Unit 1.2 - Types of organisation Flashcards
What is private sector?
- Owned and controlled by private individuals
- Can be owned/runned by 1 person to multinational companies
- Main aim = Make profit
What are the 3 profit based organisations?
- Sole trader
- Partership
- Limited Liability
What is a Sole trader?
An individual who runs and owns a personal business
What are the disadvantage of a sole trader?
- Unlimited liability
- More workload
- Harder to collect sources of finance
- High risks of failure
- Lack of continuity
What are the advantage of a sole trader?
- Keep all profits
- Make your own decision
- Decide on the working hours
- Quick and easy to set up
What is partnership?
Profit seeking business owned by 2 or more people, max. 20 people
What are the disadvantage of a partnership?
- Unlimited liability
- The lack of continuity (deed becomes invalid)
- Prolonged decision making
- Lack of harmony
What are the advantage of a partnership?
- Financial strength
- Specialisation and division of labour
- Financial privacy
- Cost-effective
What is a company?
Business owned by their shareholders
[Shareholder: Individuals or other businesses that invested money to provide capital for a company]
Companies have limited liability, what are the 2 branches of limited liability? Explain.
Private: Company that can’t raise share capital from general public
Public: Able to advertise and sell its shares to the general public via stock exchange
What is a non-profit organisation (NPOs)?
NPOs use their surplus revenues to achieve their social goals
What are the two types of NPOs
- Non-governmental organisation
2. Charities
What is NGO? (Non-Governmental organisation)
- A non-profit social enterprise that operates in the private sector.
- Runs for the benefit of others in society
What are charities?
- A charity is a non-profit social enterprise that provides voluntary support for good causes
