Business Environment

(Ac1.1) Identify the purposes of different types of organisation giving examples

Proprietorship -   Is a business owned and operated by one person, who is generally called
the sole proprietor . The main idea of sole proprietorship is that the business is managed and owned by one person . This person can hire an employee to assist in the day to day operations, but   the business is still managed by one sole decision maker.
This form of business organisation is easy and inexpensive to form and operate, also there are some good benefits that goes with it, such as all the decisions   regarding the business is made by one person , decisions such as naming the business , employing someone and deciding what services and products to offer to their customers, also in sole proprietorship there is incentive to earn more. The owner puts his best efforts in the business and reaps the appropriate rewards for his hard work. Secrecy of the affairs of the business are kept within, there is also the   benefits   of   keeping all profits generated by the business. On the other hand   there   are   few down sides as well , as a sole proprietor there can be difficulties in raising capital because there is limited methods of getting additional funds and may have to use their own personal assets because banks are not so keen to give loans ,also you are liable for all kinds of risks attached to the business   and   have to use personal assets   to pay for any debt   incurred while owning   the business. As a result , the proprietorship may collapse. (Madura, 2007)

Partnership -   This type of   organisation is formed when a business is owned and managed jointly by two or more people. This is usually done by mutual consent and agreement, there are unlimited liability having more than one person investing in the business. Being in partnership have some positive benefits such as other partners may bring new skills and ideas that benefits the growth of the business and also if the business...