Ownership and Management Structure Features - Term Paper Example

Jayden Electronics Name: Institution: Date: Table of Contents Table of Contents 2 Business Overview 3 Ownership Structure 3 Ownership Comparison 3 Ownership Appropriation 4 Owners Motives Evaluation 5 Small Business Characteristics Exhibited 6 References 7 Business Overview Jayden electronics is a small scale entrepreneurship venture in the electronic industry. The organization, though operating on a retail basis, has a relatively diverse products base in which it supplies a range of electronic products including mobile phones, electric gadgets as well as other non-appliances such as refrigerators. The business has three main retail outlets in Melbourne Australia. The outlets are strategically placed to facilitate and increase increased sales through capturing diverse consumer bases across the city. Functionally, the organization distributes electronic products to the consumer base at affordable prices. Moreover, for high price products, the organization offers higher purchase price terms for its regular customers facilitating their acquisition of such goods. Ownership Structure The organization is a sole proprietorship. This is based on its ownership and management structure features. As Spadaccini (2007) stated, a sole proprietorship business is an organization owned by an individual alone or through the help of their family members. As such, the owner is in charge of both the management and leadership of their organizations. Jayden electronics fall under this business ownership category. On one hand, the owner, Patel Rajesh is in charge of supervision and customer service responses in the three respective outlets. However, he has recruited the support of his family members who individually serve as directly supervise the operations of the three outlets distinctly but report on daily process to him. Ownership Comparison The organizational owners have a range of legal ownership structures besides the sole proprietorship business form. On one hand, is the development of a partnership. In this regard, the organization could join hand with other similar organizations in the industry to establish a partnership with an increased capital and supply base in the Australian electronic industry retail market. As such, such an ownership would increase the organizational consumer and revenue base. However, the owners would be required to share their developed strategic competitive edge as well s the gained revenues with the partners (Kuratko, 2009). Alternatively, the owners can develop the organization into a limited company with a separate legal identity from the owners under which the organizational liabilities would be limited and not extended to the owners’ assets. However, the establishment of such a structure would require the management to employ external third parties in its management and employee functions increasing the business operational. In this regard, a study developed by Pies, Beckmann and Hielscher (2010) established that the development of a limited company ownership form would require the application of the law of agency where the owners would be required to recruit and entrust the management of the organization to professionals. Therefore, the adoption of this ownership structure would increase the organizational operational costs. Ownership Appropriation Based on an analysis on the existing demand in the Australian electronics industry retail market, I argue that the sole proprietor ownership form adopted by Jayden electronics is the most appropriate for the organization. In this regard, the organizational management conducted through family assistance considerably reduces on the organizational operational costs. As such, Wang (2013) stated that this facilitates the increment of the minimal organizations profit margins through a reduction in operational expenses. In addition, the owner is not required to share the profits with others. As such, despite the low demand and subsequent profits the business owner acquires enough profits to warrant the organizational continued existence. Further, the organization, instead of operating a single large outlet has distributed its capacity into three small scale retail outlets. As such, this approach allows for the business owner connection with the customers. Consequently, the sole proprietorship ownership form as well as the increased distribution offers the business n operating strategic advantage over other large premises in the electronics retail industry (Miller & Jentz, 2008). Owners Motives Evaluation Due to its small scale operations and the hands management approach adopted by the owner, I had an interview opportunity questioning the motives behind the organizational establishment and operation. In this case, the owner argued that the formation and establishment of Jayden electronics was a passion and objective oriented. In this regard, he stated that he yearned running and managing his own business in order to apply his entrepreneurship and marketing skills. Moreover, with respect to its continued existence, the owner admitted that despite its being his pet activity, the organization earns profits that are his main source of income. Wealth maximization through increased profits forms the core of each small business enterprise whether small scale or entrepreneurship ventures. In this regard, although skills and talent play a significant success role, the motive for the establishment of these ventures is profits and wealth maximization. A majority of small scale businesses are established in a bid to counteract and fight against the existence of high levels of unemployment in the global market. Therefore, as Davis, Haltiwanger and Schuh (1996) argued individuals result to start up ventures as alternative self employment avenues. Therefore, such owners rely on the respective business returns as their main source of income. Tong and Reuer (2010) developed a study to evaluate the concept of small business ventures regard on profitability. In its analysis, the study established that although a majority of them are social ventures, they all have a regard and objective of raising revenue gains to enhance owner gains as they form their main revenue and income sources (Abdulsaleh & Worthington, 2013). Therefore, this analysis establishes that a majority of the small business ventures have wealth maximization as their key objective besides other economic, personal and social establishment needs. Small Business Characteristics Exhibited Jayden electronics reflects a range of small business characteristics ranging from its structure to its capital base as well as its functioning systems. On one hand, the organisation has an average stock turnover of less than $ 2 million. This as Knowles and Castillo (2011) argued signifies that the enterprise falls under small business enterprises. In addition, the organisational owner is the key decision maker. In this regard, as Bouchoux (2010) argued on sole proprietorships and small businesses, the owner serves as the undisputed absolute decision maker. Finally, an organisational employee review establishes that besides the family members entrusted with supervising the respective outlets, who earn no direct wages, the organisation has on overall less than ten wage employees, making it a small business enterprise by employee count feature. References Abdulsaleh, A. M., & Worthington, A. C. (2013). Small and medium-sized enterprises financing: A review of literature. International Journal of Business and Management, 8(14), 36-54. Bouchoux, D. E. (2010). Fundamentals of business organizations for paralegals. Austin: Wolters Kluwer Law & Business. Davis, S. J., Haltiwanger, J., & Schuh, S. (1996). Small business and job creation: Dissecting the myth and reassessing the facts. Small business economics, 8(4), 297-315. Knowles, R. A., & Castillo, C. (2011). Small business: An entrepreneur's plan. Toronto: Nelson Education. Kuratko, D. F. (2009). Entrepreneurship: Theory, process, practice. Mason, Ohio: South-Western Cengage Learning. Miller, R. L. R., & Jentz, G. A. (2008). Business law today: The essentials : text & summarized cases--e-commerce, legal, ethical, and international environment. Australia: Thomson/South-Western West. Pies, I., Beckmann, M., & Hielscher, S. (2010). Value creation, management competencies, and global corporate citizenship: An ordonomic approach to business ethics in the age of globalization. Journal of Business Ethics, 94(2), 265-278. Spadaccini, M. (2007). Business structures. Irvine, CA: Entrepreneur Press. Tong, T. W., & Reuer, J. J. (2010). Competitive consequences of interfirm collaboration: How joint ventures shape industry profitability. Journal of International Business Studies, 41(6), 1056-1073. Wang, Q. (2013). Industrial concentration of ethnic minority- and women-owned businesses: Evidence from the survey of business owners in the United States. Journal of Small Business and Entrepreneurship, 26(3), 299-321 Read More