Chapter 6 Forms Of Business Enterprise

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Chapter 6 Forms Of Business Enterprise

  1. 1. Ownership and Structural Forms of Business Enterprise<br />Chapter 5<br />
  2. 2. Ownership<br />It means the legal title to a thing or control over the thing owned, the right possession and disposal.<br />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.<br />17 December 2009<br />2<br />Guevarra Institute of Technology<br />
  3. 3. Types of business ownership<br />Private Ownership<br />When an enterprise is so organized that private individuals exercise and enjoy the rights and privileges of an owner in their own interest.<br />17 December 2009<br />3<br />Guevarra Institute of Technology<br />
  4. 4. Types of business ownership<br />Public Ownership<br />Controlled by political bodies as a municipal , provincial or national government or by any instrumentality created by them<br />17 December 2009<br />4<br />Guevarra Institute of Technology<br />
  5. 5. Types of business ownership<br />Mixed Ownership<br />It exists when the elements of ownership are divided such that private persons and public bodies share in the operation of the same enterprise<br />17 December 2009<br />5<br />Guevarra Institute of Technology<br />
  6. 6. Forms of private ownership<br />Individual or single or sole proprietorship<br />Partnership<br />Cooperative Organization<br />Corporation<br />Corporate combination<br />17 December 2009<br />6<br />Guevarra Institute of Technology<br />
  7. 7. Factors involved in business forms<br />The nature and size of the business<br />The capital required and the means of procuring it<br />The length of time the enterprise is expected to operate<br />The technical conditions affecting the enterprise<br />The types of products to be manufactured<br />The method and volume of production<br />The kind of markets to be supplied and methods of marketing<br />The competitive nature of the chosen industry.<br />17 December 2009<br />7<br />Guevarra Institute of Technology<br />
  8. 8. 1. Single Proprietorship<br />The ownership is vested in one person.<br />This form of ownership is small, requires but little amount of capital and is readily established under the control of one man.<br />17 December 2009<br />8<br />Guevarra Institute of Technology<br />
  9. 9. Advantages of single proprietorship<br />It is easy to start and to terminate<br />Control and management lies entirely in the hands of the owner<br />Only a small amount of capital is required in starting<br />Profits belong entirely to the owner <br />High Credit Standing<br />17 December 2009<br />9<br />Guevarra Institute of Technology<br />
  10. 10. Disadvantages of single proprietorship<br />Limited judgment and wisdom. <br />Limited amount of capital<br />Unlimited liability<br />Difficulties of Management<br />17 December 2009<br />10<br />Guevarra Institute of Technology<br />
  11. 11. 2. Partnership <br />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.<br />17 December 2009<br />11<br />Guevarra Institute of Technology<br />
  12. 12. Advantages of partnership<br />It could be as easily formed as the single proprietorship.<br />There are more persons to conduct the business and to handle its problems.<br />A partnership has access to greater or better credit facilities<br />The combined ability and resources of partners are a source of strength.<br />Retention of Valuable Employees<br />17 December 2009<br />12<br />Guevarra Institute of Technology<br />
  13. 13. Disadvantages of partnership<br />Unlimited liability of partners<br />Disagreement between partners often lead to delay and difficulties which could endanger the enterprise.<br />Easy dissolution <br />Frozen Investment<br />17 December 2009<br />13<br />Guevarra Institute of Technology<br />
  14. 14. Limited partnership<br />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.<br />17 December 2009<br />14<br />Guevarra Institute of Technology<br />
  15. 15. Advantages of limited partnership<br />There is a single direction of management , thus there is unity and prompt action<br />The limited liability of special or limited partners , serves as good inducement of investments.<br />17 December 2009<br />15<br />Guevarra Institute of Technology<br />
  16. 16. Disadvantages of limited partnership<br />The unlimited power given to general partners may result in abuse.<br />Possibility of collusion among partners to defraud the creditors.<br />17 December 2009<br />16<br />Guevarra Institute of Technology<br />
  17. 17. Kinds of partners<br />General Partner<br />Limited Partner<br />Capitalist partner<br />Industrial Partner<br />Managing Partner<br />Liquidating Partner<br />Ostensible Partner<br />Secret Partner<br />Silent Partner<br />Dormant Partner<br />Nominal Partner<br />17 December 2009<br />17<br />Guevarra Institute of Technology<br />
  18. 18. Cooperative organization <br />A cooperative association has some elements of a large partnership and also many features of a corporation , although it is distinct from both .<br />17 December 2009<br />18<br />Guevarra Institute of Technology<br />
  19. 19. Kinds of cooperative<br />The Consumer’s Cooperative<br />It draws its members from the general public. This cooperative carries on retail trade operations.<br />The Producers’ Cooperative<br />It draws its membership from the producers of grains and other farm products <br />17 December 2009<br />19<br />Guevarra Institute of Technology<br />
  20. 20. Kinds of cooperative<br />The Marketing Cooperative<br />Closely related to the producer’s cooperative and often merged with it into one organization .<br />The Financing Cooperative<br />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.<br />17 December 2009<br />20<br />Guevarra Institute of Technology<br />
  21. 21. Principles of cooperative<br />Open Membership<br />Democratic Control<br />Limited interest to capital<br />Patronage refund<br />17 December 2009<br />21<br />Guevarra Institute of Technology<br />
  22. 22. Power of cooperatives<br />To exercise the same rights and privileges given to persons, partnerships and corporation provided under existing laws.<br />To establish and operate business enterprises of all kinds as their needs dictates and their capabilities allow subject to the provisions of existing laws.<br />To establish rural banks under the Rural Bank Act <br />To enjoy all the privileges and incentives granted by the NACIDA act<br />17 December 2009<br />22<br />Guevarra Institute of Technology<br />
  23. 23. Power of cooperatives<br />To petition the government to expropriate idle urban or rural lands for agricultural production , cottage industry , business or housing purposes.<br />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.<br />17 December 2009<br />23<br />Guevarra Institute of Technology<br />
  24. 24. Privileges of cooperatives<br />Exemption from income taxes and sales taxes<br />The preferential right to supply rice, corn and other grains , fish and other marine products.<br />Exemption from the application of the Minimum Wage Law.<br />17 December 2009<br />24<br />Guevarra Institute of Technology<br />
  25. 25. Corporation<br />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.<br />17 December 2009<br />25<br />Guevarra Institute of Technology<br />
  26. 26. Nature and characteristics of a corporation<br />It is an artificial business unit and its creation is through the process of law.<br />The basic structure of a corporation <br />The corporation organization is of wide scope<br />The existence of a corporation is practically permanent by operation of law<br />The function of a corporation is public<br />17 December 2009<br />26<br />Guevarra Institute of Technology<br />
  27. 27. Kinds of private corporation<br />One in which the capital stock is divided into shares or allot the surplus profit on the basis of the share<br />One in which the capital stock is not so divided. It issues certificates of stock which in reality are merely certificates of membership<br />Stock Corporation<br />Non-stock corporation<br />17 December 2009<br />27<br />Guevarra Institute of Technology<br />
  28. 28. Classes of capital stock<br />The right of ownership and active control is vested in the owners of the common stock.<br />The ordinary stock representing the basic ownership.<br />The ownership interest is divided into shares which may or may not have par value.<br />Par value is the amount printed on the stock certificate.<br />Gives the owners special protection or advantages over the common stock holders.<br />It carries preference as to priority in the payment of dividends over the common stock <br />Common Stock <br />Preferred Stock<br />17 December 2009<br />28<br />Guevarra Institute of Technology<br />
  29. 29. Classifications of preferred stock<br />Preferred as to dividend<br />Preferred as to asset<br />Preferred as to both dividends and asset<br />Cumulative preferred<br />Callable<br />Convertible<br />17 December 2009<br />29<br />Guevarra Institute of Technology<br />
  30. 30. Advantages of corporation<br />Ease of acquiring large amount of capital<br />Flexible ownership<br />Limited liability of stockholders<br />More or less permanent existence<br />Legal entity<br />17 December 2009<br />30<br />Guevarra Institute of Technology<br />
  31. 31. The operational advantages<br />The corporation offers an excellent mechanism for mobilizing the large capital needed for modern industrial operations.<br />It permits extended specialization in management , plant and equipment , factory organization, labor and marketing<br />17 December 2009<br />31<br />Guevarra Institute of Technology<br />
  32. 32. Disadvantages of corporate ownership<br />Organizational expense<br />Government restrictions and reports<br />Lack of Personal Interest<br />Lack of Secrecy<br />17 December 2009<br />32<br />Guevarra Institute of Technology<br />
  33. 33. Corporate combinations<br />The union affected by the absorbing of one or more existing corporations by another which survives and continues the combined business <br />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.<br />Merger<br />Trust<br />17 December 2009<br />33<br />Guevarra Institute of Technology<br />
  34. 34. Reference<br />Gutierrez, Pura, Garcia 1994. Business Orgainzation and Management. 6th Edition. R.M. Garcia Pubishing House. Quezon City<br />17 December 2009<br />34<br />Guevarra Institute of Technology<br />

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