Types Of Business Organisation: The Main Features Of Different Forms Of Business Organisation (Copy)
Cheat Sheet: 1.4.1 Types of Business Organisation
| Type | Features | Example | Key Points |
|---|---|---|---|
| Sole Trader | One owner, keeps all profits, unlimited liability | Local shop, small bakery | Simple to start, risky for personal assets |
| Partnership | 2–20 owners, shared profit/loss, unlimited liability | Law firm, medical practice | More capital than sole trader, but disputes possible |
| Private Limited Company (Ltd.) | Owned by shareholders, shares not sold publicly, limited liability | IKEA (before expansion), local Ltd. firms | Separate legal identity |
| Public Limited Company (Plc.) | Shares sold on stock exchange, limited liability, must publish accounts | Apple, Coca-Cola, BP | Can raise huge capital, but costly & public scrutiny |
| Franchise | Business model licensed from franchisor to franchisee | McDonald’s, Subway | Lower risk, franchisee pays fees/royalties |
| Joint Venture | Two or more businesses cooperate on a project | Sony Ericsson (past JV) | Shared risk/resources, but possible conflicts |
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Business Studies Full Scale Course
Unincorporated vs. Incorporated (Limited Companies)
| Aspect | Unincorporated (Sole trader/Partnership) | Incorporated (Ltd./Plc.) |
|---|---|---|
| Legal Status | Owner & business = same legal identity | Separate legal identity |
| Liability | Unlimited (personal assets at risk) | Limited liability |
| Continuity | Ends if owner dies/quits | Continues even if shareholders change |
Risk, Ownership & Liability
- Unincorporated → Higher personal risk
- Limited companies → Lower risk due to limited liability
- Ownership → Sole trader (1), Partnership (few), Ltd./Plc. (many shareholders)
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Business Studies Full Scale Course
Choosing the Right Form (Recommendations)
| Situation | Best Option | Justification |
|---|---|---|
| Small local shop | Sole trader | Easy to start, full control |
| Family business expanding | Private Ltd. | Raise funds, maintain control |
| Company needing global finance | Plc. | Access to stock exchange |
| Risk-averse new entrepreneur | Franchise | Lower risk, brand support |
Public Sector Organisations
| Type | Features | Example |
|---|---|---|
| Public Corporations | Owned/controlled by government, provide essential services, not profit-driven | BBC (UK), Pakistan Railways |
| Aim | Provide affordable/widely available services, protect public interest | Utilities, transport |
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Business Studies Full Scale Course
Quick Revision Bullets
- Sole trader = easy start, unlimited liability
- Partnership = shared risk, still unlimited liability
- Ltd. = separate legal identity, limited liability
- Plc. = large capital, shareholder control issues
- Franchise = brand support, less independence
- Joint venture = share resources/risk
- Public sector = welfare > profit