Types of Business

Organisation

BTEC Business
Learning Objectives
 Identify the differences between the private
and public sectors of the economy

 State the four traditional examples of business

organisations in the private sector (sole trader,
partnership, private limited and public limited
company)

 Understand the difference in terms of liability

between these business types.
Two Sectors
The economy can be divided into two sectors:

 The Private Sector

 The Public Sector

The Private Sector
 Private individuals and firms that are
owned by private individuals
 Firms in the private sector include:
 Sole Traders
 Private Limited Companies (Ltd)
 Partnerships
 Public Limited Companies (PLC)
The Public Sector
 Made up of central government,
local government, and businesses
that are owned by government

 In the last twenty years the number

of government-owned firms in the UK has shrunk
massively

 Now, very few examples remain:

for instance, the Royal Mail
Differences
One of the key differences is between:
 Sole traders and partnerships

whose liability is unlimited

And

 Private Limited and Public Limited

Companies, who have ‘limited liability’
Other Business Types
 Co-operatives are owned by their staff,
who are ‘members’ of the firm

 Profits are shared

amongst the members

 Losses too must be shared

Franchises
Many businesses today are franchises

 A business idea is licensed

to a franchisee

 The owners of the brand receive

a license fee

 The franchisee gains the right

to use the business brand
Not For Profit Businesses
 Many charity-based business organisations are run
as ‘not for profit’ operations

 They typically receive donations

or funds from groups or government

 Any financial surplus is ploughed back into the

business

 The organisation does not aim

to generate profits
Sector Inter – Relationships
Much of the education system in the UK, would be
classified as being part of the public sector but
within that, there is now a growing role for the
private sector

 Some schools are being run by private sector

organisations: catering and cleaning operations are
often provided by private sector firms.

 It is clear from this that the two sectors have to

cooperate to be able to survive and prosper.
Business Classification
 Primary Sector - extracting raw products from nature.

 Secondary Sector – Transforming those raw products

into finished and part finished goods.

 Tertiary Sector – Providing services to individuals and

business
Business Sectors

PRIMARY Raw materials

SECONDARY Manufacturing

TERTIARY Service/ Selling

 Practice Point
Classify the following list into primary, secondary and
tertiary sector businesses:
A mining company
An advertising agency
A canning factory
An oyster gathering business
A building company
A fishing company
An insurance business
A car Insurer
A news paper publishing company
A newspaper delivery business
a forestry business
A furniture manufacturer
A second hand furniture shop
A business that makes fish fingers
A car manufacturer
A web design business
Task – Class Notes
In groups you must research the main business
ownerships and present your findings back to the
class.

The presentation must include;

 A detailed description of the business ownership
including examples. Who owns the business?
 The advantages and disadvantages.
 Definitions of any new business terminology used.
 Does the business have limited or unlimited
liability?
 Examples of the business ownership.
Analytical Question
Jenni Foster worked in the travel business for many
years before setting up her own business putting
together tailor-made holidays fore wealthy clients.
After a few successful years she now employees one
other person and is considering expanding. She is
thinking about making the business a private limited
company. Analyse the possible advantages to Jenni
of changing her business from being a sole trader to
becoming a private company.
(10 marks)