Business Environment Task 1 and Task 2

Topics: Corporation, Monetary policy, Limited company Pages: 6 (1277 words) Published: July 25, 2013

a)Identify the purpose of different organisation giving examples(AC1.1) Sole trader-it’s a business that is owned by only one person and it can have one or more employees. This type of business organization often succeeds because the owner has total control of businees, the owner keeps all profit and it’s cheap to start-up,but also it can be difficult to raise financial,it may be difficult to specialise or enjoy economies of scale and can also have problems with continuity if sole trader retires or dies. E.g

* Small retailers
* Plumbers
* Builders
* Beauticians
* Internet entrepreneurs
* Market traders
* Grocers
* Butchers
Partenership it’s a business that is owned by 2 or more members, most comonly between 2 and 20. Partenerships have:
* Advantage –spreads the risk across more people
- Partener may bring money and resource
-partener may bring others skills and ideeas -increased credibility
* Disadvantage-have to share profits
-less control of business for individual -problems if parteners disagree over of direction of business E.g. -Motorola, King Sturge consultancy, law firms etc.

Private limited company is a business owned by shareholders, run by directors and liability is limited. Advantages-limited liability that means that the personal assets of shareholders will not be at risk of being detained by creditors - Business will not be affected by the status of the owner

- Minimum number of shareholders to start the company needed is two. - More money can be raised as you can have a maximum of shareholders which is 50. - Capacity of expansion is higher because it is easy to raise capital from financial institutions Disadvantages – growth may be limited because of maximum shareholders allowed are 50. * The share cannot be sold or transfered to anyone else without the accord of other shareholders. E.g –Chrysler group whose ownership is separate from its management.

Public limited company-the standard legal title of a company which has offered shares to general public and has limited liability. Advantage-there is a limited liability for sharholders
-separate legal entity
-raise large capital sum
-no limited shareholders
-the shares of business are freely transferable
Disadvantages-a lot of legal formalities required
-strict controls and regulations to comply -the original owners may lose control of the business E.g. Tesco plc, British airways plc, talk talk plc etc.

Co-operatives-is an autonomous association of persons who willingly collaborate for their mutual, social, economic and cultural benefit There are three main types of co-operatives:
* Retail co-ops
* Marketing or trader co-ops
* Workers co-ops
* Inexpensive to register a cooperative
* Shareholders, directors, managers and employees have no responsibility for debts of the cooperative unless those debts are caused recklessly, negligently or fraudulently * Cooperative is owned and controlled by its members rather than its investors. Disadvantages:

* There must be a minimum of five members
* Active and direct involvement of members/shareholders in the cooperative * Requires continuous cooperative education programs for members. E.g: -farmer’s co-operative marketing and distributing food products (Nebraska food cooperative) Franchises –is a type of license that a partied (franchisee) acquires to allow them to have access to a business’s (the franchisor) proprietary knowledge, processes and trademarks in order to allow the party to sell a product or offer a facility under the business’s name. Advantage:

* Tried and tested market place, business model
* Easier to raise money from bank to buy a franchise
* Normally receive training
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