Business Information Needs and Strategies - Assignment Example

BUSINESS FUNCTIONS Contents Q1. Types of Business 3 Sole Proprietorship 3 Partnership 3 Private Limited Company 3 Public Limited Company 4 UnlimitedLiability 4 Limited Liability Company 4 Q2. Three types of business ownership 5 Private Limited Company 5 Partnership 6 Sole Proprietorship 6 Q3. Factors consider for starting a business 7 Reference 9 Q1. Types of Business A business can be of different types. According to business types a company forms its organizational structure. Different types of business are listed are defined and listed below. Sole Proprietorship In this type of business only one individual controls the entire business. The size of the business is normally small. It is a very simple type of business. Proprietor is the owner of this business. The business closes on the death of its proprietor. Only the owner is responsible for business activities. So for all liabilities of business he becomes personally responsible. Sole Proprietorship business is run by the capital provided by its owner. Different personal assets of the owner are used in this business. Partnership In partnership business at least two or more that two people become owners. They become partners for running the business efficiently. For starting a partnership business all the partners needs to sign different legal agreements. By this the partners contributes money, divides profit and design different business operation or activities which will be under their control. Partnership business can be of medium size or big. The owners of this business are not personally liable for any business losses or credit. Private Limited Company Private limited company or business is a voluntary organization. This type of business can have more than one owner but not more than fifty. This business has proper legal existences. For starting a private limited company the owners have to undergo through different legal formalities. The business has to be registered under company act. Shareholders of these companies are its owners. For performing its business activities private limited company has to follow different legal rules and regulation of the country where it is operating its business. Public Limited Company The company whose shares are sold and purchased in stock market is known as public limited company. Any people can purchase and sell share of public limited company. This type of company strictly follows legal rules and regulations of business. The company needs to disclose its financial position to its investors for determining the value of its shares. Public limited company can or cannot be listed in stock exchange. Many people are the owners of this type of company. Unlimited Liability In unlimited liability business, the owner of company has unlimited liability of all debts and credits of business. Another name of unlimited liability company is private unlimited company. It is hybrid type of business which can be run with or without share capital. The shareholders of unlimited liability company have too many non limited obligations for meeting business requirements. The partners or shareholders of this company accept all these unlimited liabilities to avoid double taxation process. This type of business is exempted from disclosing business related issues to public. Limited Liability Company In the business of limited liability the owners or the shareholders are responsible to pay company debts up to a certain limit which is based on their contribution in business or their shareholdings. It is a type of private limited company. The business structure of this type of company may be formed on the idea of sole proprietorship or partnership. This type of business has to follow many legal rules and regulations for performing its business functions. Q2. Three types of business ownership Business ownerships are of different types. According to company ownership, a business establishes its structure and organizational process. Three important types of business ownership are as follows. Private Limited Company Private company is owed by non government body or by different shareholders. The company can have many owners. The owners of this company hold a certain number of company shares according to their position or contribution on the business. Different investors of this company become its shareholders. They are not allowed to trade their share or offer it to general public. Contribution of its owners had a huge impact on the business of private company. The owners of private company divide profit and dividend among themselves. Shareholders of this business have to take high risk for making the business successful. They contribute different resources for making the company successful. The owners play a major role in the handling the management process of the company. They hold strong position in the company. Owners of private company have vast knowledge about the product and services of business they are offering. As per their knowledge they take different decisions of business. For example initially Facebook was a private ownership company. Its different shareholders controlled its business operations and functions. Major decisions of the company were taken by considering different opinions of its investors. Partnership This type of business has one or more owners. These owners contribute a lot in establishing its business. They invest a lot of money and resources in the business. They take part in business process and decide goal and objectives of the company. For starting up a partnership business the owners sign various legal agreements with each other for establishing its business properly. Risk, resources and funds of the business are shared among the owners. Profit and losses are divided on the basis of owners’ contribution in business (Abels and Klein, 2008). They have a limited liability of business. Owners are not personally responsible for company debts and credits. They plays an important role in the decision making process of the company. Owners of some partnership firms divide profit, loses, expenses equally among themselves. Often the partners joint business for a limited period of time. All the partners of this type of company have a huge contribution in growth and development of the business. For example McDonalds established its business with the help of two partners Maurice McDonald and Richard. Both of them had given huge efforts for establishing this business and making it’s a successful one. Sole Proprietorship A single owner establishes this type of business. The owner has unlimited liability of the business. He is liable to the creditors for paying back money. If he fails to repay the money back then creditor of business claims their personal assets. The owner of sole proprietorship company controls the entire business process by its own. He organizes its business in a very simple way which is very easy to handle by a single individual. Minimum legal formalities are done by the owner for establishing the business. The longevity of business process is based on owner’s wish or his life. Normally sole proprietorship business gets closed after the death of its owner. Sometimes the owner appoints different persons for running its business effectively. For example Nikki Spencer is the owner of small clothing shop. She is the sole proprietor of the company. As a result she is facing unlimited liability of the company. Nikki takes business decisions by her own. Q3. Factors consider for starting a business Capital: For establishing a business capital is required. It is a main pillar of business. The owner of the business has to estimate the amount of capital he requires for starting its business properly. Apart from this various other financial needs are associated with the business. The owner also has to analyze all these financial factors developing its business. Market: proprietor of the business needs to decide in want type of market he wants to operate its business. According to its product and service he chooses appropriate market where he can get its targeted customers. By analyzing the market properly the owner gets an idea about demand and requirement of its product. With the help of this he designs the business structure which will support its business process. Government policies: Different countries have different business environment. Government policies of various countries contribute a lot in shaping up their business environment. Moreover, many types of products and services are prohibited in different countries. The owner of a business should be conscious and aware of all rules and regulation of government related to his product. Business functions and activities are also highly influenced by government policies. Considering this factor will help the owner to implement the business process. Experience: The owner or owners of the business must be experienced enough to deal different issue of business. For starting up a company the owner needs to have proper knowledge about the product and many other issues related with business. Huge experience and knowledge will help him to conduct its business activities effectively. Setting up a business is a very difficult job. So, high quality of experience is required for it. Stress: For developing a business owner has to take a huge amount of stress. He has to deal with all the business issues and problems. A single wrong decision can ruin the company’s position and profitability. There he has to consider this factor very consciously. If he is capable of handling stress then he can take initiative to start business. License: It is a very important legal factor. A business must have a legal license for performing its functions. Various rules and regulation are associated with license. The owner has to follow all these rules and regulation for getting permit to start business. Reference Abels, G.E. and Klein, P.D., 2008. Business Information: Needs and Strategies. Bingley: Emerald Group Publishing. Read More