Page 56 - Cambridge IGCSE Business Studies

Cambridge IGCSE Business Studies Section 1 Understanding business activity

■ The owners’ role in the management of the business. Some owners may only want
Sources of finance: see to invest in a business and have nothing to do with the running of it. If this is the case
Chapter 19, page 246. then an incorporated business organisation may be a better choice.
■ The attitude towards financial risk. If owners do not want to risk their personal
wealth, then they are more likely to set up an incorporated business.
■ How quickly the owners want to start operating their business. Unincorporated
business organisations such as sole traders and partnerships are much quicker to
set up than incorporated ones. This is because they do not have any complex legal
requirements.
■ The potential size of the business. Most businesses start small and many will
remain so because of factors such as the size of the market, or owners’ choice.
These businesses are more likely to be set up and remain as sole traders or
partnerships.

Number of
owners?

Does the
What is the owner want to
size of the manage
business? Which type the business
of business directly?
organisation
to choose?
54

How quickly Is the
does the business to be
business need unincorporated or
to be set up? incorporated?

Figure 4.4 Factors affecting the type of business

organisation chosen

In addition to the legal structure of a business, entrepreneurs may consider the
benefits of a franchise (see page 50).

Business organisations in the public sector
Public corporations

A public corporation