Learning ObjectivesLearning Objectives

• To gain knowledge of the unit and the assessment procedure

• To identify the various types of business ownership

• To discuss the + and – of the types of business ownership

• To demonstrate knowledge and understanding of business ownership

Starter ActivityStarter Activity

• Complete the starter activity sheet

• This is not a test and no other students will see it, it is simply for the teacher to determine how much knowledge you currently have.

What different types of What different types of ownership are you aware of?ownership are you aware of?

Examples

Privately owned – by private individuals (one or more):

• Sole Traders – owned by one person;• Partnerships – owned jointly by two people or more;• Private limited companies – have ‘Ltd’ after the name;• Public limited companies – have ‘plc’ after the name;• Franchises – small trader allowed to sell by large

organisation, e.g. McDonald’s, Body Shop;• Cooperatives – collectively owned by workers / customers.

Business Ownership

Publicly owned – by the state:

• Central government offices;• Local authorities;• Public corporations – e.g. the Post Office, the BBC, the

Bank of England.

Jigsaw Activity Jigsaw Activity

• In your group complete the relevant sections of the jigsaw sheet for your specific business ownership.

• You have 40 mins to get your information researched and written down.

Benefits:

• Easy to set up.

• Ideal for personal services

e.g. hairdressers.

• Owner independent, can be

flexible about working hours.

• Minimum of paperwork.

• Owner knows customers,

so can avoid bad debts.

Sole TradersSole Traders

Drawbacks:• Long working hours, few holidays.

• Sickness may mean closure.• Capital may have to come

from savings.• Business ceases on owners

death.

• Unlimited liability – owner

personally responsible for all

debts.

One person business but may employ staff. Examples: newsagents, local shops, market traders, plumbers.

PartnershipsPartnershipsUsually between 2 & 20 people who jointly own a business.

Examples: accountants, doctors, dentists, vets, solicitors.

Benefits:

• Problems can be shared.

• Partners each bring new

skills to the business.

• Easier to raise capital as

all partners contribute.

• Minimum of paperwork.

Drawbacks:• Partners may disagree, some

may work harder than others.• Profits are shared.• All partners must be

consulted before decisions are made.• The death of one partner bind

all the others.• All partners have unlimited

liability so are personally

responsible for all debts.

Private Limited CompaniesPrivate Limited CompaniesAll end in word ‘Ltd’. Usually small, family businesses.

Examples local shops, garages and small factories.

Benefits:

• Minimum of one director and

one shareholder so company

can stay small.

• Affairs still private.

• Easy and cheap to set up.

• Owners have limited liability

for debts – cannot lose more

than amount invested.

Drawbacks:• Cannot sell shares to general

public to raise more capital.• More regulations to comply

with.

• If cannot pay debts, company goes into liquidation.

Public Limited CompaniesPublic Limited CompaniesAll end in word ‘Plc’. Large Organisations which are quoted on the stock

exchange. Examples include some football clubs, banks and other large retailers.

Benefits:

• Increased capital as the

general public can buy

shares.

• Large scale operations save

money through bulk buying,

mass production etc.

• Shares increase in value if

company is successful so

overall value of company

increases.

Drawbacks:• Problems are public knowledge – so are accounts.• Original owner may lose

overall control.• Shareholders expect good

dividend or may sell shares.• Annual general meeting must be held each year at which shareholders can raise

concerns.

FranchisesFranchisesLarger company allows small operators to trade on name in return for fee and

share of profits, e.g. Body Shop, McDonalds, Prontoprint, KFC.

Benefits:

• Less risk than starting own

business.

• Selling a known name.

• Advice, guidance and

expertise given by franchisor

so fewer decisions to make.

• Owner retains most of

profit.

Drawbacks:• Share of profit goes to franchisor.

• Franchisee not free to make

all own decisions.• Only franchisor products can

be sold.

• All other drawbacks of sole

trader.

CooperativesCooperativesSocieties that operate for the benefit of their members.

Examples: Cooperative Retail and Wholesale Societies – owned by customers – and producer cooperatives – owned by workers.

Benefits:

• Each owner has equal share

and voice in making decisions

– all have one vote.

• Each person has equal

share of profits.

• Owners can choose to run a

limited liability company.

• Jobs can be rotated for

fairness.

Drawbacks:• Finance may be difficult to

obtain as no overall boss responsible for operations.• Job rotation can affect

quality if unskilled workers

used.

• Disciplinary procedures may

be difficult to enforce.• ‘Equality’ can de-motivate

good leaders / workers.

Points for thought…Points for thought…

• How would the type of ownership affect how much the business could produce?

• How would the type of ownership affect the profits / losses of a business?

• How does the type of ownership impact the business decisions and objectives?

PlenaryPlenary

• On your plenary sheet write down….

• 3 things that you have learnt this lesson.

• 2 things that you already knew

• 1 thing that you didn’t understand very well.

HomeworkHomework

• Complete the business studies glossary

• Study room homework – read pages 102-109 of the GCE Applied business textbook, then complete The growth of Exotic Fashion’s case study on page 106.