Business Organizations (Econ)

Question 1

List the types of business organizations

Answer 1

-Sole proprietorship
-Partnerships
-Public & Private Limited companies
-MNCS
-Co-operatives
-Public Corporation

Question 2

define sole proprietorship

Answer 2

one person that creates and manages a business for his own profit.

Question 3

Advantages

Answer 3

-Easy to startup
-All profits go to manager
-no payment of corporate taxes
-Easy decision making

Question 4

Disadvantages

Answer 4

-possibility of limited business lifespan
-difficult to expand the business
-limit to extent of supervision
-not suitable for all kinds of businesses

Question 5

Advantages

Answer 5

-easy and inexpensive to startup
-unlimited liability of the partners
-easier to expand business
-Higher productivity (division of labor)

Question 6

Define Partnership

Answer 6

a business created,managed and partnered between 2-20 people

Question 7

Disadvantages

Answer 7

-possible limited business lifespan
-disagreement over division labor
-Difficulty in finding partners
-limited fun raising power

Question 8

Private limited company

Answer 8

a company owned by between 7-50 people that does sell shares to the public

Question 9

Public ltd company

Answer 9

a company that has no maximum number of shareholders and shares are transferable.

Question 10

Advantages

Answer 10

-Economies of scale
-spread of risk over a greater number of people
-limited liability
-transferability of shares

Question 11

Disadvantages

Answer 11

-Dis-economies of scale
-Separation of ownership & control
-Speculation abound

Question 12

Multinational Corporations

Answer 12

An organization that has operations in outside host countries.

Question 13

Advantages

Answer 13

-creation of jobs
-introduction to new production techniques and managerial skills
-wider choice of products for host consumers
-greater competition between local and mnc’s

Question 14

disadvantages

Answer 14

-profits earned from host countries go back to the head office
-supplies are acquired from foreign affiliated businesses
-lack of managerial knowledge transfer to locals

Question 15

Public corporations

Answer 15

a state owned organization which makes decisions based on government guidance

Question 16

Advantages

Answer 16

-Main aim is to provide efficient services to the government
-enjoy economies of scale
-easily obtainable loans from gov.
-corporate tax payment not required

Question 17

disadvantages

Answer 17

-May lack incentive to introduce new products of consumer demand
-dis-economies of scale