(4) How do ownership and management differ in Company form ?
Answers
Answer:
In small businesses, there is very little difference between business ownership and business control because generally the person who owns the business also runs (controls) the business.
However, in big business, corporations and public companies it is rare for the owners (shareholders) of the business to also run (control) the business. This is because shareholders are numerous and they often lack the specific management skills required to successful manage large enterprises.
So the business owners (shareholders) will appoint a board of directors to run the business on their behalf. In appointing the board of directors, the shareholders vest the management and control of the business in the board.
Business ownership represented by the shareholders, are the company's owners. They have the potential to profit if the company does well, coupled with the potential to lose money if the company performs poorly.
Business control represented by the board of directors, are the governing body appointed by the shareholders to look after the shareholder's interests. They are the ultimate decision-making authority for the company and so control the policies, direction, dividends and managerial appointments for the business.
The business owners (shareholders) vest control of the business in a board of directors who employ specialist management to run the business and return the profits of the business back to the shareholders
Answer:
mind own language along with synonyms