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BUSINESS STRUCTURES
Sole Traders
A sole trader is a business owned by one person. They may have employees, but the owner is fully responsible for all debts (unlimited liability). This type is common for artisans and small shops. Advantages: It is easy to start the business because it needs little money. The owner can make all the decisions and keeps all the profits.
Disadvantages: The owner must pay all the debts if something goes wrong. The business has limited money, the owner works long hours, and prices are often higher than in big companies.
Partnerships
A partnership is a business owned by 2 or more people(max 20) who share responsibility, profits and losses.They are divided into: ● Unlimited (ordinary) partnership :where all partners help run the business and are fully responsible for debts. ● Limited partnership : while some partners only invest money and have limited liability; at least one partner must have unlimited liability. they are often called sleeping partners.
Advantages: A partnership has more money because more people invest. It can grow faster, partners can specialise in different jobs, and the work is shared among them.
Disadvantages: The partners must share the profits and make decisions together, which can be difficult. There is also a risk of disagreements.
Limited Companies
Limited companies have their own legal identity. Owners (shareholders) have limited liability. Profits are shared as dividends. There are two types of limited companies: ● Private Limited Company (LTD) : where shares are owned by a few people and cannot be sold to the public.
● Public Limited Company (PLC): where shares ne sold to anyone on the stocks market and are controlled by a board of directors.
Advantages: Shareholders only lose the money they invest. It is easier for the company to raise money and grow, and it can operate on a large scale.
Disadvantages: Making decisions is slow. Starting the company is expensive and complicated. Shareholders and employees often feel distant, and the company must publish its accounts.
Cooperatives
Cooperatives are organisations owned and controlled by members (producers, workers, or consumers).They may be non-profit or profit-sharing and usually operate democratically with one vote per member.
Advantages: Members feel motivated because they own the business. Decisions are democratic, the government often gives support, and members have limited liability.
Disadvantages: Decision-making is slow. The business may struggle to grow because it lacks investment. Members may also lack business skills, and the low profit motive can reduce interest
Franchising
Franchising is a type of business where a person (the franchisee)buys the right to use the name, logo , and way of working of successful company called the (franchisor). The franchisee pays fees and a part of yearly sales.
Advantages: Starting the business is easier because the brand is already well known. The franchisor gives training and equipment, And banks are more ready to give money. .
Disadvantages: Franchises are expensive to buy. The franchisee must follow rules and cannot make important decisions. There is also a risk if the franchisor fails.
RELOCATION OF BUSINESS (OFFSHORING)
Multinational companies often move parts of their business to other countries to save money or be closer to their customers. This is called offshoring.
Offshoring can be
● Production offshoring – moving manufacturing to cheaper countries, like making toys, clothes, or electronics in China.
● Service offshoring – moving support jobs, like accounting, IT, or call centers, often to countries like India where workers are cheaper and skilled.
The main reasons for offshoring are lower costs, saving time, being closer to markets, focusing on main business activities, and accessing expertise.
Reshoring means bringing business production back to the home country.
Many companies are doing this because costs in China have become much higher.
Other reasons include higher risks, smaller savings than expected, and customers now wanting very fast delivery.
COMPANY STRUCTURE
When a company becomes bigger, it needs a clear organisation so everyone knows their job and how to work together. Companies are divided into departments, and each department has a different type of work.
An organisational chart shows the structure of the company and who is the boss at each level. This is the chain of command.
The chain of command is a hierarchy:
● Board of Directors and CEO/Managing Director – they make the big decisions. ● Department Directors – they lead each department. ● Managers – they manage smaller groups. ● Office and factory workers – they do the daily work.
Each person is responsible for the people below them.
Common departments include:
● Finance – handles money. ● Human Resources – manages workers. ● Purchasing – buys materials. ● Production – makes the products. ● Marketing – studies the market and promotes products. ● Sales – sells the products and helps customers after buying.
ADVERTISING
TYPES OF ADVERTISING
Advertising helps companies promote their products and attract customers. Its main goal is to sell more and improve the company image.
INFORMATIVE ADVERTISING
gives information about a product or a topic. It is often used for new products, so people can understand what they are and how they work. Governments and charities also use this type of advertising to change people’s behaviour, for example to live a healthier life. Sometimes these adverts use strong or shocking images, but this can be controversial.
PERSUASIVE ADVERTISING
tries to make people choose one brand instead of another.It often uses emotions, happy people, famous celebrities, comparisons with other brands and easy slogans.The aim is to make people remember the brand and want to buy it.
ADVERTISING MEDIA
Advertising uses different media to show or share adverts.
There are five main types of advertising media.
Print advertising uses newspapers, magazines and brochures.
Broadcast advertising uses television and radio.
Outdoor advertising includes posters, buses, cars and shopping bags.
Digital advertising uses the internet and mobile phones.
Brand or product placement shows products inside films or TV programmes.
Choosing an Advertising Medium
When choosing an advertising medium, companies think about several things.
They consider the target market , meaning who they want to reach.Young people are easier to reach online, while older people prefer traditional media.
They also think about the location. Local markets are reached with leaflets and local newspapers, while national or international markets use TV or the internet.
Social media advertising
Companies advertise on platforms like Facebook, Instagram, Twitter and YouTube.They can post ads, pay influencers or promote posts. Social media ads are popular because they can be personalised. Advertisers can choose who sees the ad based on things like age, location or interests. Companies can also check how well the advert works and target people again who showed interest before.
Sponsorship
Sponsorship is when a company gives money, products or services to a team, event or person. In return, the company can promote its brand. For example, a company can sponsor a football team and put its name or logo on the shirts.
The main objectives of sponsorship are:
● Brand awareness : to make people know the brand or reach new customers.
● Increasing sales: companies can sell products or give free samples at events.
● Repositioning the brand : sponsorship can change how people see a brand, for example making it look more luxury.
● Blocking competition : it helps companies reach customers in ways competitors cannot.
● Social responsibility: sponsoring popular or important causes improves the company’s image.
Sport sponsorship is very common, especially on TV. It allows companies to reach millions of people around the world. lPopular sports like football or motor racing are often chosen. Companies also sponsor famous athletes to promote their products.
