INTRODUCTION TO ORGANISATIONS
Lecture 1 (ICTM)
Types of Organisations
Private Sector and Public Sector
Analyse organisations of different types and identify their main features.
Explain the advantages and disadvantages of each type of organisation.
Relate each type of ownership to the degree of control. Distinguish between organisations in the
Private and Public Sectors.
What is the difference between the public and private sectors?
Can you name some organisations from both sectors? The Private Sector comprises businesses owned and controlled by individuals or groups of individuals. In most countries, the majority of business activity is in the private sector.
The Public Sector comprises organisations accountable to and controlled by central or local government. These usually include: THE ECONOMY
Health and education services
Law and order
Welfare and social services.
This is the most common form of business organisation. One person provides the finances and in return, has full control of the business and is able to keep all the profits.
What are the advantages and disadvantages of a sole trader?
Easy to set up
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
Unlimited liability – all of the owner’s a assets are potentially at risk.
Often faces intense competition from bigger firms, for example, food retailing.
Difficult to raise additional capital.
Long hours often necessary to make business profitable.
Lack of continuity- as the business does not have separate legal status, when the owner dies, the business ends too
Partnerships are agreements between two or more people to run a business together.
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 function of each partner and who has the authority to sign contracts.
are the advantages and disadvantages of being in a partnership? 4
Partners may specialise 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 than corporate
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.
All 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 lose independence of decision-making
Characteristics of Limited Companies
Capital is divided into shares
Companies are run by directors
Memorandum of Association + Article of Association
Registrar of Companies
Certificate of Incorporation
Name of the company
Name and address of the company’s registered office
The objectives of the company and scope of its activities