This document discusses different types of business organizations including sole proprietorships, partnerships, limited companies, and public limited companies. It provides details on the key characteristics of each type. Some of the main points covered include: - Sole proprietorships are owned and run by one individual who has full control but also bears all financial risk. Partnerships involve two or more individuals sharing ownership, management, and liability. - Limited companies provide owners with limited liability but require more legal formalities to establish. They can sell shares to raise capital but shares cannot be publicly traded. - Public limited companies can sell shares on a stock exchange, allowing them to raise large amounts of capital but they have less control than smaller

2. Types of Organizations
 Profit, non-profit and non-governmental
 Sole Trader/Proprietors
 Partnerships
 Companies/Corporations

3. CLASSIFICATIONS OF BUSINESS
Private Sector First

4. Types of Private Sector
Businesses
Sole
Trader Partnership
Limited
Companies
Cooperatives
Private
Ltd
Public
plc

5. This is the most common form of business organization. One
person provides the finances and in return, has full control
of the business and is able to keep all the profits.
Identify some of the advantages…………

6.  Easy to set up-no legal formalities.
 Owner has complete control –not answerable to anybody else.
 Owner keeps all profits.
 Able to choose times and patterns
 of working.
 Able to establish close personal
relationships with staff
(if any are employed) and customers.
 The business can be based on the
interest and skills of the owner –
rather than working as an employee
for a larger business.

7. Identify some of the disadvantages…………

8.  Unlimited liability – all of the owner’s a assets are potentially at
risk.
 Often faces intense competition from bigger firms, for example,
food retailing.
 Owner is unable to specialize in areas of the business that are
most interesting – it is responsible for all aspects of
management.
 Difficult to raise additional capital.
 Long hours often necessary to
make business pay.
 Lack of continuity- as the
business does not have separate
legal status, when the owner dies,
the business ends too.

9. Partnerships are agreements
between two or more people
carry on a business together,
usually with a view of making a profit.
The Deed of Partnership establishes the rights and
privileges of the partners. This document includes issues
such as voting rights, distribution of profits, The
management role of each partner and who has the
authority to sign contracts.

10.  Identify advantages of a partnership

11.  Partners may specialize in different areas of
business management.
 Shared decision making.
 Additional capital injected by each partner.
 Business losses shared between the partners.
 Greater privacy and fewer legal formalities that
corporate Organizations (companies)

12. .
 Identify disadvantages of a partnership

13.  Unlimited Liability for all partners.
 Profits are shared.
 There is, as with sole traders, no continuity and the
partnership will have to be reformed in the event of the death
of one partner.
 Al partners are bound by the decision of any one of them.
 Not possible to raise capital from selling shares.
 A sole trader, taking on partners will loose independence of
decision making.

14. LIMITED COMPANY
 3 Differences between limited companies and
sole traders and partnerships
 Limited companies have:
1. Limited Liability
2. Legal Personality
3. Continuity

15. WHAT IS LIMITED LIABILITY?
 Financial protection in the event that the
company fails. The financial liability is limited.
 Sole Traders and Partnerships are financially
responsible for all claims against the company.

16. WHAT IS LEGAL PERSONALITY?
 A company is its own entity having an identify
separate of that of its owners.
 “It is its own person” so to speak in the eyes of
the law.

17. WHAT IS CONTINUITY?
 The company will continue to exist in the event
of the death of its owners.
 A sole trader or partnership is automatically
dissolved.

18. WHO OWNS A LIMITED COMPANY?
 Shareholders
The company issues shares. Each share is a
small ownership in the company.
 Shareholders own shares in a limited company.

19. WHAT IS A PRIVATE LIMITED COMPANY?
(LTD.)
 It is a company – has issued shares.
 Its shares are not available for sale to the
public.

20.  Tend to be relatively small companies.
 Their business name ends in Limited or Ltd.
IE: JP Solutions Ltd.
 Shares can only be transferred privately and all
shareholders must agree to the transfer.
 Private Limited Companies are often family
businesses owned by members of the family or close
friends.
 The directors of these companies tend to be
shareholders and are involved in the running of the
business.
 Many manufacturing firms are Private Limited
Companies rather than Sole Traders or Partnerships

21.  Shareholders have limited liability.
 More capital can be raised as there are no limits on the
number of shareholders.
 Control of companies cannot be lost to outsiders.
 The business will continue even if one of the owners dies.

22.  Profits have to be shared out amongst a much larger
number of members.
 There is a legal procedure to set up the business. This
takes time and costs money.
 Firms are not allowed to sell shares to the public This
restricts the amount of capital that can be raised.
 Financial information filed with the
Registrar can be inspected by any
member of the public.
 Competitors could use this to their
 advantage.

23. WHAT IS A PUBLIC LIMITED COMPANY?
(PLC.)
 It is a company – has issued shares.
 Its shares are available for sale to the general
public. Its share price is quoted on the stock
exchange.
 A board of directors control the management of
the company appointed at an annual meeting.

24. • Can raise money by issuing shares of stock.
• Offers owners limited liability.
Owners are liable only up to the
amount of
their investments.
• People can easily enter or leave the business by
buying or selling
their shares of stock.

25. •Corporations are subject to more government regulations
than partnerships or sole proprietorships
•Share prices fluctuate; risk of takeover
•Income is taxed twice
•Short-term profit objectives of major

26. Advantages
 Huge amounts of money can
be raised from the sale of
shares to the public.
 Production costs may be lower
as firms gain economies
scale.
 Because of their size, plc can
often dominate the market.
 It becomes easier to raise
finance as financial
institutions are more willing l
to lend to plcs.
Disadvantages
 Setting up costs can be very
expensive.
 Since anyone can buy shares, its
possible for an outside interest to
take control of the company.
 All company accounts can be
inspected by member of the
public.
 Because of their size they cannot
deal with customers at a personal
level.
 The way they operate is controlled
by various company acts which
aims to protect shareholders.
 There is divorce of ownership and
control which might lead to the
interest of owners being ignored
to some extent.
 Plcs inflexible due to their size.
Questions: What are the
limitations of being a
limited company in a highly
competitive market?

27. PUBLIC SECTOR ORGANIZATIONS
Now the Public Sector

28. The Public Sector is made up or organizations which are
owned and controlled by central or local government or
public corporations. They are funded by government and in
some cases from their own trading ‘surplus’ or profit.
Public Sector businesses still have important roles to play in
certain areas of business activity.

29.  Public corporations are owned and controlled
by the government.
 Profit is not their main goal.
 They are meant to serve or meet the needs of
citizens.
Examples:
PBS
(Public Broadcasting Service)
United States Postal Service

30. Advantages
 Managed with social
objectives rather than
profit
 Loss-making services
might be kept operating if
the social benefit is great
 Finance raised mainly from
the government
Disadvantages
 Tendency towards
inefficiency because no
profit targets
 Subsidies from
government can encourage
inefficiencies
 Government may interfere
in business decisions for
political reasons

31. NON-PROFITS: NON-GOVERNMENTAL
ORGANIZATIONS (NGOS)
 Charities
 Pressure Groups
 Social Enterprise

32. CHARITY
 Profit is not the
objective
 Money raised is used
to support or bring
attention to cause

33. PRESSURE GROUP
 Pressure groups are
charities
 Their goal is to change
behaviors in:
Citizens
Business
Governments

34. SOCIAL ENTERPRISE
 A company with an objective to
reinvest or use profits to benefit
society.
 Triple bottom line:
Economic: Make a profit to reinvest
Social: Provide job support for
community
Environmental: Manage business in
a sustainable way

35. Higher Level “Stuff”

36. PUBLIC-PRIVATE PARTNERSHIPS (PPP)
 Private sector management and financing in
public sector projects that benefit the public

37. GOVERNMENT FUNDED PPP
 Government provides all or part of the funding
 Private management to control costs and be
efficient
 Example: HopeClinicLukuli in Kampala,
Uganda. Receives government funding for
malaria prevention and HIV testing

38. PRIVATE SECTOR FUNDED (PPP)
 Large projects that are financed in the private
sector releasing the government from the
burden of funding.
 The gov’t then leases or pays rent
 Known as PFI – Private Finance Initiative

39. GOVT DIRECTED WITH PRIVATE FINANCING
AND MANAGEMENT (PPP)
 Private sector funding and private sector
management of public projects.
 Example: London hospital was built with
private financing, then leased to the
government which manages and control
hospitals health care services.

40. Costs
 If managed by the private
sector, can cut wages and
benefits and workers no
longer have protection of
being employed by the
public sector
 Reputation of large
business earning large
profits paid by taxpayers
 Private sector may lack
experience managing such
large scale projects
Benefits
 Schools, roads, prisons,
and hospitals have been
built with this scheme
 The goal is for private
sector to make a profit
causing cost efficiency not
seen with government
supervision
 Public service
improvement without
increasing taxes for capital
improvements

41. Thanks
Manoj Srivstava