Types of Businesses (1)

Question 1

Private Sector Organisations

Answer 1

Organisations that are owned by individuals or companies and not the state.

Question 2

Public Sector Organisations ( State-Owned Enrerprises)

Answer 2

AKA (SOEs)

Large organisations that are created by a country’s government to carry out commercial activities.

Question 3

Sole Trader/Proprietor

Answer 3

A business where only one person owns and controls the business.

Pros:
Easy to set up
Little Capital
None, if any little legal documents

Cons:
Unlimited Liability

Question 4

Unlimited Liability

Answer 4

Owners are personally liable for the debts and may have to sell personal assets to repay them.

Question 5

Limited Companies (Ltd Companies)

Answer 5

Businesses that have gone through legal formalities to be registered, usually with the Government. Ownership of the company is distributed through shares, and they are called Shareholders.

Pros:
Limited Liability

Question 6

Private Limited (Pvt. Ltd)

Answer 6

Shares only sold to families and friends. Up from 1 to 20 shareholders.

Question 7

Public Limited (Plc. Ltd)

Answer 7

Shares and ownership of the company is traded freely on the stock exchange domestically or internationally.

Question 8

Limited Liability

Answer 8

Separates in law the company and the owners. This means the shareholders only lose the capital they’ve invested and their personal possessions are protected if the company is in debt.

Question 9

Not-for-profit Organisations (NGOs)

Answer 9

Organisations that do not have profit as a goal; instead any profits are used to support their objectives.

Question 10

Co-operatives

Answer 10

A firm owned, controlled and operated by a group of users, such as the workers for their own benefit.

Rather than votes on the proportion of shares owned by the shareholders, it goes by a one to one member basis. One share by a member enables to them to vote once as well as a million shares owned by another.

Pros:
Limited Liability

Question 11

Joint Venture

Answer 11

Where a separate business entity is created by two or more parties. It involves sharing ownership, returns and risks of the new project or other business activity for which the joint venture was set up for.

Advantages/Pros:
Sharing of capital and knowledge for products
Expanding into a new market one side has knowledge of
Prevent exploitation by sharing the wealth and knowledge of foreign companies by venturing with Local Firms.