Professional Documents
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1.2 Types of Organizations
1.2 Types of Organizations
2 Types of
organizations
sectors
Outline the main features of the following types
or direction of governments.
Organizations do not have outside
shareholders.
They are solely accountable to the
government for their performance.
In many countries, they cover activities
of making profit.
Includes public and private limited
companies.
Public means that the shares are traded
Advantages Disadvantages
Partnerships
Organizations where two or more individuals
choose to work together as co-workers.
The risks are shared.
The owners all have unlimited liability. The
partners are liable for each others debts.
They can be specialized in certain tasks.
No distinction between the owners and the
managers of the business.
Look more substantial to potential customers
than sole traders.
Partnerships
Advantages Disadvantages
Limited Companies or
corporations
Have shareholders and directors, and they
are not always the same people.
Separation in ownership and control.
The shareholders are limited in their
liability to the amount of their investment.
Have to file annual financial information to
public registrars.
Presents a more solid and trusting image.
Private limited companies (Ltd)
The smaller of the two types of limited
company.
Suitable for a new business start-up or for an
existing sole trader or partnership seeking the
benefits of limited liability.
The shares they issue cannot be advertised for
sale or traded on the stock market.
Any transfer of shares must be done privately
and with the agreement of all shareholders.
Many Ltds are family businesses, with the
family members being directors and
shareholders.
Private limited companies
Advantages Disadvantages
Public limited companies (Plc)
Much larger type of company.
Have their shares traded on the stock market.
When a company decides to become a plc it
must be floated on the stock exchange.
This involves publishing a prospectus to
advertise the company to potential
shareholders and can be an expensive process.
Once a plc has a listing on the stock market,
any member of the general public can buy and
sell shares in the company.
Public limited companies
Advantages Disadvantages
Workpoint
When establishing a business, which type of
organization would best suit these two scenarios?
Expand your answers.
developing countries.
Influence governments policies on areas
Business Studies