Types of business organisations

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Business organisations

First, what is a business?

A business is a system where goods and services are exchanged to make money.

FRANCHISING

LIMITED COMPANY

PARTNERSHIP

SOLE TRADER

There are many types of business organisations.

A sole trader does not share profits with anyone.If the business fails he/she may lose His/her personal assets. Electricians, carpenters, hairdressers are all sole traders.

A sole trader is a self-employed person who owns, runs and is legally responsible for all aspects of his/her business.

SOLE TRADER

A partnership is an agreement between at least two parts (called partners).Partners are the owners of the business and they work jointly to run the business together. They share responsability and profits. Partners contribute to the initial capital. There are two tipes of partnerships:

PARTNERSHIP

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+ info

+ info

All partners play an active role in managing the business and they are all responsible for losses.

(also called ordinary partnership)

UNLIMITED PARTNERSHIP

Not all partners play an active role in managing the business: only one partner is responsible for losses while the other partners (called sleeping partners) are responsible only for the amount of money they invested.

LIMITED PARTNERSHIP

vs

(or joint-stock company)

Limited company

Dividend is proportional to the amount of shares they own.

Shareholders are people who have bought shares in the company. They receive part of the company's profits as a dividend.

The owners of a limited company are the shareholders.

The policies decided by the Board are carried out by the CEO (Chief Executive Officer).

The board of directors takes all the decisions about the company.

Shareolders own the company but they do not manage it. So, who does?

If a company goes bankrupt, shareholders are responsible only for the capital they have invested in the business.

Plc.

Ltd.

PUBLIC LIMITED COMPANIES

PRIVATE LIMITED COMPANIES

Limited companies can be

A private limited company is a privately held small business.It is the most common type of limited company. They can sell shares privately to people (max.50). Shares can be sold only by agreement with the other shareholders. They can't be quoted on the stock exchange. In the UK the minimum share capital is £ 1.

PRIVATE LIMITED COMPANY

A public limited company is very complex to set and manage.They can freely sell shares to people. They can be quoted on the stock exchange. In the UK the minimum share capital is £50.000.

PUBLIC LIMITED COMPANY

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Franchising

The franchisee pays a royalty and often an initial fee for the right to do business under the franchisor's name and system.

The franchisor establishes the brand's trademark and the business system.Usually the franchisor is a big and well-known company.

It is an arrangement between two people, the fanchisor and the franchisee. The contract which binds them is called franchise.

The franchise model can propel small companies to great success.

To be succesful a new franchise system must overcome several challenges.

1. faster system growth; 2. strong brand recognition; 3. investment capital provided by the frsanchisee; 4. dedication and commitment of an owner-operator.

Advantages a franchising can provide:

The organisational structure of a company

There are many types of organisational structures.

The organisational structure of a company describes how the company arranges people and jobs to reach its goals, encouraging productivity and an appropriate working environment.

Hierarchical structure

It has the shape of a pyramid, with a large base of employees directly supervised by the smaller level above them, who are in turn supervised by the level above them, continuing on to the top ranking officer (CEO).

Functional structure

Employees are divided in smaller groups arranged on specific skills and knowledge.

Divisional structure

Workers are split into segments that correspond to particular products, services or market. This kind of structure is suitable for very large companies, such as multinationals.

Groups of workers are organised around a specific project, with well-defined functions for each employee. It is suitable for large companies which have varied work lines, long or complex projects and a rapidly chaniging work environment.

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Employees can make decisions quickly,because many levels of middle management are eliminated.This type of structure is very often adopted by small companies at the beginning of their business.

Flat structure

to be continued...

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