1.4.1 Features of Different Forms
Instruction :
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Go through all instructions and course details thoroughly before starting each lesson or activity.
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Watch the attached video lessons attentively and take clear, organized notes in your notebook.
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Write all answers for the attached worksheets in your notebook. Make sure your work is neat and properly labeled.
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Revise your notes and completed worksheets after each lesson to reinforce understanding.
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If you face any difficulty or have questions, note them down and contact your instructor or course coordinator for guidance.
Click to download the Video Lecture Handout.
Good morning class. Today, we’re going to learn about the different forms of business organisation.
This is about how businesses are set up, owned, and run. I’ll keep it simple with examples you see every day.
Let’s start with the sole trader. This is the easiest type – one person owns and runs everything. Think of your local tailor, a small café, or a shopkeeper.
The owner keeps all the profit but also carries all the risk. If the business fails, they are personally responsible for the debts. That’s called unlimited liability.
Next is the partnership. Here, two or more people, up to 20 usually, own the business together. They share profits, responsibilities, and risks.
A dental clinic run by two dentists is a good example. Partnerships are useful when you need more skills and money than one person can provide.
But, just like sole traders, partners usually face unlimited liability unless registered as limited.
Now, let’s look at private limited companies, or Ltds. These are businesses owned by private shareholders, often family or friends.
They are incorporated, meaning the business has a separate legal identity from its owners. The owners enjoy limited liability,
so they only risk the money they invested, not their personal assets. For example, a family furniture company or a small tech startup.
Ltds are good for growing businesses that want investment while keeping control.
Then we have public limited companies, or PLCs. These are large businesses that sell shares to the public through the stock exchange.
Famous examples are Nestlé or Unilever. PLCs can raise massive amounts of money but face stricter rules and the risk of being taken over if others buy enough shares.
Another form is the franchise. This is when one business allows another person to run a branch under its name.
McDonald’s or Subway are classic examples. The franchisee gets training, support, and a proven brand, but must follow strict rules and pay fees to the franchisor.
It’s lower risk but less flexible.
We also have joint ventures, where two or more businesses team up to share risks, resources, and profits.
For example, a local company joining with an international car manufacturer to build cars in a new country.
Finally, let’s not forget the public sector organisations. These are run by the government, not for profit, but to provide essential services –
like Pakistan Railways, public hospitals, or waste management. They’re funded by taxes and aim to serve society.
So class, let’s recap:
– Sole traders: simple, full control, but high personal risk.
– Partnerships: shared skills and money, but also shared risk.
– Private Ltds: limited liability, private shareholders, good for growth.
– PLCs: huge capital from the public, but strict rules and risk of takeover.
– Franchises: proven brand with support, but limited freedom.
– Joint ventures: businesses working together to enter new markets.
– Public sector: government-run to serve society, not profit.
By the end of this lesson, you should be able to describe the main features of each type of business, give examples, and explain when each form is suitable.
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