Types of organisation

BUSINES
S&MANA
GEMENTby: Shadi A. Razak 1
Types of
Organisation

Objectives
• Distinguish between private and public sector
organisations
• Distinguish between different types of profit-
based organisation
• Evaluate the most appropriate form of
ownership for a firm
• Compare and contrast the objectives of non-
profit and non-governmental organisations
by: Shadi A. Razak 2

Structure
• Public and Private Sector Organisations
• Types of Organisations
• Non-profit and Non-governmental
Organisations

Public & Private Sector
PUBLIC & PRIVATE SECTOR
THE ECONOMY
Private Sector Public Sector

Private Sector Organisations
• Comprises businesses owned and controlled
by individuals or groups of individuals
• In every country, most business activity is in
the private sector

Public Sector Organisations
• Comprises organizations accountable to and
controlled by central or local government.
These usually include:
– Health and education services
– Defense
– Law and order

Profit Based Organisations
PUBLIC & PRIVATE SECTOR TYPES OF ORGANISATIONS
Private Sector
Businesses
Sole Trader Partnership Limited Companies Cooperatives
Private Limited Public Limited

• Sole Trader: is the most common form of
business organisation:
– One person provides the finances
– S/he has full control of the business
– S/he able to keep all the profits
TYPES OF ORGANISATIONS

• The advantages of being a Sole Trader:
– Easy to set up-no legal formalities
– Owner has complete control
– Owner keeps all profits
– Able to choose time and pattern of work
– Able to establish close personal relation
with staff (if any) and customers
– The business usually based on the interest
and skills of the owner

• The disadvantages of being a Sole Trader:
– Unlimited liability
– Intense competition from bigger firms
– Owner is unable to specialise in areas of the
business
– Difficult to raise additional capital
– Long hours often necessary to make
business pay
– Lack of continuity

• Partnership: is an agreement between two or
more entity to carry on a business together.
• The deed of partnership
establishes the rights and
privileges of the partners.

• The advantages of being a Partnership :
– Partners specialise in different areas of the business
management
– Shared decision making
– Additional capital injected by each partner
– Business losses shared between the partners
– Greater privacy and fewer legal formalities
than corporate Organisations

• The disadvantages of being a Partnership :
– Unlimited Liability for all partners
– Profits are shared
– No continuity
– All partners are bound by the decision of
any one of them
– Not possible to raise capital from selling
shares

• Limited Companies: are run by directors elected
or assigned by the shareholders, who provide the
source of finance and capital
• There are three differences between companies, sole
traders and partnerships:
– Limited Liability
– Legal personality
– Continuity

• Private Limited Companies: small to medium
sized business that is owned by shareholders
• Shareholders are often family members or private
investment companies
• The shares of these companies cannot be sold to the
general public

• Private Limited Companies:
 Small to medium in size
 Their business name ends in Limited or Ltd
 Shares can only be transferred privately and all
shareholders must agree to the transfer
 Private Limited Companies are often family businesses
owned
 The directors of these companies
tend to be shareholders

• The advantages of being a Private Ltd. :
– Shareholders have limited liability
– Bigger capital can be raised as there are no limits on
the number of shareholders
– Control of companies cannot be lost
– Business continuity guarantied

• The disadvantages of being a Private Ltd. :
– Profits have to be shared out with all shareholders
– The cost of setting up the business is high
– Rising additional capital is difficult and strict
– Disclosure of financial information to the public

• Public Limited Companies: are limited companies
with the legal right to sell shares to the general
public.
• There share price is quoted on the national stock
exchange
• They are often large business (Royal Mail and Facebook)
• There name end with (PLC)

• The advantages of being a PLC. :
– Additional capital can be raised from selling shares to
the public
– Achieve economy of scale
– Possible domination of the market based on their size

• The disadvantages of being a PLC. :
– Setting up costs can be very high
– Possible lose control of the company and business due
to dominate shareholder
– Disclosure of financial information to the public
– Share price subject to fluctuation

• Cooperatives: are businesses run by all the
members of the organisation:
– Members share the work load, responsibilities and
decision making
– All members have a vote
– Profits are shared equally among
members

• The advantages of being a Cooperatives :
– Achieve economy of scale
– Work together to solve problems and make decisions
– All members share business liability
– High motive to all members
– Profit distributed equally among all
members

• The disadvantages of being a Cooperatives :
– Slow decision making
– Poor management and slow run to the business
– Capital shortage
– Profit distributed equally among all
members
– All members share business liability

Non-Profit and NGO’s
• Not all organisations aim to make profit
• Some have other objectives to achieve
• Examples of such organisations:
– Charities
– Pressure groups
– Non-Government Organisations
PUBLIC & PRIVATE SECTOR NON-PROFIT & NON-GOVERNMENTTYPES OF ORGANISATIONS

• These organisations are usually classified as
either:
– Non-Profit Organisations
– Non-Government Organisations
PUBLIC & PRIVATE SECTOR NON-PROFIT & NON-GOVERNMENTTYPES OF ORGANISATIONS

• Non-Profit organisations:
– Aims to achieve other social objectives beside
profit generation and distribution
– Usually governed and run by voluntary board and
members
– They include: Charities and Pressure Groups
PUBLIC & PRIVATE SECTOR TYPES OF ORGANISATIONS NON-PROFIT & NON-GOVERNMENT

• Non-Government organisations:
– Legally constituted body;
– They do not representation of any government
– Usually they work in fields of disaster recovery,
Poverty and Human rights

Summary
• Distinguished between private and public sector
organisations
• Distinguished between different types of profit-
based organisation
• Understood the difference between non-profit
and non-government organisations

Types of organisation

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (20)

Similar to Types of organisation

Similar to Types of organisation (20)

More from ShadiAR

More from ShadiAR (16)

Recently uploaded

Recently uploaded (20)

Types of organisation