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Types of business organisation - Coggle Diagram
- Types of business organisation
Private sector
- Private limited companies
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- Not in public sector of industry.
- Title can cause confusion.
Advantages:
• this form of business organization still offers limited liability to shareholders.
• there's a opportunity to race very large capital sums to invest in the business.
• no restriction on the buying selling or transfer of shares.
• a business trading as a public limited company usually has high status and should find it easier to attract suppliers prepared to sell Goods on credit and Banks willing to lend to it than other types of businesses.
• it's an incorporated business and a separate legal unit.
disadvantages:
• legal formalities of forming such companies are complicated and time-consuming.
• many regulations and controls over public limited companies in order to try and protect the interests of the shareholders.
• public limited companies can grow too big that they become difficult to control and manage.
• selling shares to the public is expensive.
• There's real danger. Although the owners of the business might become rich from the shares. they may lose control over it when it goes public
•company exists separately front he owner and will continue to exist even if the owner dies.
•can make contracts and legal agreements
•company accounts are kept separate from accounts of owners.
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Disadvantages:
•lots of legal matters to be dealt with for the business to form.
•the articles of association.
•the memorandum of association.
•shares cannot be sold to other people without the agreement of other shareholders.
•the accounts are less secretive.
•cannot offer it's shares to the general public.
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Disadvantages:
•no one to discuss business matters with.
•don't have the benefit of limited liability.
•business is likely to remain small.
•If ill there is no one who will take control of the business.
Advantages:
•few legal regulations to worry about.
•his own boss.
•had freedom of choice over holidays, work hours, charging prices, and employing.
Public corporations:
Advantages:
•Some industries are considered to be so important that government ownership is thought to be essential.
•industries are controlled by monopolies because it would be wasteful to have competitors.
•an important business is failing and likely to collapse, the government can step in to nationalise it.
•Important public services, such as TV and radio broadcasting, are often in the public.
Disadvantages:
•There are no private shareholders to insist on high profits and efficiency.
•Government subsidies can lead to inefficiency as managers will always think that the government will help them if the business makes a loss.
•Often there is no close competition to the public corporations.
•Governments can use these businesses for political reasons, for example to create more jobs just before an election.