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Organisations, Incorporated, Disadvantages, Similarities between profit…
Organisations
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Advantages
Limited liability, access to greater capital
Private limited - Shares owned by private individuals, Not available to public
Public limited Anyone can purchase shares through stock exchange, often a consequence of growth
Not for Profit
Government organisations
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Achieving value for money and reducing cost, designed for value maximizations, strict budget -> increases n productivity, efficiency
is a key to sucess
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Charities
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Provide product or service for a target group, not to extract profit
Example: doctors without borders
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Surpluses and Deficits
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Surplus - profit , losses - deficit
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Partnerships - For profit maximization , Business relationship of 2 or more persons
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Incorporated
Are recognized on their own as a legal entity
Limited LiabilityWhy the need for limited liability?
- To grow greater investment if needed
- To entice investors
How does limited liability work? - Value of business broken down into shares
agents manage shareholder interest
liability limited to organizational assets
Legal constraints and procedures, weak asset based could limit funding sources, Investors not entitled to 100% Profit
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