
      - Successes and losses are experienced in group
      - Expansion of business is possible as more than one person invests in the business
      - All the propietors are inspired to work hard as the profits can benefit them all
    - - If one of the business partners dies, then the business is halted
      - Partners' opinions can differ and coming to a decision all together can take a long time
      - Partnership businesses, like sole trader businesses, do not have limited liability
      - The failings and shortcomings of one partner can negatively affect the rest
      - The number of business partners is limited to twenty in most countries, and the business's growth depends on how much capital twenty people (or the amount of business partners in each case) can invest in it
- - - - In a private limited company, shareholders appoint the directors that run it, the latter usually being important or majority shareholders.
        
        ADVANTAGES OF A PRIVATE LIMITED COMPANY
        
        Shares can be sold to a large number of people (though in some countries there is a maximum amount)
        
        Shareholders have limited liability and often feel encouraged to invest in these companies as the only money they could lose is the one they invested
        
        The people who started this business get to keep control of it if they do not sell too many shares
        
        DISADVANTAGES OF A PRIVATE LIMITED COMPANY
        
        There is a required legal process for starting a private limited company. Two significant document forms, The Articles of Association and The Memorandum of Association, have to be filled and sent to the Registrar of Companies. Only once the latter has received them and issued a Certificate of Incoporation can the company begin trading
        
        The shares of this sort of company cannot be sold without the permission of other shareholders. This can put off people from buying them in the first place as they won't he able to sell them at a fast enough pace should they require their investment back
        
        There is less privacy than in the case of a sole trader or partnership, as accounts of the business have to be sent to the Registrar of Companies anually
        
        Shares cannot be sold to the public, which means not enough capital is invested for a rapidly expanding company
  - - - ADVANTAGES OF PUBLIC LIMITED COMPANIES
        
        Public limited companies have limited liability
        
        If one of the shareholders dies, then the business still continues
        
        There is no limit on the amount of shareholders a public limited company can have, so extremely large sums of money can be raised
        
        There are no restrictions on the buying, transfering or selling of shares
        
        Public limited companies usually have high statuses and have a lot of providers eager to sell goods on credit to them and banks willing to lend money to them in comparison to other types of businesses
      - DISADVANTAGES OF PUBLIC LIMITED COMPANIES
        
        The legal formalities of creating such a business are too time consuming
        
        There are much more regulations and controls over public limited companies to protect the interest of the shareholders, such as the publication of accounts
        
        Public limited companies can become so big they become hard to control and manage
        
        Selling shares can be very expensive
        
        Owners are at risk of losing control of the business if it "goes public"
- - - - Sharing of costs
      - Local knowledge in case the venture is based in the case it is based in the same country
      - Sharing of risks
    - - Profits have to be shared
      - Disagreements occur often
      - Different ways of running a business can clash, especially if there are different cultures
- - - - TO THE FRANCHISOR
        
        The franchisee buys a license to sell the product
        
        Expansion of the business is much faster as not all new outlets would have to be financed
        
        The management of the outlets is left to the franchisee
        
        All products sold have to be provided by the franchisor
      - TO THE FRANCHISEE
        
        The chances of failure are much more reduced
        
        Advertising is paid by the franchisor
        
        All products are obtained from a main source, the franchisor
        
        Fewer decisions to be made
        
        Staff and management is provided by the franchisor
        
        Banks are not reluctant to lend money as there is low risk
  - - - Less independence
      - Might be unable to make decisions that can suit the local area
      - A fee and a possible percentage of the annual turnover have to be paid to the franchisor
    - - Bad managing in one outlet could result in a negative image for the entire business
      - Profits from the outlet are kept by the franchisee
- - - - Though they are owned by the state, it does not directly control it. Instead, it appoints a Board of Directors, who run it in accordance to the state's objectives
        
        ADVANTAGES OF A PUBLIC CORPORATION
        
        State ownership can be essential in certain cases
        
        Natural monopolies occur, which put a stop to private monopolists who might take advantage of customers
        
        If a business of great importance is collapsing, then the state can save it by nationalising it
        
        Important public services like T.V. are in the public sector, and non-proffitable but important programmes can still be available
      - DISADVANTAGES OF PUBLIC CORPORATIONS
        
        Government subsidies can make managers assume there will always be backing in case of failure, and they can be unfair to private businesses in the same industry that do not receive them
        
        No private shareholders that can encourage efficiency and profits
        
        Lack of competition can make them value consumer choice and efficiency less
        
        Political motives can intrude into these corporations, and their operations will always be different from other profit-making businesses