Different forms of ownership

Business is the organized effort of individuals to produce and sell, for a profit, the goods and services that satisfy society’s needs. A business may be privately owned in three different forms. These forms are: the sole proprietorship, partnership and corporation. The sole proprietorship is the simplest organizational form. There is one owner who makes decisions without consulting anyone.

Advantages: - it is easy to organize; - the single proprietor is the boss who makes decisions and enjoys substantial freedom of action; - possibilities of conflicts are minimize.

Disadvantages: - in general the financial resources of a single proprietorship are not enough to transform the business into a large scale enterprise.- benefits of specialization in business management are not present in small scale proprietorship; - the owner has unlimited liability.

Partnership – is an association of two or more persons to carry a business for profit.

Advantages: - it is easy to organize like single proprietorship’ / - better management because of the presence more participants in the operations of the business; /- possibility of bigger resources then in sole proprietorship exists.

Disadvantages:

- conflict between partners;

- the death or withdrawal of one partners dissolves the partnership;

- the partners are also subject to unlimited liability except the limited partnership.

And the last one – a business corporation is an institution established for the purpose of making profit. It is operated by individuals. Their shares of ownership are represented by stock certificates and person who owns a stock certificate is called a stock-holder.

Advantages: - a members has limited liabilities;

- it has the most effective means of raising capital for its operations, by selling stocks and bonds;

- it has permanent existence. The death or withdrawal of some members does not affect the existence of the corporation;

- it is capable of getting the most efficient management considering its huge resources and large scale-corporation.

Disadvantages: - it is not easy to organize;

- abuses of corporation officials such as large salaries others;

- some corporations are engaged on questionable activities. They do not comply with their social responsibility;

- there is very formal relationship between the officers and employee of a corporation.

3. Management

Management plays a vital role in any business or organized activity. Management includes those personnel who have right to make decisions that affect company’s affairs. The four basic functions of management are: Planning, Organizing, directing and controlling.

Planning. Preparation of the plan is always considered as the initial phase of management. It means that someone has to decide: what, how, when and who should be executed. Management organization must find the answers to these questions:
Where we are at this time? (Assess strengths and weaknesses of organizations in finance, marketing, manufacturing, human resources).

Where we want to move? (Assess opportunities and threats in the environment: competition, environmental sustainability, supply, what should be the goals and how to achieve them). How are we going to do?

Organizing. Is the process of putting the plan into action.

Directing is guiding and motivating the employees to work efficiently to achieve the goals and objectives of the organization.

Controlling is evaluating how well the company’s objectives are being met.