1.2 Types of organizations

owned and controlled by private individuals and businesses, rather than by the government. The main aim of most private sector organizations is to make profit.

the sector of the economy where resources are owned and controlled by government

Organizations that are wholly owned by the government

Sole-traders, Partnerships, corporations

self-employed person who runs and controls the business and is the sole person held responsible for its success (profits) of failure (unlimited liability) -They may work alone or employ other people, start up capital is obtained from personal savings or borrowings -An important legal point is that the business is unincorporated (the owner is the same legal entity as the business) -Unlimited liability (fully legally responsible for any debts, must pay debts with own money)

Few legal formalities (easy to set up) Owner receives all of profit made by firm Being your own boss Personalised service to customer Privacy - don’t have to make financial records available to public

Unlimited liability (no limit to the amount of debts) Limited source of finance and economies of scale High risks Workload and stress Lack of continuity (if owner isn’t present business can be jeopardised)

profit-seeking business owned by two or more persons (partners). They share responsibilities, burdens and financing of owning a business -Silent partners do not actively take part in the running of the partnership but have a financial stake in it and limited liability. -Without a contract (deed of partnership), profits or losses must be shared equally amongst the partners and all partners have the same rights in the running of the business. -They have unlimited liability

Financial strength Specialisation and division of labour Financial privacy ( don’t have to publicise financial records) Cost-effective - raising productivity

Unlimited liability Lack of harmony (disagreements and conflict) Lack of continuity if partner dies or leaves the firm Prolonged decision making

-Companies are businesses owned by their shareholders. These are individuals or other businesses that have invested money to provide capital for a company. -Companies are incorporated businesses (there is a legal difference between the owners of the company and the business itself). -Limited liability means that shareholders do not stand to lose personal belongings if the company goes into debts (the max they can lose is their investment) -A board of directors (BOD) is elected by shareholders to run the company on their behalf.

Private limited company (LTD) Public limited company (PLC)

Owned by at least 2 shareholders Shares are sold privately to friends and family, they receive dividends in return

This is able to advertise and sell its shares to the general public via a stock exchange

Finance through shares Limited liability Tax benefits Productivity in specialist managers and staff Benefit of economies of scale

Communication problems Added complexities & bureaucracy Compliance costs Disclosure of information Loss of control

revenue-generating business with social objectives at the core of their operations. These strive to return a surplus for social gain and they can be operated as a non-profit and for-profit organisation.

-To achieve social objectives -To earn revenue in excess of costs

enterprises owned and run by their members, such as employees or customers, with the common goal of creating value for their members by operating in a socially responsible way.

All employees have a vote in decision making. There are three main types: -Consumer cooperatives - owned by the customers who buy the goods/services for personal use - child care, health care cooperatives, etc -Worker cooperatives - set up, owned and organized by their employees - cafes, etc -Producer cooperatives - these join and support each other to process or market their products

-Employees have a key stake in cooperative so are more interested in how it performs -Employees have a say -Social benefits & public support

-Low salaries & limited source of finance -Slower decision making -Limited promotional opportunities

This is a type of financial service aimed at entrepreneurs of small businesses especially those on low incomes. These enable the disadvantaged members of society to gain access to essential financial services to help eradicate poverty

-Microfinance helps those in poverty to become financially independent -Job creation -Social wellbeing