Understanding different business forms

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  • Understanding different business forms
    • Private Sector Organisations
      • Unincorporated
        • Sole trader
          • Single owner
          • Unlimited employees
          • Unlimited liability
        • Partnership
          • 2-20 partners
          • Can be ordinary, limited or LLPs
      • Incorporated
        • Private Limted Company (Ltd)
          • Limited liability
          • Shares sold privately
          • Shares
            • Public Limited Company
              • Limited liability
              • Share capital >£50,000
              • Shares sold publicly
            • Ordinary share capital
              • The price paid for a 1% share in a business - a permanent investment
            • Market Capitalisation
              • The value of outstanding shares in a PLC
        • Public Limited Company
          • Limited liability
          • Share capital >£50,000
          • Shares sold publicly
    • Role of shareholders and why they invest
      • Shareholder = a person who owns at least one share in a company
      • To provide financial support for a business
      • To be involved in the running of a business
      • To gain control of a business - buying 51%
      • To receive a regular dividend
      • To make a capital gain
    • Influences on share price and the significance of share price changes
      • State of the economy
      • Performance of the company
      • Competition in the market
      • Proposed takeovers
      • Investor's expectations and their response to rumours
    • Factors affecting the choice of business form and changing business form
      • The need for finance in order to expand
      • The size of the businesses and level and type of investment needed
      • The need for limited liability
      • The degree of control desired by owners
      • The nature of the business and its objectives
      • The level of risk involved
      • Non-Profit organisations
        • No defined structure, can take many different business forms
        • NGOs
        • Have a governing body to manage affairs
        • Value driven and have social, environmental, community, welfare or cultural aims
        • Established for purpoases other than financial gain - profits re-invested
        • Use volunteers often
        • Operate under various legal structures
    • Effects of ownership on mission, objectives, decisions and performance
      • Public Sector - focused on providing essential services
      • Not-for profit - focused on generating enough surplus to meet requirements
      • A sole trader that becomes a partnership has to take into account view of partner

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