In simple terms, management is the achievement of an organisation’s objectives
through people and other resources. Managers use their own time, energy and
expertise to achieve the best return from the organisation’s resources – people,
materials and a budget.
Leadership is about influencing people. Leaders are innovative and they inspire
others to give their help and support to accomplish common tasks.
A business can be owned and run by a sole trader, sometimes referred to as a
proprietor or freelancer. A sole trader has full responsibility for the business – e.g.
income tax, national insurance contributions, VAT, payroll, welfare, health and safety.
Partnerships are formed when two or more people join their business activities, assets
and liabilities together.
The liability for debts that cannot be paid in a limited partnership is split among
partners. Partners’ responsibilities differ as ‘general’ partners can be personally liable
for all the partnerships’ debts, whereas ‘limited’ partners are only liable up to the
amount they initially invested in the business. General partners are also responsible
for managing the business.
The partners in a limited liability partnership (LLP) are not personally liable for debts
the business cannot pay, and their liability is limited to the amount of money they
invest in the business. Partners’ responsibilities and share of the profits are set out in
an LLP agreement. ‘Designated members’ have extra responsibilities.
A limited company is a legal entity in its own right. The finances, assets, liabilities and
debts of a company are separate to those of the people who own and run it.
A limited company will also have at least one director. Directors take responsibility
for running the company and they have to satisfy legal requirements. They do not
have to be shareholders, although many do own shares that they have purchased or
been given as part of their remuneration package.
Salaries and benefits for directors and employees are paid via the Pay As You Earn
tax system.
When a company is large and well-established, it can be ‘floated on the Stock
Exchange’ and its shares can be offered to the general public. There are very strict
rules that need to be followed before a company can be floated and become a PLC.
The structure is similar to a limited company, in that there are directors who are
responsible for running the company and shareholders who own it.
This sector includes organisations such as the NHS, police, fire service, housing
departments, HM Revenue and Customs, the armed forces, local councils, schools
and colleges. They provide a variety of services to the public – e.g. healthcare,
security services, education classes, and rubbish collection. They often have to generate
income and handle budgets, but they are not necessarily profit-making.
The focus is to provide a good quality and level of service and they are funded by
the public.
This sector includes voluntary and not-for-profit organisations. They can be known as
social enterprises and could be charities, community groups, trusts or cooperatives.
They can provide products or services, and they are often involved with selling products
to raise money – e.g. items for sale in a charity shop, or counselling services.
An unincorporated association is an organisation set up through an agreement
between a group of people who come together for a reason other than to make a
profit – e.g. a voluntary group or a sports club. Individual members are personally
responsible for any debts and contractual obligations.
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