Organization of Business Sole Proprietorships Partnerships Corporations Cooperatives Public /...
Transcript of Organization of Business Sole Proprietorships Partnerships Corporations Cooperatives Public /...
Organization of BusinessSole ProprietorshipsPartnershipsCorporationsCooperativesPublic / Government Enterprises
Sole ProprietorshipsOne person owns & operates the businessMost common type of business organizationAppropriate for small market where good /
service is not mass produced (e.g. accounting, dentistry, engineering)
Sole ProprietorshipsAdvantages Disadvantages
Sole decision makerKeep all the profitsEasy to start
• Limited money (capital) to start investment
• No specialization which means a lot of work for owner
• Severe financial risk with unlimited liability
• Hard to attract workers looking for permanent work because long term future unsure
PartnershipsTwo or more people enter a business as
owners and share the profits / losses based upon an oral or written agreement specifying the money, skills, workload and authority of each partner
Commonly found in farming, the professions (e.g. law), restaurants, construction and repair work
PartnershipsAdvantages Disadvantages
More capital can be raised
Workload shared allowing for vacations & specialization
Sounder business decisions can be made
Partners can have disagreements
Unlimited liability for debt can hurt partner who is not responsible for poor business decisions
When one partner dies or leaves a new partnership agreement must be made
CorporationsHas an existence of its own separate from
those who created it or own itCrown-owned or controlled by the
government (e.g. CBC)Business-owned and controlled by private
individuals (e.g. Bell Canada Enterprises)
CorporationsWeaknesses of sole proprietorships and
partnerships led to corporations being formedStock Market is an organized market where
corporations can sell shares or ownership in their company
CorporationsAdvantages Disadvantages
Limited liability which means only personally liable for the amount of money you have invested in the company
Easier to raise capital for the business (e.g. retained earnings, securities like preferred & common shares, bonds)
Unaccountable management may act selfishly against the best interests of the shareholders
Management less motivated to be successful if they don’t have ownership stake in company
CorporationsAdvantages Disadvantages
LongevitySpecialization through
mass production
Expensive to establishDouble taxation
CooperativesOrganized with the aim of benefiting its
owners through lower prices and / or distribution of surpluses at the end of the year
Like a corporation with shares sold but unlike a corporation despite how many shares you own only one vote per person
CooperativesAdvantages Disadvantages
democratic and fair little motivation to work harder than others
Public / Government EnterprisesFederal, provincial, and municipal
governments produce a wide array of goods and services in Canada from garbage disposal to medical services
Crown corporations are semi-independent (e.g. Canada Post)
Public / Government EnterprisesProduces goods and services that are
essential to a community at a reasonable price
To reduce debt and inefficiency crown corporations have been sold off to the public i.e. privatization (e.g. Air Canada, 407)