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Organizational Behaviour Types of Ownership and Mixed Economy Issues

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Knowing the two friends are likely to receive a quite large redundancy package from their employers, they are discussing how they will use this. They are seriously considering getting together to run the business already owned by one of them. Originally, the form of business is a ‘Sole Trader’ since there is only one person who owns and runs the business. As soon as the small-time business owner and his friend agree to get together to run the business, both are likely to form a ‘partnership’ business. Normally, a partnership business is owned by two or more individuals who have decided to set up a business. (Weber, 2007) In the process, the partners will share the risks and liabilities as well as the profits earned from the business. The two friends could also end up starting a ‘Private Limited Company’ in order to protect themselves from the possibility of business’ debts such that the owners’ liability in case the company goes bankrupt will only be limited to the amount each shareholder has invested in the company. (HIE, 2008b) A ‘franchise’ business is not applicable in the case of the two friends who are working at the same factory since franchising is an agreement formed between two legally independent parties wherein the franchisor will give the interested franchisee the right to sell the franchisor’s product and service or the use of the company’s name in exchange of the franchise fee. (Beshel, 2000) In the case of the two friends, both are seriously considering getting together to run the business. ‘Public Limited Company’ is also not applicable since this type of business form requires the company to have a public share capital. (Mamp.N Group Limited, 2008a) It means that for a company to be registered as a public limited company, the company has to be a public company which is not true in the case of the owner of a small business who is working in a factory. Given the situation that the two friends are aiming to raise extra money to run the business through the selling of the business shares in the stock market, they should register the business as a public company first at the Companies House.