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TYPES OF BUSINESS ORGANISATION

TYPES OF BUSINESS ORGANISATION. Andrew Triganza Scott MBA (Maas), M.Ed (Melit), B.Psy (Hons), PGCE. CHAPTER TOPICS. WHAT ARE THE DIFFERENT TYPES OF BUSINESS ORGANISATIONS? WHAT ARE STATE OWNED ENTERPRISES? WHAT ARE THE CHANGING TRENDS IN BUSINESS OWNERSHIP AND STRUCTURE?

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TYPES OF BUSINESS ORGANISATION

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  1. TYPES OF BUSINESS ORGANISATION Andrew Triganza Scott MBA (Maas), M.Ed (Melit), B.Psy (Hons), PGCE

  2. CHAPTER TOPICS • WHAT ARE THE DIFFERENT TYPES OF BUSINESS ORGANISATIONS? • WHAT ARE STATE OWNED ENTERPRISES? • WHAT ARE THE CHANGING TRENDS IN BUSINESS OWNERSHIP AND STRUCTURE? • WHY HAVE AGRICULTURAL CO-OPS TURNED INTO PLC’S? • WHY DO BUSINESSES CHANGE THEIR LEGAL STRUCTURE OVER TIME?

  3. 1. WHAT ARE THE DIFFERENT TYPES OF BUSINESS ORGANISATIONS? • SOLE TRADER • PARTNERSHIP • PRIVATE LIMITED COMPANY (PLC) • CO-OPERATIVE • STATE OWNED ENTERPRISES

  4. 1. WHAT ARE THE DIFFERENT TYPES OF BUSINESS ORGANISATIONS? These above business structures are going to be compared under the following headings: • Formation • Dissolution • Ownership • Management & Finance • Profits & Risk

  5. 2. What are Sole Traders? This is a one person business run by the owner with his/her own money.

  6. 3. What are partnerships? • Is an agreement between 2 or more people to go into business with a view to making a profit? There can be no less than 2 members and no more than 20.

  7. 4. What is a limited company? • There are two main types of company: • Private limited company (Ltd) – HEITON BUCKLEY • Public limited companies (PLC’s) – LIVERPOOL FC • The main difference is that shares of PLC’s can be freely bought and sold on the stock exchange. - ‘Ltd’ companies are regarded as separate legal entities from the people who own and run them. - The owners are called ‘Shareholders’ and only gain/lose on the amount they put into the business.

  8. Shareholders Board of Directors Managers Personnel Dept Marketing Dept Financial Dept Production Dept The management structure of companies

  9. How is a Private Limited Company formed? To form a Private Limited Company (PLC) you must: • Have at least two shareholders and one director. • Prepare a Memorandum of Association. This is a document for public use. It details name of company, company objective, the number of shares of each shareholder. This document is kept in the Companies Office. • Prepare an Articles of Association. This is a document for shareholders. It details the internal rules of the company, types of shares issued, how meetings are run, the procedure for electing/replacing directors. • Register with REGISTRAR of COMPANIES in the COMPANIES OFFICE • The companies office issues a “birth certificate” called a CERTIFICATE of INCORPORATION • If you register as a public limited company you must obtain aTRADING CERTIFICATE • TRADING CAN NOW COMMENCE

  10. How companies are run? Annual General Meeting (AGM)- a meeting held once a year involving directors, shareholders of a firm discussing events of the previous 12 months and future plans. Board of Directors BOD – this board is responsible for overseeing the running of the company. These directors are the most senior managers of a limited company. Directors can be removed by a majority voting system. The Company Chairperson – is a director and is elected by the Board to chair the AGM’s and/or EGM’s. They speak on behalf of the BOD. The Managing Director (MD) or General Manager (GM) or Chief Executive Officer CEO - Is in charge of overseeing all aspects of company activities. The CEO is answerable to the BOD.

  11. Limited Company Features

  12. 5. What is a Co-operative (Co-op)? A co operative is business owned and run by a group of people, AND each has a financial interest in its success. They also have a say on how it is managed Co-ops mainly exist in the agricultural industry.

  13. 5. What is a Co-operative (Co-op)?

  14. 6. What are state owned enterprises? These are enterprises that are set up, financed and controlled by the government – Air Malta, Malta Enterprise, Transport Malta

  15. 6. What are state owned enterprises?

  16. Forms of Ownership – A summary

  17. 7. WHAT ARE THE CHANGING TRENDS IN BUSINESS OWNERSHIP AND STRUCTURE? • Rise in the number of firms entering into alliances • Mergers and Acquisitions (M&As) • Rise in the number of SME’s • Privatisation of state owned companies • Agricultural co-ops turning into PLC’s • Rise in the number of firms entering into alliances • Many Irish firms are now entering into alliances such as joint ventures. This helps them against larger international firms. They can also share skills, pool resources to further their growth.

  18. SME’s are developing in an enterprise culture • Subcontracting (contracting out) – Businesses are now spending more time contracting out jobs such as cleaning, security, maintenance etc. • Franchising – The renting of a successful business formula is a common route to becoming a LARGER company. Examples include SUPERMACS, THE BODY SHOP, MacDonald’s, Burger King, Starbucks, Costa Café etc.

  19. Why do businesses change their business structure? • Businesses change their Business Structure from Sole Trader to Partnership to Private Limited Company to a PLC because: • It helps them bring in new skills, experience, resources • It reduces risk as the sole trader or the partners can now enjoy limited liability • Helps to raise finance through investors, stock exchange etc. for future expansion

  20. Why do businesses change their business structure? • Helps to market the company. Being a limited company enhances the image of the business. • This adds to the reputation of the company as advertising and promotions will be more convincing to the intended customers. • Business profit prestige - changing a Co-op structure to a PLC offers the management and employees a stronger allegiance to making profit rather than operating for the goodwill of the local cooperatives.

  21. Review QUESTIONS • Distinguish between a Sole Trader and a Partnership as a form of Business organisation. • Explain the concept Limited Liability. • Explain why you would recommend a private limited company Ltd as a type of business organisation for a new business venture. • Contrast a Private Limited Company LTD with a Public Limited Company PLC as a form of Business Organisation. • Contrast the contents and functions of the articles of association and memorandum of association of a limited company.

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