Economic Sectors and Legal

Structures
Privates Sector Organizations
Public Sector Organizations
Not for Profit Organizations
Privatization and Nationalization
Private Sector Organisations
The private sector comprises businesses
owned and controlled by individuals or
groups of individuals. In nearly every
country , most business activity is in the
private sector.
The types and sizes of businesses in the
private sector can vary considerably. In
developing economies the private sector is
small. This is because of the lack of
Private Sector Businesses
Sole Trader
Partnership
Private Limited Company
Public Limited Company
Cooperative enterprise
Franchise
 Legal Element
governing formation,
financing and
management.
 Sole traders
One person provides the permanent finance and, in return, has
full control of the business and is able to keep all of the profits.

All sole traders have unlimited liability. This means that the
ownerss personal possessions and property can be taken to
pay off the debts of the business, should it fail.

This type of business organization is most commonly

established in the construction , retailing , hairdressing, car-
servicing and catering trades
 PARTNERSHIP
They are agreements between two or more people to
carry on a business together, usually with a view to
making a profit.

When planning to go into partnership it is important to

choose business partners carefully the errors and poor
decisions of any one partner is considered to be the
responsibility of them all.

It is usual, although not a legal requirement, to draw up

a formal Deed of Partnership between all partners
 Private Limited Company
This is a company that has legal form. Usually the shares will be
owned by the original sole trader, relatives, friends and employees.
New issues of shares cannot be sold on the open market and
existing shareholders may only sell their shares with the
agreement of the other shareholders
In setting up this company it must have a :
Memorandum of Association- states the name of the
company, the address and maximum share capital
Articles of Association documents about the internal
workings and control of the business. e.g the names of
directors and procedures to be followed at meetings
 Public Limited Company
This is the most common form of legal organization for
really large businesses, for the very good reason that
they have access to very substantial funds for
expansion.

Shareholders own the company, but they appoint, at the

Annual general meeting, a board of directors who
control the management and decision making of the
business.

They can raise large sums from public shares if they

 Cooperative Enterprise
All members can contribute to the running of the
business, sharing the work load, responsibilities and
decision making, although in larger cooperatives some
delegation to professional managers takes place

All members have one vote at important meetings

Profits are shared equally amongst members

 Franchises
This is a legal contract between two firms.

This contract allows the franchisee, to use the name,

logo and marketing methods of the franchiser.

They have allowed certain multinational businesses,

which are now household names, to expand much more
rapidly than they could otherwise have done
 Joint Ventures
These occur when two businesses agree to work closely together
on a particular project and create a separate business division to
do so.

The proportion of finance to be provided by members of the

venture should be made clear, this will not necessarily mean that
each member of the venture contributes an equal capital sum

Errors and mistakes might lead to one blaming the other for
mistakes and business failure of one of the partners would put
the whole project at risk.