Day 2 - Types and Forms of Business
Day 2 - Types and Forms of Business
THE DIAGRAM ABOVE SUMMARISES THE ALL CONCEPT OF BUSINESSES THAT ARE
BEEN MANAGED EITHER BY AN INDIVIDUAL OR GROUP OF PEOPLE.
SERVICE BUSINESS: AN ACTIVITY PERFORMED TO EARN MONEY THROUGH
CUSTOMER SATISFACTION. IT INVOLVES PROFESSIONAL SKILLS AND EXPERTISE
E.G INSURANCE, MOBILE TELECOMMUNICATION SERVICES, AVIATION,
CONSULTANT, PROFESSIONAL TEACHERS ETC.
MERCHADISING BUSINESS: PROCUREMENT OF GOODS FROM MANUFACTURERS
OR WHOLESALERS, AT A LOW PRICE AND SELLING IT AT A HIGHER PRICE TO
MAKE A PROFIT. IT IS ALSO KNOWN AS A RETAIL BUSINESS. E.G SUPERMARKETS,
WHOLESALERS ETC.
CONT…
IN GENERAL WE CAN SIMPLY SAY THAT THERE ARE THREE FORMS OF BUSINESS
1.SOLE PROPRIETORSHIP
2.PARTINERSHIP
3.CORPORATIONS
SOLE PROPRIETORSHIP
THE SIMPLEST AND MOST POPULAR FORM OF OWNERSHIP REMAINS THE SOLE
PROPRIETORSHIP. THE SOLE PROPRIETORSHIP, AS ITS NAME IMPLIES, IS A
BUSINESS OWNED AND MANAGED BY ONE INDIVIDUAL.
THE OWNER OF THE BUSINESS MAKES ALL THE BUSINESS DECISIONS. RECEIVES
THE PROFITS THAT THE BUSINESS EARNS, AND BEARS THE FINANCIAL
RESPONSIBILITY FOR LOSSES.
THIS BUSINESS FORM BARS AN LEGAL RESTRICTIONS MEANING THAT AN
INDIVIDUAL CAN SIMPLY DECIDE TO GO INTO BUSINESS EXCEPT IN AREAS OF
ENTERPRISE WHERE BUSINESS LICENSE'S ARE REQUIRED.
CONT…
SIMPLE TO CREATE
LEAST COSTLY FORM OF OWNERSHIP TO BEGIN
TOTAL DECISION-MAKING AUTHORITY
PROFIT INCENTIVE
NO SPECIAL LEGAL RESTRICTIONS
EASY TO DISCONTINUE
DISADVANTAGES OF SOLE PROPRIETORSHIP
LIMITED LIABILITY
UNLIMITED CAPITAL BASE
SEPARATE LEGAL STATUS
SEPARATION OF OWNERSHIP FROM MANAGEMENT
DISADVANTAGES
HIGHER COSTS
COMPLEXITY
CONFLICTING OBJECTIVES
HIGH GOVERNMENT REGULATION
THANK YOU!!