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TYPES OF ORGANIZATIONS - Coggle Diagram
TYPES OF ORGANIZATIONS
Public Sector
Owned and operated by the government
Provide goods and services
Use public funds, like: taxes
Sell shares to the public in the stock market (Floating on the stock exchange)
Characteristics
2 directors and there is no maximun limit
Formed with a minimum amount of share capital
Must appoint a company secretary
No competition
Stable employment
Ensure essential goods
Provide accces to all necesary services
Disadvantages
Expensive to set up
More complex accounting and reporting requirements
Inneficient by the lack of strict profit targets
Government may interfere with the business decisions
Advantages
Ability to raise additional finance through share capital
Increased negotiation opportunities with suppliers
Managed with social objectives than profit objectives
Finance raised from the government
Examples
Mc Donalds
Prudential Finance
Tesco company
Essalud
Private Sector
Organizations owned by individuals.
Profit
Unincorporated business
Partnerships
Business owned by two or more individuals.
Disadvantages
Limited sources of finance.
Unlimited responsibility
Shared responsability
High level of trust among the partners is required.
Slower process of decision making.
Advantages
Higher financial strength
Easy to set-up
Greater privacy than corporate organizations (companies).
Sole traders
Business owned and controlled by one person.
Disadvantages
High workload and stress
High risk
Limited source of finance.
Unlimited liability
High costs of production
Lack of continuity
Advantages
Privacy/Secrecy
Minimum government regulations
Being your own boss
Offer personalized services
Small amount of capital needs to be invested. Low stand-up cost.
Incorporated business
Private limited companies (Ltd)
New shares cannot be sold on the open market and existing shareholders may only sell their shares with the agreement of the other shareholders.
Private Limited Companies are often family businesses owned by members of the family or close friends.
Their business name ends in Limited or Ltd.
The directors of these companies tend to be shareholders and are involved in the running of the business
Tends to be relatively small companies.
Public limited companies (PLC)
.
The most common form of legal organization for really large businesses
Access to large amount of funds.
Recognized by the use of ‘plc’ or ‘inc.’ (incorporated) after the company name.
Converting a private limited company to public limited company (plc) status is referred to as a stock market flotation.
Shares can be advertised and sold on the stock exchange.
Clear distinction between ownership and control. The owners are the shareholders, but they appoint at annual general meetings a Board of Directors who are the ones that control the management and decision making of the company.