Business Ownership

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Sole Trader

This business is owned by a single individual

Advatanges

  • Easy to setup
  • Owner has total control
  • Keep all profits
  • Choose working times
  • Close relationships with staff

Disadvantages

  • Unlimited Liability
  • Owner can't just specialise in what they love, the have to manage the business
  • Hard to raise capital
  • Long hours
  • Owner goes - business goes
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Partnership

A business owned by two or more individuals

Advantages

  • Shared skills/experience
  • Less pressure to make decisions
  • More capital to start up

Disadvantages

  • Unlimited Liability
  • Disagreements
  • Can't sell shares to raise capital 
  • Profits Split
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Private Limited Company (Ltd)

A business owned by two or more individuals

Advantages

  • Shared skills/experience
  • Less pressure to make decisions
  • Limited Liability
  • ANother source of capital (Shares)

Disadvantages

  • Disagreements
  • Loss of Control
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Public Limited Company (PLC)

A company owned by two or more individuals

Advantages

  • Limited Liability
  • Easy for Shareholders to buy and sell shares
  • Access to more capital through selling shares to public

Disadvantages

  • Loss of control (might be taken-over)
  • Share prices constantly changing
  • Have to publish accounts
  • Risk of takeover
  • Directors go for short-term objectives of major investor
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Franchises

A buyer that uses the name, logo and trading systems of an existing successful business.

Advantages

  • Less chance of failing because of brand name
  • Franchisor gives advice and training
  • National advertising done by franchisor
  • Supplies sent to you and already quality cheched
  • Franchisor will not open another branch in same area

Disadvantages

  • Franchise fee must be paid at the start (McDonalds = $250,000)
  • Shared of profits must be paid every year to franchisor
  • Local promotions still franchee's responsibilt
  • No choice of supplies or what supplies to use
  • Reduced control for franchisee as can't change prices or layout branch
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Co-operative

Is where the workers own the business.

Features:

  • All memebers can share the worload
  • All members have one vote at important meetings
  • Profits all shared equally among members

Advantages

  • Buy in Bulk
  • Good motivation for all members to work hard as they get share profit
  • Can work together to solve problems

Disadvantages

  • Poor-management skills unless professional manager hired
  • Lack of capital as can't ever sell shares to general public
  • Slow decision making as all members have equal say
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Joint Venture

Two or more businesses agree to work closely together on a certain project ( not a merger )

Advantages

  • Share the cost and risky venture ( Nike Apple Watch)
  • Different companies have different strengths
  • Their major markets may be in different countries so both, can help each other break into these.

Disadvantages

  • Blame each other for mistakes
  • If one business fails, whole project is at risk
  • Management style and culture of may clash
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