02

March 6, 2019 Critical Thinking

02.1 – Understand organisational structures
Q1 – The private sector are companies who are privately owned which means that they are not part of the government. This can be either profit and non-profit. Examples of private sector companies include stores such as New Look, Apple and River Island. The public sector is companies and organisations that are owned by the government. Examples of this include, doctors, dentists and teachers. Finally, the voluntary sector is organisations that help benefit and enrich society. These are non-profit. Examples of this include charities such as Halton Haven, YWCA and Dogs Trust.
Q2 – There are many different types of organisational structures to ensure that the business is running smoothly. This helps employees understand their roles and responsibilities within the company. Introducing the business to a formal structure can help put it in a better working position. The hierarchy structure is most commonly used in larger businesses such as a longer chain of command. There are many advantages and disadvantages of the hierarchical structure. An advantage of using this structure is there are chances for promotion as everyone knows who is above them within the company. However, a disadvantage of using this structure is that it might take longer for a larger company to adjust to change. A flat structure is used is smaller companies where there is no chain of command and only one manger that controls and has final say in the company. The advantage of using this structure is it allows employees to increase the responsibility within the business. On the other hand, a disadvantage of using this structure is that their maybe no opportunities to develop and grow with the business.
Q3 – There is many different legal structures used in all types of businesses. When picking a legal structure for your company you have to consider the structure that will work best for your type of company. As this may affect the tax and the national insurance that you have to pay, if the business gets into any trouble and the way management decisions are made. Becoming a sole trader is the easiest way to run the company. As you do not have to pay any registration fees which means that you get to keep all the profits that are brought into the business. However, if you own a company that needs investments then this would not be the best legal structure as you are responsible for any debt that the business gets into.
If the business decides to get into a partnership, then there are three different types. An ordinary partnership has no legal presence from any of the partners. This means that if anyone within this partnership goes bankrupt, dies, resigns then the partnership must be cancelled. A limited partnership allows partners to avoid personal asset liability. Before entering into this partnership, there must be an agreement that is signed by both companies. Finally, limited liability partnerships (LLPs) are obligated to have two selected members who will take on most of the responsibility. A partner’s liability is limited to the amount of money that they have invested within the company. They are limited to any personal guarantees they have given to raise finance. This means that one of the members has some protection on the company should they get into any financial trouble.