Forms of Business Organisation 1
Transcript of Forms of Business Organisation 1
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Forms of Business organisation (1/3)
Identify and explain the main features of differentforms of business organisation
Describe the main features of sole traders,
partnerships, limited companies, franchises and joint ventures Understand the differences between sole traders
and partnerships Understand the differences between
unincorporated businesses and limitedcompanies
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Roman AbramovichOwner of Chelsea Football Club
In June 2003, hebecame the owner ofthe companies that
control ChelseaFootball Club in theUnited Kingdom.
Born: 24 October 1966Nationality: Russian
http://en.wikipedia.org/wiki/Chelsea_F.C.http://en.wikipedia.org/wiki/Chelsea_F.C.http://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Russianshttp://images.google.co.uk/imgres?imgurl=http://www.sportsbettingreview.co.uk/images/chelsea.jpg&imgrefurl=http://www.sportsbettingreview.co.uk/News/13092009/chelsea-vs-porto-odds-betting-preview-030.html&usg=__7bGGFipzC_ToelZynimOkIWTu4s=&h=320&w=320&sz=38&hl=en&start=1&tbnid=EQj0zxT2OQbJNM:&tbnh=118&tbnw=118&prev=/images?q=chelsea&gbv=2&hl=en&safe=activehttp://en.wikipedia.org/wiki/Russianshttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Chelsea_F.C.http://en.wikipedia.org/wiki/Chelsea_F.C.http://en.wikipedia.org/wiki/File:Abramovich_Chukotka.jpg -
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Richard BransonOwner of part of all of the
Virgin companiesRichard Branson is the261st richest person
in the world
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Unincorporated
Sole trader
Partnership
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Sole Proprietor
Business owned by one person Can also be called a sole trader
Usually a very small business
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Try to think of two people who
might be sole proprietors?
(Hint: Plumbers are often soleproprietors)
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Examples of Sole traders
Builders Painters Hairdressers Window cleaners Mechanics Plumbers Etc.
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Advantages of sole traders
Easy and cheap to set up The owner is in complete control of the
business Owner is able to keep all the profit the
business makes
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Disadvantages of sole trader
Unlimited liability Shortage of capital (money)
Illness/holidays Hours of work Shortage of skills Continuity - the business, in its present form,
ceases on the death of the owner
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What is a partner?
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Partnerships
Owned by a minimum
of two and amaximum of 20 people
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Examples of Partnerships
Doctors Dentists Solicitors Accountants Surveyors Etc.
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Why might partnerships be better thansole traders?
Write down your ideas
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Advantages of the partnership
More capital can be introduced to helpbusiness grow
Each partner may have a different specialistskill
The work of the business can be shared Sleeping partners invest in the business, but
do not work in the business
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Disadvantages of the partnership
Profit has to be shared Disagreements
Shortage of capital Unlimited liability Continuity - the business, in its present form,
ceases on the death of one of the owners
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How do partnerships work outhow profit is shared?
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Deed of partnership
This is a legal document that sets out: Who invested how much capital How the profits are split How to resolve disputes
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Activity True or falseStatement True False
A partnership usually has between 2 and 20 partners
The deed of partnership usually states how profitswill be shared amongst the partnersSole proprietors find it easy to borrow money fromthe bankA sole proprietor is owned by more than one person
Partners often use their own savings to set up thebusinessOne disadvantage of a sole-proprietor business is thatit will have unlimited liability
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Unincorporated businesses ALL have fivefeatures
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Match the pairs
Financial Information
Bankruptcy
Unlimited liability
Continuity
Tax on Profits
Income tax is paid on the profitswhich the business may make
The business, in its present form, ceaseson the death of one of the owners
Remains private to the business
This occurs when the business cant
pay its debts
The owners of the business arepersonally liable for any debts which
the business may have
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Match the pairs - answers
Financial Information
Bankruptcy
Unlimited liability
Continuity
Tax on Profits
Income tax is paid on the profitswhich the business may make
The business, in its present form, ceaseson the death of one of the owners
Remains private to the business
This occurs when the business cant
pay its debts
The owners of the business arepersonally liable for any debts which
the business may have
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Unincorporated business features
Good Bad NeitherUnlimitedliability
Tax onprofitsContinuity
PrivatefinancialinformationBankruptcy
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Public Corporations
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Public Corporations
Owned and controlled by the Government The Corporations get some money from the
Government, but they also make moneythemselves
Any surplus money goes to the Government
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Objectives of Public corporations
May include: To keep prices low so that everybody can
afford the service To keep people in jobs so that unemployment
does not rise To offer a service to the public in all areas of
the country
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Examples of Public Corporations
QTel Qatar oil and Gas
BBC NHS
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Advantages and Disadvantages Companies owned by the
government will ensure thatconsumers are not takenadvantage of by privatelyowned monopolies
If an important business isfailing the government canstep in to nationalise it
Important public servicessuch as TV and radio
broadcasts are often in thepublic sector.
No private shareholders toinsist on high profits andefficiency
Subsidies can lead toinefficiency as managerswill always think that thegovernment will help themout
Often there is no closecompetition
Government can use thesebusinesses for politicalreasons