1.2 Types of Business Entities

Question 1

Private Sector

Answer 1

> Organisations owned by individuals or a group
Don’t confuse with public/private businesses which are both under private sector

Question 2

Public Sector

Answer 2

> Government owned and managed organisations
Funded by government > taxes
e.g. healthcare, education

Question 3

Privatisation

Answer 3

A public sector organisation going into private sector, to allow gov to allocate funds to other priorities

Question 4

Overlap of public and private sector

Answer 4

PPP/s (Private Partnerships)
> Purpose to deliver service traditionally provided by the public sector

Question 5

What sector is for-profit commercial enterprises under?

Answer 5

Private sector

Question 6

What goes under for-profit commercial enterprises?

Answer 6

> Sole trader
Partnerships
Private/Public companies

Question 7

Sole trader

Answer 7

> For-profit commercial
One individual runs and owns entire business

Question 8

Partnership

Answer 8

> For-profit commercial
Made up of two or more people who distribute income/losses with each other

Question 9

Private company

Answer 9

> For-profit commercial
Owned by small group of founders, private investors
Does not sell stock shares to the public

Question 10

Public company

Answer 10

> For-profit commercial
Open to investment by public
Sells shares to the public at large on market (NY Stock Exchange)

Question 11

Business vs Company

Answer 11

Business: All entities
Company: Corporated and owned by shareholders and only two types (public/privately held)

Question 12

Incorporation

Answer 12

> Legal process of a sole trader becoming a company/corporate entity
The owner is now a shareholder
Limited liability - to company not to personal assets of the owner
Legal separation of owner and business

Question 13

What goes under for-profit social enterprises?

Answer 13

> Public and private sector companies
Cooperatives

Question 14

Cooperatives

Answer 14

> Business structure that is member-owned (min 5 members)
Focuses on servicing members rather than member owners
Minimises exploitation of weaker members of companies

Question 15

Social vs Commercial for-profit enterprises

Answer 15

> Social (SPO’s): Main purpose is around social objectives, profits redirected to social objective
Commercial: Purpose is to create profitable operations for private gain

Question 16

Corporated structures

Answer 16

Private and public company

Question 17

UIncorporated structures

Answer 17

Sole trader and partnership

Question 18

Shares and shareholder

Answer 18

> Part of company owned by shareholder
Person who owns part of company

Question 19

Dividends

Answer 19

The part of company’s profit returned to shareholders as reward for their investment

Question 20

Shareholder benefits

Answer 20

> Share price
Limited liability
Dividends

Question 21

AGM (Annual General Meeting

Answer 21

> All companies must hold
Allows owners to have say in the running of the business
Shareholders get to vote on
> Resolutions + re-elections of BOD
> Ask Q’s to CEO
> Approve financial accounts of prev years

Question 22

Private or Public: Pty Ltd and Ltd

Answer 22

> Private: Pty Ltd
Public: Ltd

Question 23

What is a non-profit social enterprise?

Answer 23

> Uses surplus revenues to achieve their social goals - NOT distributed as profits to shareholders

Question 24

What are NGO’s?

Answer 24

Non-gov organisations
> Main type of non profit social enterprise
> Private organisations that strive to benefit each other

Question 25

Two types of NGO’s

Answer 25

> Operational NGO’s: Established from given purpose - involved in community projects
Advocacy NGO’s: Aggressive approach defending a particular cause, striving to raise awareness through direct action