Understanding business 2) - Private sector organisations

Private sector organisations :

Limited company (LTD) - the money of a buiness is divided into shares, each member or shareholder will own a number of these shares, the company must have a minimum of 2 shareholders.An LTD is not aloud to offer shares to the public through stock exchange. LTD's have limited liability which means they will not go bank rubt personally if the buisness fails (i.e. if buisness fails it will not affect your personal assets)

Public Limited company (PLC) - Is generally a large company which a minimum of £50,000 share capital (e.g tesco). The shares of a PLC can be bought and sold on the stock exchange, this means large amount of capital can be raised by selling shares to members.

Advantages - share holders are entilted to limited liability. Huge sums of capital can be raised from individuals and institutional investors such as oension funds and insurance companies.

Disadvantages - PLC's have to make more info available to the public than LTD's, e.g they must publish annual reports. PLC's may grow larger, so they could become inflexible and difficult to manage. In very large companies, employees feel out of touch, from those at the top and it may be difficult to take a personal approach to customer sevice. The legal procedures necessary to set up a PLC can be very costly.

Multinationals - Many PLC's operate as Multi-national operations. Multi-national coportations…