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FORMS OF BUSINESS ORGANIZATION. Business- is a human activity, which is undertaken to provide goods and services to the people with a view to earn profit.

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Presentation on theme: "FORMS OF BUSINESS ORGANIZATION. Business- is a human activity, which is undertaken to provide goods and services to the people with a view to earn profit."— Presentation transcript:

1 FORMS OF BUSINESS ORGANIZATION

2 Business- is a human activity, which is undertaken to provide goods and services to the people with a view to earn profit. Organization- the word organization is generally divided into two parts. 1. material organization- is the determining and provision of necessary raw materials, tools, capital to enterprises for their smooth running and functioning. 2.human organization-it is the appointment of qualified staff and assigning them different duties and responsibilities for the sake of business organization.

3 The process of establishing effective cooperation among different people to achieve certain goals to earn profit WHAT IS BUSINESS ORGANIZATION?

4  Sole proprietorship  Partnership  Corporation Types of business organization

5  It is owned and controlled by an individual who is responsible of all profits and bearer of all risks SOLE PROPIETORSHIP

6 SOLE PROPRIETORSHIP ADVANTAGES  Easy and inexpensive to form.  The owner receives all the profit.  Owner has complete control over business. DISADVANTAGES  Unlimited personal liability  Difficult to raise capital.

7  It is the arrangement of two or more people that share profits and liabilities for business venture.

8 Partnership Advantages.  Easy to form  Partners an combine expertise  Combine capital  Spread workload  Easier to raise fund Disadvantages  More people to share in the profit  Partners have unlimited liability  Disagreements can occur  Dissolves if partner died.

9 It is an agreement among partners which sets at the term on which they were agree to form a partnership.  How the business decisions will be made  How the partners will resolve disagreement  How the partners will divide the profits  How the partner cover the losses  How ownership changes will be handled  Who can legally bind the business through contracts  How to dissolve the partnership PARTNERSHIP AGREEMENT

10  is a business entity that is owned by its shareholder(s), who elect a board of directors to oversee the organization's activities CORPORATION

11 ADVANTAGES  Limited liability  Flexible profit and loss distribution  Separation of management/ownership  More money for investment  Unlimited life of business DISADVANTAGES  Difficult to start  NOT simple to operate

12 Shareholders Board of directors President Chief Executive Officer Chief Financial Officer Chief Operating Officer

13  The nature of business is the most important  Scale of operations and the size of the market area.  The degree of control desired by the owner.  The amount of capital required for the establishment and operation of the business.  The volume of risks and liabilities as well as the willingness of the owners to bear it.  Comparative tax ability Choosing a form of Business Organization

14  Product growth  Efficient use of resources  Technological improvements  Creative thinking  Use of skilled salesman  Quick decisions  Recognition of problems  Fixing responsibility  Feed bank  Minimum cost IMPORTANCE OF BUSINESS ORGANIZATION

15 THANK YOU!


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