Business Management 1.2 – TYPES OF ORGANISATIONS
NATIONALISATION PRIVATISATION
PUBLIC SECTOR: controlled by government PRIVATE SECTOR: controlled by individuals,
or a group of them
COMMAND ECONOMY: MIXED ECONOMY: both FREE-MARKET ECONOMY:
owned, planned and many private sector, little
controlled by the state control of the government
PUBLIC CORPORATIONS / NATIONALIZED INDUSTRY / PUBLIC SECTOR ENTERPRISE:
Organisation in the public sector. Social objectives rather than economic ones, sometimes
there are loss but continue working, the government finance it. But, they are generally
inefficient, and the government might interfere for political purposes. Look for maintaining
employment, maintain environmental standards, prevent monopolies and ensure supplies.
FOR PROFIT ORGANISATIONS
Sole trader: single owner, small business
Advantages Disadvantages
- No legal formalities - Unlimited liability (personal possessions
- Complete control at risk)
- Keeps all profits - Competition from big companies
- Choose times and patterns of working - Responsible for all aspects of
- Close personal relationships (staff and management
customers) - Difficulty in expanding and raising
- Business according to interest and capital
skills of the owner - Long hours of work
- No continuity
Partnership: 2 or + (group of people), usually draw up a formal “Deed of Partnership” to
state responsibility of each partner.
Advantages Disadvantages
- Partners specialize in different areas of - Unlimited liability
the business. - Shared profits
- Shared decision making - No continuity
- More capital - Partners bound by the decisions of any
- Loss is shared of them
- More privacy and less legal formalities - No shares
than companies - Lose independence of decision-making
Limited company: overall objectives written in Memorandum and Articles of Association.
Limited liability: Shares, its owners are called shareholders (part-owners of the
company, are paid dividends). They can finance companies so as to expand and they
are only risking their own money. And, the investors, if the company can´t pay its
debts, are now creditors.
Legal personality: separate legal unity. Shareholders can´t be blamed.
Continuity: inheritance of the shares, if someone dies, the company continues
working.
1
NATIONALISATION PRIVATISATION
PUBLIC SECTOR: controlled by government PRIVATE SECTOR: controlled by individuals,
or a group of them
COMMAND ECONOMY: MIXED ECONOMY: both FREE-MARKET ECONOMY:
owned, planned and many private sector, little
controlled by the state control of the government
PUBLIC CORPORATIONS / NATIONALIZED INDUSTRY / PUBLIC SECTOR ENTERPRISE:
Organisation in the public sector. Social objectives rather than economic ones, sometimes
there are loss but continue working, the government finance it. But, they are generally
inefficient, and the government might interfere for political purposes. Look for maintaining
employment, maintain environmental standards, prevent monopolies and ensure supplies.
FOR PROFIT ORGANISATIONS
Sole trader: single owner, small business
Advantages Disadvantages
- No legal formalities - Unlimited liability (personal possessions
- Complete control at risk)
- Keeps all profits - Competition from big companies
- Choose times and patterns of working - Responsible for all aspects of
- Close personal relationships (staff and management
customers) - Difficulty in expanding and raising
- Business according to interest and capital
skills of the owner - Long hours of work
- No continuity
Partnership: 2 or + (group of people), usually draw up a formal “Deed of Partnership” to
state responsibility of each partner.
Advantages Disadvantages
- Partners specialize in different areas of - Unlimited liability
the business. - Shared profits
- Shared decision making - No continuity
- More capital - Partners bound by the decisions of any
- Loss is shared of them
- More privacy and less legal formalities - No shares
than companies - Lose independence of decision-making
Limited company: overall objectives written in Memorandum and Articles of Association.
Limited liability: Shares, its owners are called shareholders (part-owners of the
company, are paid dividends). They can finance companies so as to expand and they
are only risking their own money. And, the investors, if the company can´t pay its
debts, are now creditors.
Legal personality: separate legal unity. Shareholders can´t be blamed.
Continuity: inheritance of the shares, if someone dies, the company continues
working.
1
