Page 47 - Cambridge IGCSE Business Studies

4 Types of business

organisation

Introduction
Objectives

Your local business directory will list all types of businesses, from accountants to
In this chapter you will
plumbers, florists to furniture manufacturers, department stores to banks, and
learn about:
many, many more. They all have one thing in common – they are businesses, but
■ sole traders and partnerships that is where the similarity ends. Some may be sole traders, some may be limited
companies, some may be public corporations, and so on. Some businesses may be
■ private and public limited
in the private sector; others will be in the public sector.
companies

■ franchises and joint ventures In this chapter you will learn about the different types of organisations found in the
■ the diff erences between private and public sectors. You will look at the advantages and disadvantages of
unincorporated and diff erent forms of private sector organisation and how entrepreneurs choose the
incorporated businesses best form of organisation for their business.
■ the role of public sector
organisations.
Forms of business organisation

Business organisations in the private sector are defined by their legal structure.

Figure 4.1 shows the forms of business organisation which you need to study as part
of your Business Studies course. 45

Private Sector
TOP TIPS Businesses
Make sure you know the main
features of each type of business
ownership and the advantages Limited
Sole Trader Partnership Franchise Joint Venture
and disadvantages to the owners Companies
of each type.
Private Limited
Company

Public Limited
Company

Figure 4.1 Main forms of business organisations in the private sector

Sole traders
KEY TERM A sole trader is a business owned and managed by one person. Your local fl orist or
plumber may be sole traders.
Sole trader: a business that is

People often choose to become sole traders for their own personal reasons, for
owned and controlled by just one
person who takes all of the risks example because they want to:
and receives all of the profits.
■ be their own boss and make their own decisions
■ decide when and how many hours to work
■ have a business that uses their skills and interests.