1.2 Types of Organisations

Market Types

  • Free or Market Economy

  • Mixed Economy

  • Planned Economy

Private (for profit business)

  • Unincorporated = Sole traders and Partnerships à Unlimited Liability (Loans, Debts)

  • Incorporated = Limited Liability

    • Private Limited Company

    • Public Limited

Who are the Board of Directors

  • Directors are people that represent the views/interests of the investors and are the oversight

  • CEO/COO or Founders take advice from the Board of Directors and CEOs/COOs also give updates to the Board of Directors

What is their objective? What is their role in running a company?

  • Ensure that the company is running fine and is profitable

  • Has the power to fire the CEO

  • Help the CEO run the company

Types of Management for a Business Organisation

Created by: ADGV ('19) & ValkrieJJ ('19)

Cooperatives

  • A group of people who have cooperated together and built a business

  • All cooperatives have members

  • Share profits within the members

  • Co-ops can be found all around the world

5 Steps to making a co-op

1. Assemble the key organizers or members

2. Feasibility Study – Is your idea feasible for the market?

3. Business Plan

4. Incorporate (limited liability)

5. Begin business

  • Co-ops employees are managers and employees

  • Limited Cooperatives have board of directors and management team

Public-Private Partnerships (PPPs)

PPP's are between a government agency and private-sector company can be used to finance, build and operate projects, such as public transportation networks, parks and convention centres.

http://www.investopedia.com/terms/p/public-private-partnerships.asp

- Financing a project through a public-private partnership can allow a project to be completed sooner or make it a possibility in the first place.

- Merit Goods:

- Good with positive externalities in consumption

o Health or medical benefits are positive externalities

o Education is a merit good as well

o More productive economy, greater tax revenue, brilliant inventions

- Public Goods:

o A commodity or service that is provided without profit to all members of a society, either by the government or a private individual or organization.

Non-profit Organizations are an organization that has been formed by a group of people in order "to pursue a common not-for-profit goal", that is, to pursue a stated goal without the intention of distributing excess revenue to members or leaders.

- Scandals: http://www.waccobb.net/forums/showthread.php?84129-Shocking-high-salaries-of-some-charity-CEOs-(Red-Cross-United-Way-Unicef)

- NGOs =

o Operate in a business-like way but without the profit motive

o Any surplus is reinvested

- Pressure Groups =

o Exist in order to raise awareness of an issue and gain public support

- Charities =

o Main source of funding is from the ultra-rich or from donations

o Many churches are considered charities

o Charities are tax-exempt

What is Microfinance?

Microfinance is a type of banking service that is provided to unemployed or low-income individuals, or groups who otherwise have no other access to financial services.

1. A person who lives below the poverty line selects 4 people the trust and forms a group

2. The group goes through a 5-day or 1-month financial training program and borrowers open a savings account

a. The people will learn book-keeping, finance planning and business planning

b. This enables the group or people to build their start-up and grow it until they can profit and then pay back the loan

3. Each borrower gets a loan to open a small business (no collateral needed)

4. Weekly group meetings with a manager

5. Borrowers begin to repay loans and deposit savings

6. Upon full repayment borrowers can apply for another loan to expand their businesses

- Note: Micro financiers can exploit their clients by increasing the interest and basically earning back more than they loaned

- Fact: 90% of the clients in low-income developing countries are women

- Fact: Majority of micro-financed business start-ups fail