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BUSINESS ORGANISATION

Sole traders

It is the simplest form of business organization. It is owned and run by one person, who has unlimited liability. There are some advantages and disadvantages.

  • The advatanges are
  1. he has complete control over the business;
  2. he keeps all the profit;
  3. he makes decisions quickly
  • The disavantages are:
  1. he can lose his personal assets;
  2. he has got limited financial resources;
  3. there is no one to share his workload.

Partnership

It's a group of people who run a business. There are partners who contribute to the capital of the business organization in equal or agreed amount of money.

A partnership can be:

  1. unlimited: it's like a sole trader becaue partners can lose their personal assets;
  2. limited: the partners can lose only the money invested and not their personal assets.

Franchising

It is a widespread form of business. The Franchisee has the opportunity to enter a business without having to build a brand.  The franchisee takes advantage of the success of an established business while the Franchisor  can get a quicker return on investment

  • The advantages for the franchisor are
  1. he has to invest little capital;
  2. he receives a percentage of the annual profit
  • The advantages for the franchisee are:
  1. He receives the shop furniture according to the company style;
  2. He receives marketing support

Limited companies

They are owned by shareholders: they invest their money in separate equal parts called shares .

The profits of the company are paid to shareholders in proportion to the number of shares they hold. these payments are called dividends. There are two types of limited company:

  1. Public limited companies: they are quoted on the Stock Exchange;
  2. Private limited companies: they can't be quoted on the Stock Exchange