Business is a termed used to denote any legitimate firm that supplies merchandize, commodities and services to customers. The term business has gained prominence in countries that adhere to free market, capitalistic economic principles. The aims of business organizations are profit maximization, business development, and competitive edge in consumer markets. Products and services are offered on the assumption that they will augment the revenue and sales of any organization. There are, of course, different types of recognized business enterprises, and this research paper will seek to identify the recognized types of business organizations, as well as evaluating the strengths and weaknesses of each enterprise.
Sole proprietorship is one of the basic forms of business enterprises. A single person acts as the owner of the business organization. This person has the authority and clout to hire and retain employees (Buckley, 1994: Pg 96). He or she can also create organizational rules, regulations, values, and objectives. Legally, the owner is responsible for outstanding dues that are acquired by the organization.
Sole proprietorships do not require extensive investment. The business owner enjoys a high degree of independence in the management and organization of such enterprises. The owner can also shut down operations in a simple and straightforward manner. Furthermore, only a single person is the recipient of business revenue.
Taxation levels in many countries for sole proprietorships are minimum and negligible. The business owner has to pay taxes on the revenue generated (Buckley, 1994: Pg 97). Financial management of sole proprietorships is also simple and sound as compared with other business enterprises. Decision making is enhanced and elevated within sole proprietorships. The owner can implement business strategies and techniques without consultation from other members. Sole proprietorships usually consist of small scale business organizations. They are simply to establish with minimum levels of legal regulations and business rules. The owner has to incur profit and loss.
Sole proprietorships can be vulnerable to fluctuations in the business environment. The task of obtaining additional investment can become cumbersome on the owner. Further business debts have to be paid off by the business owner (Pesic & Aalst, 2006: Pg 171). This is because the owner enjoys complete domination over the decision making process of the organization. However, as small scale organizations thrive, a number of risks can impact their performance and output, such as the danger of over-heating or over-expansion, as well as increased competition and possible illness of the business owner, for example.
Two or more people can become shareholders in any business organization. This arrangement is referred to as business partnerships. The partners work towards the attainment of common aims and targets (Pesic & Aalst, 2006: Pg 172). Profit maximization is the key target that needs to be achieved by the partners. Each individual partner is legally responsible for outstanding dues acquired by the organization.
Business partnerships carry a set of advantages which are not present in other types of business enterprises. Partnerships can be created if a business accord is reached between two or more people. Financial institutions are likely to give loans and grants to the partnership. It operates on the principle of profit sharing as the revenues are divided amongst the owners (Morris, 2005: Pg 727). Business partnerships can end without legal complications and hassles. At the basic level, partnerships do not need to pay huge amounts of money for registration. Income tax returns can also be filed in a consistent and reliable manner. Additional investments can also be increased in this type of business enterprise. Business development and expansion occurs in an efficient and effective manner.
Business liabilities need to be incurred by every business partner. This is one of the greatest limitations of business partnerships. Business risks also significantly increase with the success of business partnerships. The threat of conflict can emerge as partners might have divergent targets and objectives. There might be disparities in partner obligations in the running and supervision of the enterprise. Personal disputes can occur within the context of business partnerships. A single partner can face legal complications or debts based upon the decisions of other partners.
Corporations are business enterprises characterized by the presence of multiple shareholders. They are limited liability enterprises that enjoy unique legal status under national and local laws (Caves, 1998: Pg 8). A board of directors presides over the organization and management of the business enterprise. Corporations can be either state firms or private firms.
The greatest advantage of corporations is that business partners do not incur massive debts or liabilities. Limited liability is one of the key purposes and functions of business organizations. The corporation is recognized as an independent and autonomous legal entity; its owners are classed as its employees. The process of taxation is also simplified in the business corporation. Corporation taxes are separate from shareholder taxes. Corporations are also able to attract and raise huge amounts of capital for investment and expansion (Caves, 1998: Pg 10). Stocks, bonuses, and incentives can be offered by corporations to retain talented and skilled professionals. The operational structure of corporations is organized and systematic. A board of directors is present in order to achieve the strategic objectives of the organization. Policies and regulations can be implemented in a systematic and methodical manner. Corporations also enable business owners to make superior and excellent decisions. They also seek to respond to the challenges of business expansion in an efficient and effective manner.
Setting up a corporation may require large amounts of money. The transaction and registration fees can make it difficult for many businessmen to create corporations. Legal regulations can be time consuming and cumbersome for business corporations too. Extensive documentation is required in order to meet government regulations (Caves, 1998: Pg 10). The corporation has to pay huge amounts of money in order to ensure compliance with local and national regulatory provisions. Corporate officers and directors need to reveal their information to local authorities and the process of closure can be complicated and intricate. Double taxation can also impact the performance of business corporations: the business and the owner’s income are taxed.
Cooperatives are a type of business enterprise that includes members in its business and marketing strategies. A cooperative can be created with the purpose of profit maximization. John Lewis is a good example.
Cooperative business organizations are based upon the ideals of egalitarianism and democracy. Members seek to accomplish business objectives in a reliable and consistent manner. These organizations promote the aims and objectives of the members. It also leads to higher levels of efficiency and effectiveness (Armario, 2008: Pg 489). It is also able to withstand fluctuations in the business environment in a robust and flexible manner. Business cooperatives also are receptive to the needs and requirements of consumers.
Organizational commitment and job satisfaction of employees is also enhanced and elevated in cooperative business enterprises. Cooperative members have high degree of autonomy and control over the daily affairs of the organization. This can create elevated and augmented levels of business development and expansion. It can also lead to superior output and productivity in the performance of the organization.
Managers might feel that their freedom of action is limited and hindered in business cooperatives. This is because other members might be inclined to oppose any new business strategy. Commercially business cooperatives might not be able to compete with other forms of business enterprises. This is because most business enterprises operate on the formula of profit maximization (Armario, 2008: Pg 489). Managers do not enjoy high levels of freedom and autonomy in the decision making process. Talented and skilled professionals might not be hired or retained inside such enterprises because of limited remuneration and reimbursement. The members of the cooperative might be unable or unwilling to run the enterprise because of limited initiatives and endeavors.
Business is a broad term which refers to recognized and legal enterprises which provide products and services to consumers. Within the context of capitalist economies, businesses refer to private owned enterprises that work for profit maximization and business development. The aims and objectives of business enterprises are to ensure that profits are generated and consumer interests are served. Successful business organizations are based upon the application of efficient and effective strategies. There are many types of recognized business enterprises. Sole proprietorships are business enterprises which have single owners; the business owners have to incur the liabilities and debts of the organization. Partnerships involve two or more business partners that have agreed to form an organization for the purpose of mutual objectives. Corporates are limited liability organizations which have board of directors. The members are the shareholders who have to divide the profits. They also have to incur the liabilities of the organization. A cooperative is based upon democracy and egalitarianism; it is based upon achieving common goals and targets. Each business enterprise has its own set of strengths and weaknesses. The best type of business enterprise depends upon the resources, capital, and objectives of individuals. It is essential to conduct an extensive research and audit of the recognized business enterprises. This will ensure a high degree of success and reliability for individuals.
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