Chapter 2 - Business Structure

DIVIDE THE BUSINESSES BELOW INTO THREE GROUPS,
ENSURE THAT YOU CAN JUSTIFY YOUR DECISIONS!

UNIT 1: BUSINESS AND ITS
ENVIRONMENT
Chapter 2 – Business Structure

LEARNING OBJECTIVES
Aim (s)
To develop an understanding of the business structures.
Objectives
Analyse primary, secondary and tertiary sector businesses.
Differentiate between public and private sectors.
Assess the main features of legal structures and evaluate the most important one for
different businesses.
LO1: Analyse primary, secondary and tertiary sector businesses.
Make notes
and find own
Economic Sectors examples, be

ready to
share- 7min
Primary Sector: Direct extraction of natural resources. Example:
Dairy farming in New Zealand.
Secondary Sector: Processing and manufacturing of goods.
Example: Clothing factory in China.
Tertiary Sector: Providing services. Example: Burj Al Arab hotel
in Dubai.
Quaternary Sector: Knowledge-based activities involving
services. Example: Research laboratory in India.
EMPLOYMENT % BY COUNTRY
Country Primary Secondary Tertiary
UK 2 19 79
Ghana 42 26 32
China 54 20 26
GDP CONTRIBUTION BY
SECTOR IN VIETNAM 2019
As of 2019, the World Bank reported the following approximate
breakdown:
• Agriculture, forestry, and fishing:

• 15.3%
• Industry (including construction, manufacturing, and mining):
• 33.3%
• Services:
• 41.6%
Changes in Importance of Sectors

Industrialisation: Growing importance of secondary sector in
developing countries. Example: Ghana's shift from primary to
secondary between 2008 and 2019.
Deindustrialisation: Decline in secondary sector and rise in
tertiary in developed countries. Example: UK's shift from
manufacturing to services over 25 years.
Changes in Importance of Sectors

Consequences of Industrialisation:
🢝 Benefits: Increased national output, lower imports and higher exports, job
creation, increased tax revenue, and added value to the country's raw
materials.
🢝 Problems: Social issues due to migration from rural to urban areas,
increased import costs, and potential negative impacts from the expansion
of multinational companies.
Consequences of Deindustrialisation: Job losses in agriculture, mining, and
manufacturing industries, urbanisation, job opportunities in service
industries, and increased need for retraining programmes.
Public vs. Private Sector

Private Sector: Dominates in free-market systems. Varies in size
and legal structure. Mainly profit-driven.
Public Sector: Provides essential services and strategic industries.
Example: Health, education, defense, public transport.
Public Corporations: State-owned entities. Example: State-
owned airlines prioritizing safety.
Public Goods: Cannot be charged for, making private profit
impossible. Example: Street lighting funded by taxes.
Public sector enterprise: Public

Corporations
Advantages and Disadvantages of

Public Sector Corporations:
In your notebook make notes:
Identify, explain and create examples for
each of the advantages and disadvantages
in the textbook.
Advantages of Public Sector

Corporations:
Social Objectives: Public sector corporations focus on societal benefits rather than
profit. For example, a public health service like the NHS in the UK aims to improve
public health, not to make a profit.
Loss-Making Services: They can maintain important but unprofitable services. For
instance, maintaining rural bus routes that are vital for remote communities but are not
profitable.
Government Financing: They are funded by the government, allowing them to focus
on their social objectives. For example, public schools are funded by the government to
provide education to all children.
Disadvantages of Public
Corporations:
Potential Inefficiency: Without profit motivation, they may not be as driven to cut
costs and operate efficiently. For example, a public sector corporation might not be
as motivated to reduce wastage or streamline operations as a private company would
be.
Subsidy-Induced Inefficiencies: Government bailouts can discourage efficiency
and lead to resource wastage. For instance, a public transportation system might not
optimize its routes if it knows it will be bailed out by the government.
Political Interference: Decisions can be influenced by politics, which may not
always align with the corporation's or public's best interests. For example, a
government might insist on keeping unprofitable post offices open in rural areas for
political reasons, even if it would be more efficient to close them.
True or False Public

Corporations:
1. Public corporations can continue to operate even if they are making
losses if the social benefit is great enough. (True/False)
2. Public corporations mainly raise their finance from private investors.
(True/False)
3. Public hospitals may shut down if they are not profitable, despite
providing essential health services to the community. (True/False)
4. Public corporations can be inefficient due to lack of strict profit
targets. (True/False)
True or False Public

Corporations:
1. Public corporations can continue to operate even if they are making losses if the
social benefit is great enough. (True)
2. Public corporations mainly raise their finance from private investors. (False, they
mainly raise their finance from the government)
3. Public hospitals may shut down if they are not profitable, despite providing
essential health services to the community. (False, they may continue to operate
even if they are not profitable because they provide essential health services)
4. Public corporations can be inefficient due to lack of strict profit targets. (True)
LO3: Assess the main features of legal structures and evaluate the most important one for different businesses.
BUSINESS OWNERSHIP
ACTIVITY – PRESENTATION
For each group, your presentation should include:
A brief introduction to the business type.
Suggest businesses that will be best suited to this business type.
Supply a real word example.
The advantages and disadvantages of this business type.
Analysis and Application (examples, both generic and in context of your chosen company) for
each advantage and disadvantage.
Then suggest when a business may need to change from this type of business.
PRESENTATIONS MUST NOT EXCEED 7min

Group 1: Partnership & Private Limited Companies
Group 2: Public Limited Companies & Social enterprises
Group 3: Joint Ventures & Cooperatives
Group 4: Franchises – From the perspective of franchisee and franchisor
PRIVATE SECTOR – SOLE TRADER

A sole trader is a business structure where one individual owns and operates
the entire business.
Many small business start ups and well-known authors, artists, and freelancers
operate as sole traders. One example is J.K. Rowling, who started as a sole trader
when she began her career as an author.
Try think of
the most
relevant adv
and disadv for
JK Rowling

1.Easy to Set Up
1. Analysis: Since there are no legal formalities, setting up is straightforward. As a result, individuals can
quickly start their business without wasting time on complex procedures, which might lead to a faster entry
into the market.
2. Example: A person can start a lawn mowing service in their neighborhood without undergoing any formal
registration, thereby quickly seizing the market opportunity during the peak season.
2.Complete Control
1. Analysis: Having complete control means the owner can make swift decisions without needing consensus
from others. This will lead to a business that is closely aligned with the owner's vision and goals.
2. Example: A freelance graphic designer can swiftly change their business strategy to focus on digital
illustrations, without needing approval from partners or board members.

Easy to Set Up
• Example: J.K. Rowling could initiate her writing career without any bureaucratic hurdles,
swiftly starting her journey in the literary world.
• Analysis: The sole trader structure allowed Rowling to quickly enter the market without being
hindered by complex procedures, focusing solely on her passion for writing and developing
her manuscript.
Complete Control
• Example: Rowling had the autonomy to shape the Harry Potter series according to her
unique vision, without external influences.
• Analysis: This business model granted Rowling the liberty to make quick decisions and
retain her artistic direction, fostering a narrative that was truly aligned with her personal vision
and goals, which played a pivotal role in the series' global success.

3. Owner Keeps All Profits
1. Analysis: As the owner retains all the profits, they might be more motivated to work hard and grow
the business. Consequently, this could potentially result in higher personal financial gains.
2. Example: A private yoga instructor can enjoy all the profits from their classes, which might
motivate them to expand their offerings and thereby increase their income.
4. Flexible Working Hours
3. Analysis: The ability to choose working hours can lead to a better work-life balance, fostering a
more personalized approach to managing one's time and responsibilities.
4. Example: A freelance writer can choose to work during the nights or weekends, allowing them to
manage their time according to their personal preferences.

Owner Keeps All Profits
• Analysis: As the owner retains all the profits, they might be more motivated to work hard and
grow the business. Consequently, this could potentially result in higher personal financial gains.
• Example: In the initial stages of her career, J.K. Rowling was the sole beneficiary of the profits
generated from her book sales. This financial incentive might have fueled her motivation to
continue expanding the Harry Potter series, thereby increasing her income substantially over
time.
Flexible Working Hours
• Analysis: The ability to choose working hours can lead to a better work-life balance, fostering a
more personalized approach to managing one's time and responsibilities.
• Example: J.K. Rowling had the flexibility to manage her writing hours, which allowed her to
balance personal commitments and writing endeavors effectively. This flexibility might have been
instrumental in nurturing her creativity, as she could write at times when she felt most inspired.

5. Close Relationships with Stakeholders
1. Analysis: Establishing close relationships with staff and customers can result in a more personalized
service. Consequently, this might lead to higher customer satisfaction and loyalty.
2. Example: A local cafe owner who knows their regular customers' preferences, thereby offering a
personalized service which can foster loyalty and repeat business.
6. Business Based on Owner's Interests or Skills
3. Analysis: When a business aligns with the owner's skills or interests, it often results in higher job
satisfaction. Therefore, the owner might be more invested in the success of the business.
4. Example: A car enthusiast opening a car detailing service, where their passion drives the business,
potentially leading to a higher quality of service.

Close Relationships with Stakeholders
• Analysis: Establishing close relationships with stakeholders, such as publishers and readers, can
foster a more personalized and enriched interaction. Consequently, this might lead to higher
satisfaction and loyalty among the readership and other stakeholders.
• Example: J.K. Rowling has maintained a close relationship with her readers, often interacting with
them through social media platforms and events. This close bond has fostered a loyal fan base that
eagerly anticipates her every release, creating a community that shares a deep connection with the
Harry Potter series.
Business Based on Owner's Interests or Skills
• Analysis: When a business aligns with the owner's skills or interests, it often results in higher job
satisfaction. Therefore, the owner might be more invested in the success of the business.
• Example: J.K. Rowling's deep interest in storytelling and her skills in crafting intricate narratives were
the foundation of her business. Her passion for writing drove the creation of the Harry Potter series,
which not only led to a highly successful business but also revolutionized the world of children's
literature, showcasing the power of aligning business with personal skills and interests.

1.Unlimited Liability
1. Analysis: The aspect of unlimited liability means that the owner's personal assets are at risk in case of
business debts. As a result, the owner might face financial ruin if the business fails, leading to a high level
of financial risk.
2. Example: If a sole trader running a small restaurant faces financial troubles, they might have to sell their
personal assets, like their home, to settle business debts.
2.Intense Competition
1. Analysis: Facing competition from larger firms can be daunting, as they often have more resources.
Therefore, a sole trader might find it challenging to maintain a competitive edge, which could potentially
limit business growth.
2. Example: A small independent bookstore struggling to compete with large online retailers, which offer a
wider range of books at discounted prices.

Unlimited Liability
• Analysis: The sole trader faces the risk of personal financial loss if the business
incurs debts, potentially leading to significant financial strain.
• Example: In the early stages, J.K. Rowling could have potentially faced financial
difficulties if her books didn't sell well, risking personal assets to cover any business
debts.
Intense Competition
• Analysis: Sole traders often face stiff competition from larger entities, making it
challenging to maintain a competitive edge and achieve growth.
• Example: J.K. Rowling entered a literary market dominated by established authors
and publishing houses, which could have limited her ability to gain a foothold and
grow her business initially.

3. Lack of Specialization
1. Analysis: Being responsible for all aspects of management means the owner might not be able to specialize
in areas they find most interesting. Consequently, this can lead to a lack of expertise in certain business
functions, potentially affecting the overall business performance.
2. Example: A baker who also has to manage the accounting and marketing of their bakery, which might
prevent them from focusing on creating innovative pastry recipes.
4. Difficulty in Raising Capital
3. Analysis: Sole traders often find it hard to raise additional capital. This limitation can hinder business
expansion, as they might not have the necessary funds to invest in new opportunities or resources.
4. Example: A craftsman finding it difficult to secure a loan to purchase advanced equipment, which could
have helped in expanding the product range and improving efficiency.

Lack of Specialization
• Analysis: Managing all aspects of the business can prevent the owner from focusing
on areas of personal interest, possibly affecting business performance.
• Example: In the beginning, J.K. Rowling had to manage not only the writing but also
the marketing and financial aspects of her business, which might have diverted her
focus from crafting her narratives.
Difficulty in Raising Capital
• Analysis: Sole traders may struggle to secure additional funds, limiting the potential
for business expansion.
• Example: Initially, Rowling might have faced challenges in securing funds for
publishing her books, which could have restricted her from exploring broader
opportunities or resources in the literary market.

5. Long Working Hours
1. Analysis: The necessity to work long hours can lead to burnout and decreased productivity over time.
Therefore, the business might suffer in the long run, as the owner might not be able to maintain the same
level of energy and dedication.
2. Example: A florist working late into the night daily to arrange fresh flowers, which might lead to fatigue and
a decline in the quality of arrangements over time.
5. Lack of Continuity
3. Analysis: The business does not have a separate legal identity, which means it ends when the owner dies. As
a result, there is a lack of business continuity, which can impact the long-term sustainability of the business.
4. Example: A family-run hardware store closing down after the owner's demise, as there was no legal
provision to pass the business onto the next generation.

Long Working Hours
• Analysis: The demand for long working hours can potentially lead to burnout,
affecting the business's sustainability in the long run.
• Example: In the early stages of her career, J.K. Rowling might have spent long hours
writing and revising her manuscripts, a process that could potentially lead to fatigue
and decreased productivity over time.
Lack of Continuity
• Analysis: The business structure implies that it ceases to exist upon the owner's
death, impacting its long-term sustainability.
• Example: In the context of J.K. Rowling, had she not transitioned to a more complex
business structure, the Harry Potter franchise might have faced discontinuity upon her
retirement or demise, affecting the long-term viability of the brand.

Why might JK change her ownership?
• Finance
• Legal identity and continuity
• Liability
Group 1: Partnership & Private Limited Companies
Group 2: Public Limited Companies & Social enterprises
Group 3: Joint Ventures & Cooperatives
Group 4: Franchises – From the perspective of franchisee and franchisor

• Definition: a business which has one owner who provides permanent finance and has full control and keeps all of
the profits, they have unlimited liability.
• The most common form of business ownership
• A small proportion of total business revenue
Advantages Disadvantages
Easy to set up Unlimited liability
Owner has complete control Intense competition from larger firms
Owner keeps all profits Owner needs to be multi-skilled
Closer relationships with staff (if there are Difficult to raise capital
any)
Long hours and hard work
Lack of continuity
PRIVATE SECTOR - PARTNERSHIP

Definition: a business formed by 2+ people, with shared capital
investment and shared responsibility. They have unlimited liability.
Partners may have complementary skills Unlimited liability
Shared decision making Shared profits
Additional capital can be raised Continuity issues if there is a death
Losses are shared Disagreements may occur
Greater privacy and fewer legalities than

companies.
PRIVATE SECTOR – LIMITED COMPANIES: PRIVATE LIMITED COMPANIES (LTD)

Definition: a small to medium sized business owned by shareholder who are often members of the same
family. They cannot sell shares to the general public.
Limited liability More legal formalities than unincorporated
business
Separate legal entity Can’t sell shares to general public
Continuity (if there is a death) Difficult for shareholders to sell shares
Original owner can maintain control End-of-year accounts must be sent to

government (not the case with
unincorporated)
Can raise finance by selling shares to
friends, family, employees.
Greater status than unincorporated
PRIVATE SECTOR – LIMITED COMPANIES: PUBLIC LIMITED
COMPANIES (PLC)
• Definition: a limited company, often large, with the right to sell shares to the general public.
Shares are quoted on the national stock exchange.
Limited liability Legal formalities in formation
Separate legal entity Costs of legal and financial advisers when changing to
plc
Continuity (if there is a death) Share prices fluctuate – can’t be controlled
Ease of buying and selling of Legal requirements to publish information to

shares for shareholders shareholders and the public, e.g. accounts
Access to substantial capital Risk of takeover
can lead to growth
Directors influenced by short-term aims of major
shareholders – can lead to divorce of ownership and
PRIVATE SECTOR – OTHER TYPES OF BUSINESS ORGANISATION: CO-

OPERATIVES
Definition: A business where all members contribute to running the business, sharing the
workload, responsibilities and decision making.
In larger co-operatives, professional managers may be hired.
All members have one vote at important meetings
Profits are shared equally among members.
Can buy in bulk cheaper Poor management skills (unless

professionals are hired)
Can work together to solve problems and Shortage of capital as no shares to non-
make decisions members
All members should be motivated to work Slow decision making

hard in order to gain profits
PRIVATE SECTOR – OTHER TYPES OF BUSINESS ORGANISATION: FRANCHISES

Definition: a business that uses the name, logo and trading systems of an existing successful business, e.g.
McDonald’s. It is not legally a form of business but a contract between two firms - the franchisor (owner
of name, logo etc) and franchisee (firm paying to use name, logo etc).
Reduced risk of failure using established Share of profits or revenue to be paid to
brand franchisor
Advice and training offered by franchisor Initial franchise fee expensive
National advertising paid by franchisor Local promotions may have to be paid by

franchisor
Suppliers are reliable No choice of suppliers
Franchisor agrees not to open competing Strict rules over pricing, layout etc, reduce
branch locally owners control
PRIVATE SECTOR – OTHER TYPES OF BUSINESS ORGANISATION: JOINT VENTURE
Definition: two or more businesses agree to work closely together on a particular project and create a
separate business division to do so.
Shared costs and risks Styles of management and culture may
clash
Different companies may have different Errors and mistakes can lead to a ‘blame
strengths and work well together game’
Can exploit major markets in new countries Business failure of one partner puts the
more effectively other at risk
PRIVATE SECTOR – OTHER TYPES OF BUSINESS

ORGANISATION: HOLDING COMPANIES
Definition: a business that owns and controls a number of separate businesses but doesn't unite them into
one unified company.
This leads to a balanced portfolio – the holding company is not as vulnerable to risks if it has invested in
different industries.
The holding company can give independence to the separate business or maintain control.
PUBLIC SECTOR – OTHER TYPES OF BUSINESS ORGANISATION: PUBLIC

CORPORATIONS
Definition: a business enterprise owned and controlled by the state– also known as nationalised industry.
Managed with social objectives rather thanTendency of inefficiency due to lack of profit
solely profit – can lead to better qualitytargets
Loss-making services may be kept running Subsidies (a sum of money granted by the
for the social benefit. state to help an industry or business) from
government can encourage inefficiencies
Finance raised mainly from the government Government may interfere in business for
political reasons
Cooperatives
Cooperatives are a popular type of business organization, especially in agriculture and
retail. They can be divided into two main types:
Producer or Worker Cooperatives: These cooperatives are involved in making goods.
Consumer or Retail Cooperatives: These cooperatives sell goods and services.
Key Features of Cooperatives:
 All members contribute to running the business, sharing the workload, responsibilities,
and decision-making. In larger cooperatives, tasks may be delegated to professional
managers.
 Each member has one vote at important meetings.
 Profits are shared equally among members.
 For example, in an agricultural cooperative, members might collectively buy seeds and
materials in bulk to benefit from economies of scale. The cooperative might also buy the
produce of the members and then sell it collectively to get a better price.
Advantages of Cooperatives:
 Economies of scale from buying in bulk.
 Collective problem-solving and decision-making.
 High motivation due to profit sharing.
Disadvantages of Cooperatives:
 Potential for poor management skills, unless professional managers
are hired.
 Possible capital shortages as selling shares to non-members is not
allowed.
 Slow decision-making if all members need to be consulted on
important issues.
FRANCHISE
Key Terms:
Franchiser: The original business that sells the
rights to use its name and model.
Franchisee: The individual or company that buys
into the original business.
Franchisor: Pros & Cons

Advantages:
Rapid Expansion:
🢝 Expand quickly without huge capital.
🢝 E.g., McDonald's with 38,000+ outlets globally.
Revenue Streams:
🢝 Income from franchise fees & royalties.
🢝 E.g., Starbucks earns from each franchise's revenue.
Brand Promotion:
🢝 Franchisees boost local brand visibility.
🢝 E.g., Domino's community events raise brand awareness.
Risk Reduction:
🢝 Franchisees bear most financial & operational risks.
🢝 E.g., Losses from a failed Burger King franchise mainly affect the franchisee.
.
Disadvantages:
Control Issues:
🢝 Less control over franchise units can lead to inconsistencies.
🢝 E.g., A Subway's cleanliness might vary.
Reputation Risk:
🢝 Poor service by a franchisee can tarnish the brand.
🢝 E.g., Undercooked chicken at a KFC outlet.
Legal Liability:
🢝 Franchisors can face legal issues due to franchisee's actions.
🢝 E.g., 7-Eleven selling alcohol to minors.
Franchisee: Pros & Cons

Advantages:
Established Brand:
🢝 Operate under a known brand, attracting customers.
🢝 E.g., McDonald's franchise draws customers due to its reputation.
Training & Support:
🢝 Franchisors offer training & continuous assistance.
🢝 E.g., Subway provides sandwich-making & store management training.
National Advertising:
🢝 Benefit from franchisor's national promotions.
🢝 E.g., Local Domino's gains from national ads.
Supply Chain Access:
🢝 Access to quality suppliers ensures product consistency.
🢝 E.g., Uniform Big Mac taste at all McDonald's.
Franchisee: Pros & Cons

Disadvantages:
Cost:
🢝 Initial fees & continuous royalties can be high.
🢝 E.g., KFC requires a large initial investment & ongoing fees.
Limited Control:
🢝 Restrictions on operations, pricing, & suppliers.
🢝 E.g., Burger King franchisees follow set pricing & store designs.
Profit Sharing:
🢝 Share profits with the franchisor.
🢝 E.g., Starbucks franchisees give a portion of earnings to Starbucks Corp.
Contractual Limits:
🢝 Franchise agreements can be strict.
🢝 E.g., Dunkin' Donuts may limit products sold & operating hours.
Joint Ventures: An Insight

What is a Joint Venture?
A business collaboration between two or more companies.
Focuses on a specific project.
Not a merger, but could lead to one.
JOINT
Advantages:
VENTURE
Shared Costs & Risks:
🢝 Split costs & risks of a project.
🢝 E.g., Sony Ericsson (Sony + Ericsson) shared mobile phone
development costs.
Combining Strengths:
🢝 Merge unique strengths & experiences.
🢝 E.g., Starbucks + PepsiCo = Coffee expertise + Distribution network.
Exploiting Markets:
🢝 Use combined market presence for product introduction.
🢝 E.g., Tata Motors + Marcopolo expanded their market reach.
JOINT VENTURE
Disadvantages:
Clashing Cultures:
🢝 Different management styles can lead to conflicts.
🢝 E.g., Daimler-Benz + Chrysler failed due to cultural differences.
Blame Game:
🢝 Disagreements & blame can break the collaboration.
🢝 E.g., Renault + Mahindra split over the Logan car's failure.
Risk of Partner Failure:
🢝 If one partner fails, the venture is at risk.
🢝 E.g., Saab's bankruptcy threatened its venture with Spyker Cars.
Social Enterprises: Business with a Heart

What is a Social Enterprise?
A business aiming for profit in a socially responsible manner.
Uses profits to benefit society.
Not a charity, but can retain some profit.
Key Features:
Direct Production/Service:
🢝 Make goods or offer services directly.
🢝 E.g., FareShare redistributes surplus food to charities.
Social Aims & Ethical Methods:
🢝 Pursue social goals using ethical means.
🢝 E.g., Sanergy improves sanitation in urban slums.
Profit-Making:
🢝 Need profit to sustain, unlike charities.
🢝 E.g., Aravind Eye Care uses profits to subsidize care for the needy.
Social Enterprises: Business with a Heart
Activity 2.6
Legal Formalities in Setting Up a Private or Public Limited Company
Memorandum of Association:
This is a legal document that outlines the fundamental conditions upon which a company
is allowed to operate (company's name, location, purpose, and maximum share capital)
Articles of Association: This document provides the regulations for a company's
operations, including the roles and responsibilities of the directors, the kind of business
to be undertaken.
Certificate of Incorporation: Once the Memorandum and Articles of Association are
satisfactorily completed, the registrar of companies issues this certificate. It is the proof
of the company's existence and allows a limited company to start trading.
Changing Business Ownership: A

Transformation
Advantages:
Access to More Finance:
🢝 Opens doors to larger financial resources.
🢝 E.g., Facebook's shift to a public company expanded its capital access.
Gaining Legal Identity:
🢝 Business obtains its own legal status.
🢝 E.g., A local bakery, as a private limited company, becomes a separate legal entity.
Protecting Owners' Capital:
🢝 Owners' personal assets are shielded from business debts.
🢝 E.g., A tech startup as an LLC protects owners' assets from business liabilities.
Changing Business Ownership: A

Transformation
Disadvantages:
Legal Costs & Formalities:
🢝 Transition involves legal expenses & procedures.
🢝 E.g., A sole trader becoming a private limited company faces registration costs &
paperwork.
Loss of Control & Ownership:
🢝 Original owner might lose some control.
🢝 E.g., A family-owned restaurant as a private limited company may dilute original
ownership.
Shared Profits:
🢝 Profits are divided among more stakeholders.
🢝 E.g., A freelance designer's profits as a private limited company are shared with
shareholders.
LO2: Differentiate between public and private sectors.
ANALYSE ONE ADVANTAGE AND ONE DISADVANTAGE

TO A HAIR SALON OF BECOMING A PRIVATE LIMITED
COMPANY. [8]
Which assessment objective is this question assessing you on?
This will assess you on A01, A02 and A03

Chapter 2 - Business Structure

Uploaded by

Copyright:

Available Formats

Chapter 2 - Business Structure

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Chapter 2 - Business Structure

Uploaded by

Copyright:

Available Formats

DIVIDE THE BUSINESSES BELOW INTO THREE GROUPS,

ENSURE THAT YOU CAN JUSTIFY YOUR DECISIONS!

Chapter 2 – Business Structure

Economic Sectors examples, be

Country Primary Secondary Tertiary

• Agriculture, forestry, and fishing:

Changes in Importance of Sectors

Changes in Importance of Sectors

Public vs. Private Sector

Public sector enterprise: Public

Advantages and Disadvantages of

Advantages of Public Sector

True or False Public

True or False Public

PRESENTATIONS MUST NOT EXCEED 7min

PRIVATE SECTOR – SOLE TRADER

PRIVATE SECTOR – SOLE TRADER

PRIVATE SECTOR – SOLE TRADER

PRIVATE SECTOR – SOLE TRADER

PRIVATE SECTOR – SOLE TRADER

PRIVATE SECTOR – SOLE TRADER

PRIVATE SECTOR – SOLE TRADER

PRIVATE SECTOR – SOLE TRADER

PRIVATE SECTOR – SOLE TRADER

PRIVATE SECTOR – SOLE TRADER

PRIVATE SECTOR – SOLE TRADER

PRIVATE SECTOR – SOLE TRADER

PRIVATE SECTOR – SOLE TRADER

PRIVATE SECTOR – SOLE TRADER

PRIVATE SECTOR – SOLE TRADER

PRIVATE SECTOR - PARTNERSHIP

Shared decision making Shared profits

Additional capital can be raised Continuity issues if there is a death

Losses are shared Disagreements may occur

Greater privacy and fewer legalities than

PRIVATE SECTOR – LIMITED COMPANIES: PRIVATE LIMITED COMPANIES (LTD)

Continuity (if there is a death) Difficult for shareholders to sell shares

Original owner can maintain control End-of-year accounts must be sent to

Ease of buying and selling of Legal requirements to publish information to

PRIVATE SECTOR – OTHER TYPES OF BUSINESS ORGANISATION: CO-

Can buy in bulk cheaper Poor management skills (unless

All members should be motivated to work Slow decision making

PRIVATE SECTOR – OTHER TYPES OF BUSINESS ORGANISATION: FRANCHISES

National advertising paid by franchisor Local promotions may have to be paid by

PRIVATE SECTOR – OTHER TYPES OF BUSINESS ORGANISATION: JOINT VENTURE

PRIVATE SECTOR – OTHER TYPES OF BUSINESS

PUBLIC SECTOR – OTHER TYPES OF BUSINESS ORGANISATION: PUBLIC

Franchisor: Pros & Cons

Franchisee: Pros & Cons

Franchisee: Pros & Cons

Joint Ventures: An Insight

Social Enterprises: Business with a Heart

Social Enterprises: Business with a Heart

Legal Formalities in Setting Up a Private or Public Limited Company

Changing Business Ownership: A

Changing Business Ownership: A

ANALYSE ONE ADVANTAGE AND ONE DISADVANTAGE

Which assessment objective is this question assessing you on?

This will assess you on A01, A02 and A03