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Chapter 6   Forms Of Business Enterprise
 

Chapter 6 Forms Of Business Enterprise

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    Chapter 6   Forms Of Business Enterprise Chapter 6 Forms Of Business Enterprise Presentation Transcript

    • Ownership and Structural Forms of Business Enterprise
      Chapter 5
    • 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.
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    • 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.
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    • Types of business ownership
      Public Ownership
      Controlled by political bodies as a municipal , provincial or national government or by any instrumentality created by them
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    • 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
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    • Forms of private ownership
      Individual or single or sole proprietorship
      Partnership
      Cooperative Organization
      Corporation
      Corporate combination
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    • 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.
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    • 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.
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    • 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
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    • Disadvantages of single proprietorship
      Limited judgment and wisdom.
      Limited amount of capital
      Unlimited liability
      Difficulties of Management
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    • 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.
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    • 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
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    • 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
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    • 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.
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    • 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.
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    • Disadvantages of limited partnership
      The unlimited power given to general partners may result in abuse.
      Possibility of collusion among partners to defraud the creditors.
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    • 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
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    • 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 .
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    • Kinds of cooperative
      The Consumer’s Cooperative
      It draws its members from the general public. This cooperative carries on retail trade operations.
      The Producers’ Cooperative
      It draws its membership from the producers of grains and other farm products
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    • Kinds of cooperative
      The Marketing Cooperative
      Closely related to the producer’s cooperative and often merged with it into one organization .
      The Financing Cooperative
      It makes possible for people of small means to acquire a home and to borrow money for other purposes at relatively low rates of interest.
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    • Principles of cooperative
      Open Membership
      Democratic Control
      Limited interest to capital
      Patronage refund
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    • Power of cooperatives
      To exercise the same rights and privileges given to persons, partnerships and corporation provided under existing laws.
      To establish and operate business enterprises of all kinds as their needs dictates and their capabilities allow subject to the provisions of existing laws.
      To establish rural banks under the Rural Bank Act
      To enjoy all the privileges and incentives granted by the NACIDA act
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    • Power of cooperatives
      To petition the government to expropriate idle urban or rural lands for agricultural production , cottage industry , business or housing purposes.
      To own and dispose property , to enter into contract , to sue or be sued and to do and perform such other acts as may be necessary in the pursuit of its objectives.
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    • Privileges of cooperatives
      Exemption from income taxes and sales taxes
      The preferential right to supply rice, corn and other grains , fish and other marine products.
      Exemption from the application of the Minimum Wage Law.
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    • Corporation
      It is an artificial being created by operation of law having the right of succession and the powers , attributes and properties, expressly authorized by law or incident to its existence.
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    • Nature and characteristics of a corporation
      It is an artificial business unit and its creation is through the process of law.
      The basic structure of a corporation
      The corporation organization is of wide scope
      The existence of a corporation is practically permanent by operation of law
      The function of a corporation is public
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    • Kinds of private corporation
      One in which the capital stock is divided into shares or allot the surplus profit on the basis of the share
      One in which the capital stock is not so divided. It issues certificates of stock which in reality are merely certificates of membership
      Stock Corporation
      Non-stock corporation
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    • Classes of capital stock
      The right of ownership and active control is vested in the owners of the common stock.
      The ordinary stock representing the basic ownership.
      The ownership interest is divided into shares which may or may not have par value.
      Par value is the amount printed on the stock certificate.
      Gives the owners special protection or advantages over the common stock holders.
      It carries preference as to priority in the payment of dividends over the common stock
      Common Stock
      Preferred Stock
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    • Classifications of preferred stock
      Preferred as to dividend
      Preferred as to asset
      Preferred as to both dividends and asset
      Cumulative preferred
      Callable
      Convertible
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    • Advantages of corporation
      Ease of acquiring large amount of capital
      Flexible ownership
      Limited liability of stockholders
      More or less permanent existence
      Legal entity
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    • The operational advantages
      The corporation offers an excellent mechanism for mobilizing the large capital needed for modern industrial operations.
      It permits extended specialization in management , plant and equipment , factory organization, labor and marketing
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    • Disadvantages of corporate ownership
      Organizational expense
      Government restrictions and reports
      Lack of Personal Interest
      Lack of Secrecy
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    • Corporate combinations
      The union affected by the absorbing of one or more existing corporations by another which survives and continues the combined business
      A form of business organization had its origin in a principle of law originally developed for safe guarding the property of minors and other persons not able or willing to administer their own affairs.
      Merger
      Trust
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    • Reference
      Gutierrez, Pura, Garcia 1994. Business Orgainzation and Management. 6th Edition. R.M. Garcia Pubishing House. Quezon City
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