P1- Describe the type of ownership, purpose and ownership of two contrasting Businesses
|Key Content: |
|Range of different businesses: local; national; international; global; public; private; not-for-profit/voluntary; sectors of business activity (primary, |
|secondary and tertiary) |
|Business purposes: supply of products or services; difference between profit and not-for profit organisations |
| |
|Ownership: public, private and voluntary sectors; types of ownership (sole trader, partnerships, private and public limited companies, government |
|departments, government agencies, worker cooperatives, charitable trusts); main implications of different types of ownership on businesses (extent of |
|liability, limitations to operation for public and charitable organisations) |

Note: Complete the writing frame describing your knowledge of each aspect, you must also provide examples to demonstrate your understanding.

Part 1: Range of Different Businesses
|P1 |
|Local - A company which provides goods or services to a local population. Though most often used when referring to a locally-owned business, the term may|
|also be used to describe a franchise or corporate branch operating within a local area. |
|National – A business (also known as enterprise or firm) is an organization involved in the trade of goods, services, or both to consumers. A national |
|business is when you have different outlets all around the country. |
|International - The exchange of goods and services among individuals and businesses in multiple countries and also a specific entity, such as a |
|multinational corporation or international business company that engages in business among multiple countries. For example McDonalds where they operate |
|different franchises all over the world. |
|Global - A global business is a company that operates in several countries and uses information technology to assist in the control of operation and |
|performance in each country. |
|Public - Business firm in the public (non-private) sector of an economy, controlled and operated by civil servants or government personnel (and not by |
|private individuals). Used also as an alternative term for public limited company. |
|Private - A business firm in the private (non-public) sector of an economy controlled and operated by private individuals (and not by civil servants or |
|government-employees). Used also as an alternative term for private limited company. |
|Not for profit/ voluntary - One which relies on occasional or regular volunteers for its operations, and may or may not have paid staff. A volunteer |
|organization is characterized by |
| |
|Autonomy from the council |
|Self-governance through a board of unpaid trustees. |
|Membership that is neither inherited nor prescribed. |
|Aid from philanthropy. |
|Benefit for or service to non-members. |
|Not-for-profit orientation. |
|Sectors of Business Activity - |
|Primary – this involves acquiring raw materials. For example, metals and coal have to be mined, oil drilled from the ground, rubber tapped from trees, |
|foodstuffs farmed and fish trawled. |
|Secondary - this is the manufacturing and assembly process. It involves converting raw materials into components, for example, making plastics from oil. |
|It also involves assembling the product, e.g. building houses, bridges and roads. |
|Tertiary - |
|This refers to the commercial services that support the production and distribution process, e.g. insurance, transport, advertising, warehousing and |
|other services such as teaching and health care. |

Part 2: Business Purposes
|Supply of products or services – business activity normally involves a person or organisation offering a service or a product. This will typically |
|involve a payment. Business activity will help you meet these requirements and different businesses have been made up to do exactly this. |
|Difference between profit and not-for profit organisations – many businesses around the world are made to make a profit. For a business to make a profit |
|they need to make sure that they make more then sales that also covers the running costs. The business will need to produce products that appeal to a |
|wide range of different customers. Also they will need to price them approitatly so they will sell and make sure that they are lower priced then your |
|rival. This will make your business more popular and you will have a good customer satisfaction. |

Part 3: Ownership

|public, private and voluntary sectors |
|Sole trader - A sole trader is any business that is owned and controlled by one person. It is the most common type of business that is found this is |
|because it has a wide range of activates, these include Plumbing, window cleaning, and fire cleaners and so on. There is no complicated work involved to |
|set up a sole trader business. There are major advantages for setting up your own sole trader business, for example the wage package is usually quite low|
|as you have few employees and none at all. Another advantage is that the firms are usually small, and easy to set up. Finally it is easier to keep the |
|business under control and you can have a real hand on style towards the business, and you don’t have to consult anyone with the decisions you have to |
|make. There are also a few disadvantages with setting up a sole trader business. When you have a sole trader business there is know one to share the |
|responsibility with for if or when you go in to difficulty. Sole traders also have to work very long hours and it is very difficult to take vacations, |
|and is even worse when you are ill and can’t get cover. |
|Partnerships - a partnership is usually formed of a couple of people by a signing a deed of partnership, this is where they decide how the profits will |
|be set out and also the different responsibility’s between the partners, this is normally signed and sealed with a solicitor. A partnership is normally |
|formed in a profession work, for example a dental practice or café. When you are in a partnership you get to share the responsibilities with your partner|
|this is a massive advantage as you can play with each others strengths and then you can make the business the best it could be. Also there is someone |
|there for when you need to make a big decision and you can consult someone for what you should do and what would be best for the business. On the other |
|hand there are very bad disadvantages with having a partner, for example you have to share all of the profits. People fall out over decisions about the |
|business. |
|Private and public limited companies - a private limited company is often a small business owned by an independent retailer and is normally based in a |
|small town. It is very important that the shares do not trade on the stock exchange. A public limited company is usually a large big business, which is |
|known by a lot of people. This could be a manufacturer or a chain of retailers with branches in most city centres around the country. This is very |
|important as Shares trade on the stock exchange. The pros of being a private limited company are the minimum number of shareholders need to start the |
|business is only 2 and also it has limited liability. The pros of being a public limited company are the business can raise large capital sum as there is|
|no limit to the number of shareholders and also there is limited liability for the shareholders. |
|Government departments & government agencies - – An example of this is customs and revenue this operates on behalf of the government. It is staffed by |
|people called civil servants known in the trade as custom and revenue officers. There job is to collect income tax and other taxes of behalf of the |
|government, to collect payments from various people this is called tax credits. Government agencies work more independently then the government |
|department. The reason the government sets these up is to take a lot more responsibility for a particular activity. An example of this is the child |
|protection agency; this is a government funded agency reasonable for looking after the rights of children. |
|Worker cooperatives - A worker co-operative is a business that is owned by the people who work for it. A worker co-operative has limited liability. There|
|are no outside owners in a pure workers' cooperative, only the workers own shares of the business, though hybrid forms in which consumers, community |
|members or capitalist investors also own some shares are not uncommon . Membership is not compulsory for employees, but generally only employees can |
|become members. A couple of benefits for worker co –operatives are that Worker cooperatives can create jobs. And finally there will be a Greater |
|generation of ideas and debate due to existence of multiple owners. On the other hand there is a major dis advantage there could possibility of conflict |
|between members as if they don’t agree on certain decisions. |
|Charitable trusts - A charity is an organisation that is set up to raise funds and awareness to support people for a good cause. For business the |
|objective of charities is to create a surplus to help others. A surplus will only occur when the revenue is more than the expenditure of the charity. The|
|management of the charities are looked over by a group of trusted people. These people are well regarded and volunteer as responsible people who have had|
|experience with charity and business activities. A benefit of a charitable trust is that Charities benefit from a variety of tax reliefs and also certain|
|sources of grant funding are only open to organisations with charitable status. Although there is also cons for example, Charities cannot raise equity |
|investment and finally Charities may face restrictions on the type of work that can be carried out or funded by them. |
| |

Part 4:
|main implications of different types of ownership on businesses - |
|extent of liability |
|limitations to operation for public and charitable organisations |