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WEEK 5
FORMS OF BUSINESS ORGANIZATION
CONTENT:
- Types of Business Organizations
- Advantages and Disadvantages of each of the Business Organization
Forms or types of business ownership
The four forms of business ownership are:
- Sole proprietorship;
- Partnership;
- Co-operative societies and
- Private and public limited liability companies.
Ownership refers to the individual or organization that brings together the factors of production.
Sub-Topic 1: Meaning of Sole Trade
Meaning: Sole Trade is a business owned by one person. The size of the business may be large or small but it is important to note that it is owned by one man. Examples are restaurants supermarkets, Filing Station, Schools etc. The owner of the business is called a sole trader or a sole proprietor. Another name for sole trade is sole proprietorship.
Advantages and Disadvantages of Sole Trade
Advantages of Sole Trade:
- It is easy to start.
- The sole proprietor has a close contact with his customers and attends to them personally.
- He takes all decisions affecting his business alone.
- It requires small capital to establish.
- It can fit any environment.
Disadvantages of Sole Trade:
- The provision of capital and ability is limited.
- The business ends when a sole trader dies.
- He suffers and bears risks alone.
- If business fails, he may have to sell his personal property to pay the debt.
- Higher unit cost of goods when compared with large business operators
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