Exploring the Types of Business Organisations

Exploring the Types of Business Organisations

There are two Business Sectors:

Public Sector

These are businesses owned and run by the government. Some examples of

Services provided in the public sector are the postal service,

schools, colleges, housing environment, some bus and train services,

fire, police, ambulance and local justice and social services. Their

method of raising capital is different as Private Sector businesses

have to raise their own capital e.g. their own money, a bank loan etc.

The Public Sector business can get the money required from the

Treasury or from local rates. There is no individual owner in the

Public Sector.

Advantages:

· Their main aim is to provide a service, not to make a profit

· They will still run even if there is few people using the service

· Government is in a good position to plan the overall provision for

the country

Disadvantages:

· It is difficult to motivate employees in an impersonal business such

as this

· The tax payer has to meet higher tax payments if the business makes

a loss

· The running of the business can be politically influenced.

Private Sector

These are businesses owned and run by private people. To start a

business in the Private Sector, they have to raise their own capital

in order to pay for rent, stock, machinery etc. Some of these

businesses can be small and owned and run by one person, other

businesses can be larger and run by a group of people. Forms of

Private Sector ownership are: Sole Trader, Partnership, Private

Limited Company, Public Limited Company, Franchisee, and

Co-operatives.

Sole Trader

These are...

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...ility. This is why many small businesses that

have only a small number of partners will change their business

ownership and become a private limited company.

Background Information

When Mac and Dick McDonald first ran their restaurant in San

Bernardinosuccessfully for 21 Years it was a form of partnership, in

which they made high profits which they were happy with. Most

successful businesses like this would expand but Mac and Dick McDonald

didn't. It only expanded when Ray Kroc had brought McDonalds from Mac

and Dick McDonald. In other words if Mac and Dick McDonald had their

own way McDonalds would never have been a global multi-billion dollar

business. We can clearly see that because the size of McDonalds had

increased this has caused the type of ownership to change from

partnership to public limited company.