BUSINESS ORGANISATION
ORGANISATION OF BUSINESS
1) SOLE TRADERS
It is owned and operated by just one person who is entirely responsible for his own business
that is to say he has unlimited liability. Advantages: The owner has complete control over his
business, keeps all the profits and can make decisions quickly. Disadvantages: unlimited
liability means that the owner can lose all his personal assets if the business fails, there are
limited financial resources because all the capital is provided by one person, there is no one to
share the workload or exchange ideas with.
2) PARTNERSHIPS
It is a group of two or more people who own and run a business together. The partners
contribute to the initial capital and share the responsibility:
Unlimited partnership: (snc) all of the partners are liable for all the debts;
Limited partnership: (sas) some of the partners only contribute capital to the business, and
do not take an active role in management. They are liable only for the amount of money
they initially invest in the business, and are known as limited partners. However, at least
one partner must have unlimited liability and he is known as the general or unlimited
partner.
3) LIMITED COMPANIES
It is formed by two or more shareholders, that are investors who have shares in the company.
Any profits are divided among the shareholders in proportion to the amount they have
invested (dividends). If it goes bankrupt, each shareholder is only liable for his original
investment:
Private limited companies: (srl) they must have Ltd after their name, they cannot be
quoted on the Stock Exchange, their shares can only be sold with the agreement of all the
shareholders;
Public limited companies: (spa) they must have Plc after their name, they can be quoted on
the Stock Exchange, their shares can be sold without restrictions.
4) COOPERATIVES
In the cooperatives all the employees have a vote and no member can dominate, because all
the members help in the running of the company, share the profits equally and have limited
liability.
5) FRANCHISING
There are 2 subjects: the franchisor and the franchisee. The franchisor offers the franchisee
the right to use his trade name and to sell his product in exchange for an initial payment and a
percentage of his annual profits, and the benefit is that he has to invest little capital. The
franchisee receives the shop furniture, marketing support, training and commercial advice.
They are their own bosses and have responsibility for running the company.
