Types of business organisations

Business organisations

Start

First, what is a business?

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

There are many types of business organisations.

LIMITED COMPANY

SOLE TRADER

FRANCHISING

PARTNERSHIP

vs

PARTNERSHIP

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:

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

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.

vs

LIMITED PARTNERSHIP

UNLIMITED PARTNERSHIP

(also called ordinary 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.

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

+ info

+ info

Limited company

(or joint-stock company)

The owners of a limited company are the shareholders.

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

Dividend is proportional to the amount of shares they own.

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

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

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

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

Limited companies can be

Ltd.

Plc.

PRIVATE LIMITED COMPANIES

PUBLIC LIMITED COMPANIES

vs

PUBLIC LIMITED COMPANY

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.

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.

Franchising

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

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

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

The franchise model can propel small companies to great success.

Advantages a franchising can provide:

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

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

The organisational structure of a company

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.

There are many types of organisational structures.

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.

Write your title here

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.

Flat structure

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.

to be continued...

Got an idea?

Use this space to add awesome interactivity. Include text, images, videos, tables, PDFs... even interactive questions! Premium tip: Get information on how your audience interacts with your creation:

• Visit the Analytics settings;
• Activate user tracking;
• Let the communication flow!

Got an idea?

Use this space to add awesome interactivity. Include text, images, videos, tables, PDFs... even interactive questions! Premium tip: Get information on how your audience interacts with your creation:

• Visit the Analytics settings;
• Activate user tracking;
• Let the communication flow!