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Chapter 6    Forms Of  Business  Enterprise
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Chapter 6 Forms Of Business Enterprise


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  • 1. Ownership and Structural Forms of Business Enterprise
    Chapter 5
  • 2. Ownership
    It means the legal title to a thing or control over the thing owned, the right possession and disposal.
    Title to and possession of the assets of the enterprise , the power to determine the policies of the operation and the right to receive and dispose of the proceeds.
  • 3. Types of business ownership
    Private Ownership
    When an enterprise is so organized that private individuals exercise and enjoy the rights and privileges of an owner in their own interest.
  • 4. Types of business ownership
    Public Ownership
    Controlled by political bodies as a municipal , provincial or national government or by any instrumentality created by them
  • 5. Types of business ownership
    Mixed Ownership
    It exists when the elements of ownership are divided such that private persons and public bodies share in the operation of the same enterprise
  • 6. Forms of private ownership
    Individual or single or sole proprietorship
    Cooperative Organization
    Corporate combination
  • 7. Factors involved in business forms
    The nature and size of the business
    The capital required and the means of procuring it
    The length of time the enterprise is expected to operate
    The technical conditions affecting the enterprise
    The types of products to be manufactured
    The method and volume of production
    The kind of markets to be supplied and methods of marketing
    The competitive nature of the chosen industry.
  • 8. 1. Single Proprietorship
    The ownership is vested in one person.
    This form of ownership is small, requires but little amount of capital and is readily established under the control of one man.
  • 9. Advantages of single proprietorship
    It is easy to start and to terminate
    Control and management lies entirely in the hands of the owner
    Only a small amount of capital is required in starting
    Profits belong entirely to the owner
    High Credit Standing
  • 10. Disadvantages of single proprietorship
    Limited judgment and wisdom.
    Limited amount of capital
    Unlimited liability
    Difficulties of Management
  • 11. 2. Partnership
    The business partnership is a business relationship between two or more persons competent to make contracts for the purpose of engaging in a business activity.
  • 12. Advantages of partnership
    It could be as easily formed as the single proprietorship.
    There are more persons to conduct the business and to handle its problems.
    A partnership has access to greater or better credit facilities
    The combined ability and resources of partners are a source of strength.
    Retention of Valuable Employees
  • 13. Disadvantages of partnership
    Unlimited liability of partners
    Disagreement between partners often lead to delay and difficulties which could endanger the enterprise.
    Easy dissolution
    Frozen Investment
  • 14. Limited partnership
    One or more of the partners in a limited partnership must be general partners, who have unlimited liability. The limited or special partners have only limited liability, which is up to the extent of their investment.
  • 15. Advantages of limited partnership
    There is a single direction of management , thus there is unity and prompt action
    The limited liability of special or limited partners , serves as good inducement of investments.
  • 16. Disadvantages of limited partnership
    The unlimited power given to general partners may result in abuse.
    Possibility of collusion among partners to defraud the creditors.
  • 17. Kinds of partners
    General Partner
    Limited Partner
    Capitalist partner
    Industrial Partner
    Managing Partner
    Liquidating Partner
    Ostensible Partner
    Secret Partner
    Silent Partner
    Dormant Partner
    Nominal Partner
  • 18. Cooperative organization
    A cooperative association has some elements of a large partnership and also many features of a corporation , although it is distinct from both .
  • 19. Kinds of cooperative
    The Consumer’s Cooperative
    It draws its members from the general public. This cooperative carries on retail trade operations.