IB Business and Management 1.2 Types of Organisations

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IB Business and Management Organisation and Environment 1.2 Types of Organisations

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IB Business and Management .com IB Business and Management T he IB Diploma Business and Management course delivered IN STYLE , ONLINE . ©

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z Types of organization 1.2

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z Private sector & public sector Owned & controlled by private individuals & organizations (large & small) The main aim of most (but not all) is to make a profit & to maximize that profit Under the ownership & control of the government Reasons for Public sector organizations: Everyone has access to necessary services Avoid wasteful competition (economies of scale) Protect citizens & businesses through institutions Reduce unemployment

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z Privatization & partial privatization Public private nationalization private public Benefits of privatization: Efficiency gains Lower costs of production Increased choice Incentive to innovate Less financial burden Source of govt. revenue

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z Nationalization Making private assets public assets

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z Privatization Selling public assets

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Factors to consider? z Starting a business

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z Reasons for Starting a business

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z Gap in the market Identifying Market opportunities Innovative ideas & creations Niche markets Small & new businesses Patents copyrights Unique selling points Developing entrepreneur’s personal skills & abilities

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z Problems faced by start-ups Question: 1.2.1, p. 26

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z Profit - based organizations

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4 legal structures z

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Sole trader Sole proprietor z An individual who is the owner of his or her own business Unincorporated The owner is legally the same as the business Question: 1.2.2, p. 28

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partnership z A private sector business owned by 2-20 people (the partners) Investors (owners) in the partnership do not have to take an active role. These are silent or sleeping partners unincorporated “joint & several liability” Question: 1.2.3, p. 30

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Companies corporations z A business owned by its shareholders. that has been issued a certificate of incorporation, giving it a separate legal identity to its Limited liability

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private limited z Cannot raise share capital from the general public Able to advertise & sell its shares to the general public via the stock exchange Public limited dividends Capital growth Voting power Question: 1.2.4, p. 34

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z Public limited

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z Economies of scale

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z private limited Cannot raise share capital from the general public Able to advertise & sell its shares to the general public via the stock exchange Public limited dividends Capital growth Voting power Question: 1.2.4, p. 34

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z Non-Profit organizations

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Non-profit organizations z An organization run in a professional & business-like manner without profit being the major objective Provides services (e.g. schools) or promotes special causes (e.g. the gates foundation) Surplus not profit

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Ngo s – non-governmental organizations & charities z Any private sector organization that does not primarily aim to make a profit. Instead they operate for the benefit of others in society

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Public-private enterprises Public-private partnerships z HL

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Public-private enterprises Public-private partnerships z Government has different options for providing essential services: HL Supply the services themselves (e.g. fire service) Allow private firms to tender (bid) to provide these services (e.g. refuse collection) Form a public-private partnership ( e,g . prisons) A ppe or ppp is when governments create partnerships with the private sector in the provision of a service Benefit from the dynamics & efficiency of the private sector alongside the benefits of public sector funding & support Question: 1.2.5, p. 38