Chapter 4 :

Types of
Business
Organisation
Forms of Business
Organisation
Sole Trader
Partnership
Franchise
Joint Venture
Limited Companies
Private Limited Companies
Public Limited Companies

2
SOLE TRADER

• You own your own business

• Decide your own time to work
• Profit is all yours
• Manage everything by yourself
• Unlimited Liability (you pay your business debt)
• Hard to rival with bigger companies

3
Advantages VS Disadvantages of Sole Trader

Advantages Disadvantages

1. Easy to set up a business • Unlimited Liability :

responsible for all of the
2. Easy to make up a
debt
decision
• May have longer working
3. Full control of the
hours since you have to do
business
every single point of the
4. Own all profit business
• Difficult to compete with
bigger companies in similar
business line
• Take all the risks
This Photo by Unknown Author is licensed under CC BY-NC-ND

4
 • The business owned by two or more people
• Usually formed to overcome the disadvantages of
sole trader

Partnerships • Decision making is shared

5
Advantages VS Disadvantages of Partnership

Advantages
• Shared decision making lead to better decision for the business
• Reduce the workload since the jobs are shared with partners
• Greater access for financing since there is more than one
capital provider

Disadvantages
1. Profits are shared
2. Business may close if one partner leave the business
3. Longer time to make a decision

6
Activity 1
Joan is a sole trader. He owns a
bakery which supplies bread products
to local supermarket and independent
retailers. Lately Joan has to turn
down some costumers order since he
can not produce more output due to
lack of equipment he has. Joan has
discussed with John his friend at high
school. John agree to invest some
money, and share some workload. So
Joan can buy new equipment to
produce more output.

Discuss the advantages and

disadvantages Joan will have after
accepting John as his partner. This Photo by Unknown Author is licensed under CC BY-SA-NC
Franchise

8
This Photo by Unknown Author is licensed under CC BY-NC-ND
 A franchise is a business whereby the owner licenses
its operations—along with its products, branding, and
knowledge—in exchange for a franchise fee.

Franchise e.g : Mcd, Wendy’s, KFC

9
Benefit and Limitations
Limitations in Franchise
•Initial cost for buying franchise is so expensive
•Franchisor will take percentage of the revenue or profit
that franchisee has made
•Strict controls from franchisor over product, pricing,
and store layout

Benefit from Franchise

• Less chance of business failure since the product and
brand are already well established.
• Franchisor (franchise owner) usually gives advice and
training for franchisee
• Franchisor has already prepared good quality materials
from suppliers

10 10
Joint Ventures

Market and product

knowledge can be
Cut cost to get bigger shared for the benefit
profit of Joint Venture

Two business work Business may come

together for a better from different
oppotunity expertises.

11
Advantages and Disadvantages from Joint Venture
Advantages
• Bigger access to the market
• Able to increase the
production capacity
• Have an access to new
knowledge and specialty
(including specialization
staff)
• Access to greater resource
such as technology or
finance
Disadvantages
• Main goal of joint ventures
may be unclear
• Communications between
partner may be bad
• Resources should be shared
equally
• Different cultures and
management style may be a
barrier to co-operation
12
Unincorporated Business VS Incorporated Business

13
Unincorporated
Business
• No separate legal
between owner and
business
• All activities in the
business are being
owner’s responsible
• Owner responsible for
company’s debt
• Example : Sole trader /
partnership

14
 • Separate legal between owners and
business. For example : if there is a
customer being injured by a product,
the customers sue the company not the
Incorporated owners.
• Limited Liabilities, owner does not
Business have to be responsible for business’
debt. If companies can not repay the
loan, owners have no obligation to sell
their own asset to cover the debt

15
Exam Style
Questions 1

16
Exam Style
Questions 2

17