1.2. Types of Organizations

  • Private vs. Public sectors
      • Private Sector
        • Goal is to make profit
        • Owned, financed and run by private individuals or entities
      • Public Sector
        • Goods and services provided by the government or local authority
        • May be free or sometimes with a small fee
        • e.g. public hospitals, museums, etc.
  • Types of for-profit/commercial organizations
      • Sole trader
        • Business that is completely owned and controlled by just one person
        • Simplest form of business
        • Owned by a single person who assumes all profits and liabilities
        • Advantages
          • Little legal requirements for setup
          • All the income goes to one man
          • Less restrictions and easy decision-making
        • Disadvantages
          • All the income tax is shouldered by one man
          • Unlimited liability (owner is the same legal entity as the business) and all the debt incurred by the business is put on the owner
      • Partnership
        • Company ran by two or more individuals who form a partnership
        • Each person contributes money and resources, as well as sharing the responsibilities of managing a business.
        • Turns into a corporation if there >15 partners and will pay corporate tax.
        • Has a deed of partnership stating the responsibility of each partner
        • Involves presence of “silent” or “sleeping” partners, who do not make decisions, merely giving money to the business and earning profit
        • Advantages
          • Liability is spread around
          • Range of skills
          • Higher capital
        • Disadvantages
          • Unlimited liability despite being spread out between partners
          • Slower decision-making
      • Private limited company (LTD)
        • Shareholders are limited to family, friends, business partners
        • Shares cannot be sold to the public
        • Type of incorporation
          • Owner and company are separate entities
          • Results in limited liability
        • Registered at the Securities and Exchange Commision (SEC)
        • Advantages
          • Limited liability – when the company is sued or incurs losses, all a shareholder will lose is his stock in the business.
          • Higher capital, higher capacity for expansion
        • Disadvantages
          • More restrictions
          • Corporate taxes (higher)
      • Public limited company (PLC)
        • Company whose shares are listed on a stock exchange and can be freely bought and sold by anyone
        • Required by law to publish their complete and true financial position
        • Type of incorporation
        • Must conduct shareholders’ meetings
        • An LTD can convert to PLC by offering stock market flotation or an initial public offering (IPO)
        • Advantages
          • More capital raised from selling stock
          • Limited liability
          • Continuity after death, freely transferable
          • Higher capacity for expansion
        • Disadvantages
          • Possibility of a hostile take-over through shares, control can change unexpectedly and be lost by the original owner
          • Much more restrictions
          • Corporate tax
  • Types of for-profit social enterprises
      • Cooperatives
        • Organizations that are jointly owned and run by its members who share in profits and benefits
        • Advantages
          • Shareholders must be help run organization, work is more spread out
          • Equal voting rights/power among all shareholders
        • Disadvantages
          • Decision-making may be more time consuming or involve more conflicts
          • Less profit for each shareholder as it is spread among many members
      • Microfinance providers
        • Microfinance – loan service offered to individuals or groups with no access to more conventional banking services (unemployed, low-income individuals, etc.)
      • Public-Private Partnerships (PPP)
        • Public corporations are sold-off or transferred to the private sector
        • Advantages
          • Incentivized to be more efficient and productive
          • Government can focus on other projects and infrastructure
          • Enjoy the skills and talents of the private sector (can lead to increased efficiency and productivity)
        • Disadvantages
          • Services provided would be more expensive
          • Prices goes up, government has to subsidize (increase in taxes)
          • Aim of profit may lead to cost cutting, lower quality, higher prices
  • Types of non-profit social enterprises
    • Non-profit businesses
      • Run not for profit but to benefit the public (especially the marginalized)
      • Operational (objective or purpose) or advocacy (promote or defend a cause)
    • Non-profit organizations (NPOs) vs. non-government organizations (NGOs)
      • NPOs
        • Does not divide its funds between owners
        • Aim is to raise funds and use it for their beneficiaries
        • e.g. service organizations or charities, Bantay Bata, PGH, PCSO
      • NGOs
        • Exists in the private sector
        • NGOs participate in humanitarian projects, education projects, etc.
        • e.g. WWF, UNESCO, Red Cross
    • Charities
      • A non-profit organization that is exempt from taxes
      • Deploys its resources for charitable purposes
      • May raise funds to reduce poverty or to reduce environmental problems.
      • e.g. Caritas Manila, Pondo ng Pinoy
    • Pressure Groups
      • Organized groups that do not run for election
      • Advocate certain interests such as environment, sexuality, religion, rights, etc.
      • Seeks to manipulate the public or private sector for certain causes.
      • e.g. PETA, Greenpeace, Church, LGBT

Kim De Leon1.2. Types of Organizations

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