Type
Type |Characteristics |Advantages |Disadvantages | |
|Sole Trader | | | |
| | | | |
| | | | |
|Public Ltd Company |Company must have at least 7 shareholders |Limited Liability for the shareholders | Expenses to form PLC’S are highline stock exchange |
| |Company needs to have articles of association |Access to large amounts of money, i.e. stock |Many legal requirements to be followed, rules/procedures red – tape to get through |
| |Company needs to have memorandum of association |market |companies acts |
| |A declaration that they comply to the Register of Companies |PLC ‘s have a high credit rating with banks, |Yearly accounts must be published |
| |5. Submit financial statements to the Register of |financial institutions |Shareholders may have very little say in the running of the business |
| |companies |Company existence continues if a director dies | |
|Partnership |Is an agreement between 2 or more people to go into business |1. Extra capital available to finance the business|1. Unlimited liability, each partner is responsible for the debts of the business |
| |with a view to making a profit? There can be no less than 2 |2. Decision making is shared |2. Disagreements can easily occur between a group of people |
| |members and no more than 20. |3. Responsibility is shared |3. Profits must be shared between partners |
| |Partnerships are common among doctors, solicitors etc. |4. Financial details not open to be viewed by |4. There is no continuity of the business if a partner dies |
| | |public | |
|Franchising |This is a company, which sells a product under licence, |1. Easy to attract customers as the name of the |1. Initial payment of the licence and the setting up costs are costly |
| |(e.g.) the trade name for example KFC grants a licence in |business is well known |2. Very little scope for franchisee to use his/her initiative in the business |
|Franchiser = person who owns |return for a fee allowing a company to trade using the same |2. Franchiser provides valuable assistance at the|3. The franchisee is unable to sell the business without agreement with franchiser|
|business i.e. McDonalds, |name as the product. |start up stage – market analysis, site selection, | |
|Supermacs, Burger King. | |equipment, training of employees | |
|Franchisee = person who is | |3. Bulk buying will help to reduce long term costs| |
|granted the licence to use | | | |
|trading name. | | | |
|CHAP 19 TYPES OF BUSINESS |
|Co-ops |A co operative is business owned and run by a |1. Members have limited liability |They can only ask for limited finance from their shareholders and |
| |group of people, AND each has a financial |2. All members have equal say in the running of|they often have to resort to borrowing |
| |interest in its success. |business for members to buy from the |They must provide the Registrar of Friendly Societies with a sum of |
|A- worker co-op |They also have a say on how it is managed |3. Large membership of co-ops make sure that |money annually |
|B- credit unions |Co-ops mainly exist in the agricultural |there is high demand for goods |Many co-ops are unable to adapt to changing technology or new |
|C- producer co-op/NCF |industry. | |processes because of their lack of top quality management/personnel |
|State owned enterprises |These are enterprises that are set up, financed |They provide employment |Lack of funding which in turn leads to borrowing more from government|
| |and controlled by the government. The government|They develop industrial development, IDA, |especially if business is not making a profit |
| |provides the share capital and subsidies. These |Forbairt, Bord Trachtala, Bord Failte |The directors of some forms lack appropriate knowledge in the firms |
| |companies usually have a good understanding with|They provide services of necessity including, |particular area, this is because they are appointed through political|
| |financial institutions, (banks/building |ESB, VHI, CIE, Bus Eireann, Dublin Bus. |contacts |
| |societies). |They provide for the countries infrastructure, |3. The lack of profit making, (i.e. Iarnrod Eireann) sometimes leads|
| | |roads, bridges, airports, railways |to lack of motivation in workplace |
|TNC |Have their head office in one country and |BOP surplus through excess of Irish exports |Repatriation of profits |
| |factories in other countries, i.e. IBM, |Competition among Irish firms is stimulated |Political pressure as TNC are in powerful position as this is a small|
| |Volkswagen, Siemens, Nestle, Intel, and |which is good for customer |nation |
| |Guinness. |Govt. gain through PAYE/PRSI/VAT etc |TNC only interested in profit making |
| | |Employment levels increase |They require large grants before they set up in Ireland |
|Alliance |This involves two or more firms combining their |1.easy to establish |1.disagreements can occur easily, this may lead to alliance being |
| |skills & resources in a particular line of |2.each firm benefits from the expertise of the |over |
| |activity. Alliances are popular because the |other firms |2.the overall control is in two companies and not in one, which can |
| |companies co-operate with each other in relation| |lead to problems |
| |to market information, new technology, human | | |
| |resources | | |
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