Forms of Business

Within a mixed economy like Ireland, there are numerous organisations that have been created with the objective of satisfying demands for goods and services. Within the private sector the organisation can take one of several forms, for example, sole trader, partnership, co-operative or company. The public sectorís commercial activities i.e. transport, power etc is normally undertaken by state-sponsored bodies or state companies.

Sole Trader
This is a one person owned business and is the simplest form of business unit. It is the most popular form of business unit because of the ease in which it can be set up. Examples of sole traders include retail outlets, farmers and solicitors.
Characteristics of a Sole Trader

Advantages of a Sole Trader Disadvantages of a Sole Trader Co-Operatives
There is a long tradition in Ireland of this type of business activity particularly in agribusiness. It involves a group of individuals coming together, sharing their ideas and capital for business purpose. The members are generally workers, customers or suppliers of the co-operative. There are three main types of co-operatives: Characteristics of Co-Operatives Advantages of Co-Operatives Disadvantages of Co-Operatives Private Limited Company

This form of business unit is owned by shareholders and managed by directors who are elected each year at the annual general meeting. Unlike a sole trader it is regarded in the eyes of the law as a separated legal entity from the owners. A company may be set up from scratch, or an off shelf company can be bought from a registration agent. A private limited company has the letters ltd after its name to illustrate that the company has limited liability. This means in the event of the company failing, it is only the assets of the company that are available for the payment of the creditors debts. The liability of the shareholders is limited to the capital they invested in the business. A private limited company is unable to sell its shares on the stock market unlike a public limited company.

Characteristics of a Private Limited Company

Advantages of Private Limited Companies Disadvantages of Private Limited Companies State Ownership
The essential features of state owned bodies are that the assets of the industry have been taken over by the state, so that the industry is owned, managed and controlled by agents of the state for the general public. In Ireland, the state has been very actively in state enterprise for over 60 years. Each state owned business is responsible to a government minister. For example Aer Lingus is accountable to the Minister for Public Enterprise. The relevant minister appoints a Board of Directors to run the state enterprise. The Board then decides upon the policy of the enterprise and place executives in charge of day to day business.

Reasons for State Intervention

Classification of State Owned Enterprises
Production  Transport  Finance  Marketing  Training  Services
Bord na Mona  CIE  ACC  Bord Failte  Cert  ESB 
Coillte  Aer Lingus  ICC  Bord Glas  FAS  RTE
      Enterprise Ireland    VHI 

This involves the sale of a state asset to the general public. With the emergence of a European Single Market, there is less need for member states to be involved in commercial business. Telecom has recently been privatised, as the telecommunications market has been opened up to competition. There is also far more capital available today to help such businesses to expand. The government has announced that Aer Lingus will also be privatised, which will probably mean that more capital will be available for expansion than if it remained in the stateís hands.

Problems on Forms of Business
1. Explain the reasons for state involvement in commercial enterprise.
2. Outline the advantages and disadvantages for the government in selling Telecom Eireann.
3. Explain why Co-operatives are no longer seen as a popular business unit.
4. Compare and contrast a sole trader with a private limited company under the following headings:
5. 1. Ownership 2. Control. 3. Risk. 4. Continuity of Existence 5. Legal Requirements.
6. Outline the main characteristics of a private limited company.
7. Explain the concept of limited liability.