I will identify the various types of organisations operating in the local and national economy.
...uch capital each partner puts into the business? How should profits be shared equally or buy how much capital each puts in e.g. if you put in more capital you would get paid back by receiving more profit that the rest of the partners. If you enter into a partnership, the partners should ensure that a solicitor or an accountant draws up a proper deed of partnership.. Co-operatives Worker co-operatives are different from any other type of business. The whole business is owned and run by the entire workforce. The members believe in co-operation, working together for a common purpose. Every one has a say in how the business is run. In a co-operative: · Membership is open to all workers · Each member has one vote · Any profit is distributed to members in a fair way · Members are in control. · The co-operative teaches others in it about co-operative principles . Supporters of co-operatives say that: · Co-operatives reduce argument because the worker and the owner are the same person · Members have a greater sense of responsibility and work harder so the business can succeed · There is greater job satisfaction · Increased motivation among the workers would provide better goods and services. · Closer links to the local community. However there are some disadvantages. Poor management, Planning and financial controls have shut down some co-operatives. Also not many people have faith in co-operatives so it is difficult to get them into business. Franchises Franchising is taking a well-known company and using their logo or symbol and incorporating it to their own company. A big firm may decide that it wants to expand, and it goes into franchising. First it will usually carry out a pilot operation to see if the idea works. If this trial which is owned by the company makes profit in the first year, the company may decide to go ahead. The company set up a training scheme for franchisees, based on what has been learnt in the pilot operation. When it is ready, it advertises for franchisees. When it has received replies, the most promising applicants are interviewed. The company must choose its franchisees very carefully. If they do not succeed they could ruin the companies reputation. After the company has chosen some franchisees, they get training and trading rights in there own areas and set up successful businesses. After a year a few more franchisees are chosen and set up their businesses. Meanwhile the big firm is making profit that will carry on increasing as the number of franchises grows. Advantages for the franchisee · Better chance of success · They can use a top brand name which is advertised nationally · The franchiser provides support · The franchisee can get advise from the franchiser Disadvantages for the franchisee · It has less independence · It will not be able to sell the business with out the franchisers agreement. · Does not always have the right to renew the franchise. Has to make royalty payments to the franchiser. There are now nearly 20,000 franchise businesses in Britain. This number could possibly increase considerably. Limited Companies Limited companies are a great idea. The shareholders can invest and not take any responsibility for the debts. Their liability would be limited to the money they had invested in the company. For example if a shareholder bought £100 worth or shares they could loose all of it but not a penny more that what they put in. After the creditors have been paid (the people who were owed money be the company) the shareholders may get a bit of their money back. A limited company has some good advantages V · It can buy and sell assets · Make contracts. · Sue other companies · Shares can be bought and sold · Shareholders have control over the company’s affairs. The shareholders express their views at the annual general meeting . A few shareholders attend AGMs, unless there is a crisis in the company’s affairs. Shareholders have one vote for each share they hold. This generally means that most decisions made at AGMs are made by big investors, such as insurance companies or pension funds that have many shares. Private limited companies (which have ltd in their name) have a minimum number of two shareholders. Their shares cannot be sold to the general public on the stock exchange. Often the two shareholders are people in the firm, as a result they have control of the company and their liability is limited to what they put into the company. Another good advantage is that they can use some of the profits t...