Understanding the organisational purposes of a business
Unit 1 Assignment: Business Environment
Understanding the organisational purposes of businesses.
A number of business organisations exist in society today ranging from small, sole traders to large multinational organisations and although they share the common goal of generating profit, their purposes and objectives differ.
Organisations take on a number of different and can be placed in to three main categories – private sector, public sector, and voluntary sector.
Private sector organisations are established primarily to make money. The smallest organisation in the private sector is the sole trader. Sole traders are business run by an individual. Business and personal assets are not distinguished for sole traders so should the business incur a loss the owner is liable and may have to pay any debts using their personal funds and assets. Sole traders are the most popular type of organisation in the UK; it is easy to organise requires only small amounts of finance. It allows the owner flexibility as they are in charge of the business which enables them to adapt easily to any changes in the market. The owners are often very close to their customers. The owner keeps any profit made. There are disadvantages to being a sole trader; the owner of the company is personally liable for any losses. They may have difficulty raising funds and securing bank loans due to their small assets which makes expansion difficult. Sole traders have difficulty finding cover if they are sick and there is no-one to continue the business in the event of death.
Another organisation within the private sector is a Partnership. A Partnership is 2 or more people forming a business. Like sole traders the partners are personally liable for any financial losses. Partnerships are often established to combine skills and resources which allow businesses to grow. Limited Liability Partnerships also exist – this means the partnership has a separate legal entity therefore the business is
Understanding the organisational purposes of businesses.
A number of business organisations exist in society today ranging from small, sole traders to large multinational organisations and although they share the common goal of generating profit, their purposes and objectives differ.
Organisations take on a number of different and can be placed in to three main categories – private sector, public sector, and voluntary sector.
Private sector organisations are established primarily to make money. The smallest organisation in the private sector is the sole trader. Sole traders are business run by an individual. Business and personal assets are not distinguished for sole traders so should the business incur a loss the owner is liable and may have to pay any debts using their personal funds and assets. Sole traders are the most popular type of organisation in the UK; it is easy to organise requires only small amounts of finance. It allows the owner flexibility as they are in charge of the business which enables them to adapt easily to any changes in the market. The owners are often very close to their customers. The owner keeps any profit made. There are disadvantages to being a sole trader; the owner of the company is personally liable for any losses. They may have difficulty raising funds and securing bank loans due to their small assets which makes expansion difficult. Sole traders have difficulty finding cover if they are sick and there is no-one to continue the business in the event of death.
Another organisation within the private sector is a Partnership. A Partnership is 2 or more people forming a business. Like sole traders the partners are personally liable for any financial losses. Partnerships are often established to combine skills and resources which allow businesses to grow. Limited Liability Partnerships also exist – this means the partnership has a separate legal entity therefore the business is