FORM OF BUSINESS ORGANIZATION

The various forms or types of business organization can best be illustrated with the table below

TYPES /FORMS OF BUSINESS

ADVANTAGES

A: Sole Proprietorship	B: Partnership	C: Co-operative Society	D: Private Limited	E: Public Limited
Shoe mending	Manufacturing	Thrift Co-op	Liability Company	Liability Company
Kiosk ownership	Farming	Farmers	WABP LTD	Zenith Bank
Farming	Estate Management	Consumers	Addox Pet Dev. Ltd	UBA
Supermarket	Frank & Sons	Multi-purpose Co-op	Unilever	1st Bank
Consultancy

This layout organizes the information systematically, aligning categories under the respective business types.

Advantages and Disadvantages of Sole Proprietorship

ADVANTAGES

1. It requires small capital to establish.
2. The owner maintains close contact with customers.
3. The business is easy to establish.
4. The owner makes all decisions about the business.
5. All the profit belongs to the owner.

DISADVANTAGES

1. The capital is usually small because it is personal savings.
2. The sole proprietor may not have the required knowledge or experience.
3. The business may not stand the competition of bigger ones.
4. When the owner dies, the business may also die.
5. The liability of the sole proprietor is unlimited.

ADVANTAGES / DISADVANTAGES OF PARTNERSHIP

ADVANTAGES

1. Two or more persons contribute capital.
2. Two or more persons combine knowledge/experience.
3. The risk of the business is borne by the partners.
4. Division of labor can be practiced in administration.
5. Better decisions are made by the partnership.

DISADVANTAGES

1. The mistake of one partner affects all others.
2. Decision-making is slow.
3. Partners suffer unlimited liability.
4. No new partner can be admitted without the consent of other partners.
5. Any partner can bring the partnership to an end.

 

ADVANTAGES/DISADVANTAGES OF CO-OPERATIVE SOCIETY

 

ADVANTAGES

1. It is run democratically so each member has one vote.
2. It encourages saving habits among members.
3. Profits are shared in proportion to contribution.
4. Members are able to solve problems beyond their individual means because of cooperation.
5. Every member is bound to benefit from the Cooperative Society; it caters to the welfare of members.

DISADVANTAGES

1. Capital is limited to the ability of members to pay.
2. There can be mismanagement by unqualified executive people.
3. The decision-making process is longer compared with the sole proprietor.
4. Lack of proper planning and ignorance may affect the success of the society.
5. The society may fail due to lack of commitment from elected officials.

Advantages and Disadvantages of Private Limited Liability Companies

Advantages

1. It is separate from its owners.
2. Owners or shareholders enjoy Limited Liability.
3. Capital is easier to accumulate than that of a sole proprietorship.
4. It is not compulsory to publish its financial records.

Disadvantages

1. It is relatively more difficult to form than a sole proprietorship.
2. Ownership is separate from management.
3. Decision-making is relatively slow because of size.
4. It cannot invite the public to contribute to its capital.

 

ADVANTAGES AND DISADVANTAGES OF PUBLIC LIMITED LIABILITY COMPANIES

ADVANTAGES

• It can invite the public to buy its shares.
• It can employ experts.
• It can engage in research and development.
• It can enjoy perpetual existence.
• Shares are transferrable easily.
• Ownership is separate from the management of the companies.

DISADVANTAGES

• It must publish its financial statement in national dailies.
• It must submit its financial plans to the Nigerian Stock Exchange.
• Establishment of a public limited company is complex and involving.

GENERAL EVALUATION QUESTION

1. Define a company.
2. List four different types of business units in Nigeria
3. State three advantages and three disadvantages of a private limited liability company.
4. State two similarities between a co-operative society and a public limited company.
5. List three advantages and three disadvantages of a sole proprietorship.

 

WEEKEND ASSIGNMENT – SECTION A

1. The business unit that must publish its financial statements in the national newspaper is
2. Partnership B. Private company C. Public Company D. Sole proprietorship
3. The business that are separate from their owners (i.e separate legal entities) are A. Partnership and

sole proprietorship B. Partnership and private companies   C. Sole Proprietorship and public Company D. Private and public companies

3. The business owner who does not share profit with anybody is A. Sole trader B. Partnership
4. Private company D. Share holders
5. ______ is formed to carter for the welfare of its members A. Partnership Co-operative society C. Sole proprietorship     D. Public  company
6. Dividend is a share of profit to ______ A. Debtors Creditors     C. Partners      D. shareholders

 

Section B

1. List five forms of business unit you know in Nigeria
2. State three advantages and three disadvantages of a partnership’ business

 

See also

IMPORTANCE OF ENTREPRENEURSHIP

ENTREPRENEURSHIP

ETHICS IN SOURCING CHEMICALS

HONESTY IN BUSINESS

TYPES OF OCCUPATION