Please enable JavaScript.
Coggle requires JavaScript to display documents.
Business organisations - Coggle Diagram
Business organisations
Sole traders
-
Legal regulations
Regist and send annual accounts to the Goverment Tax Office
Name of the business is significant
Must observe laws which apply to all business tin that industry
Advantages
Few legal regulations
He is his own boss
Freedom of choosing his time of labour
Close contact with his own customers
Able to keep all the profits
No need to give info. about his business to anyone
Disadvantages
No one to discuss business matters
No limited liability
Limited sources of finance, no other owners can put capital into
Likly to remain small and unlikely to benefit from economies of scale
No continuty of the business after the death of the owner
Partnership
-
Advantages
More capital invested, allow expansion of the business
Both benefits and losses will be shared
One of the partners are always available
Disadvantages
No limited liability
No separate legal identity, they are running an unicorpprated business
Disagree on decisions ——> waste of time
Business growth would be limited by the amount of capital an amount of people can invest
-
Public limited companies
Owned by shareholders but they cannot sell shares to the public and their shares are tradeable on the Stock Exchage
Advantages
Limited liability
Incorporated business and has a separate legal identity
Opportunity to raise very large capital sums. No limit number of shareholders
No restriction on the buying, selling or transfer
Usually has high status
Disadvantages
Legal formalities are time-consuming
Mkre regulations and controls (publication of accounts)
Selling shares to the public is expensive
Owners may lost control over it
Annual General Meeting: a legal requirement. Shareholders may attend and vote in whi they want to be in the Board of Directors for the coming years
Shareholders own, but the directors and managers control
Franchises
Based upon the use of the brand names, promotional logos and trading methods of an existing successful business. They buy the licence to operate this business from the franchisor
Advantages
Franchisor
Sells a licence to the franchisee
No responsibility for the management of the outlet
They maintain al products sold
Franchisee
The chances of failure are kick reduced
Supplies aren’t obteniendo by them
Fewer decisions to make
No training for staff and management
Banks are offer willing to lend them
Disadvantages
Franchisor
Poor management of one franchisee outlet could lead to a bad reputation for the whole business
They don’t keep profits from the outlet
Franchisee
Less independence
Unable to make decisions that would suit the local area
Licence fee and a percentage of the annual turnover must be paid to the franchisor
Joint ventures
Where two or more business start a new project together, sharing capital, risks and profits
Advantages
Sharing of costs
Local knowledge when join venture company is already based in the county
Risks are shared
Disadvantages
Profits have to be shared with the join venture partner
Might occur disagreements
Might have different ways of running a business (different cultures)
Public
-
Advantages
Includes water supply and electricity generation
The government can step in to nationalise a business is likely to collapse
Disadvantages
No private shareholders. No powerful profit motive
Government subsidies can lead to inefficiency
Lack of incentive to increase consumer choice, increase efficiency or even improve customer service
Can use these businesses for political reasons, which prevents the public corporations
being operated like other profit-making businesses.