None of the four forms of business organization has all the features of an ideal form of business organizationâ. Critically evaluate the statement.
Answers
Business organisation: A business organisation is a format that is legally recognized and characterized by the legal definition of that particular category.
There are many types of business structures. Some of them are,
- Sole Proprietorship
- General Partnership
- Limited Partnership
- Limited Liability Partnership (LLP)
Sole proprietorship: An individual or a couple in business which is simple to form and operate is called Sole proprietorship.
Partnership Firm: The business is owned, managed and controlled by an Association for profit is referred to as a partnership firm.
Limited Partnership and LLP have only limited control over the business.
Hence, None of the four forms of business organization has all the features of an ideal form of business organization.
The statement is valid for many reasons.
The four forms of business organization are:-
1.Sole Proprietorship
2. Partnership firm
3. Corporation
4.Limited Liability Partnership (LLP)
Sole proprietorship: Sole proprietorship is a type of a business which is owned by only one person. It is simple to form and operate and is cheaper compared to the others.
Sole proprietorship is generally adopted by small organisations or institutions.
Partnership firm: Partnership firm is a form of business where two or more people are involved. The profit is divided among themselves.
Corporation:- It is a form which is basically owned by stockholders.
An elected group, called the board of directors from the stockholders, controls the activities of the corporation.
Limited Liability Partnership (LLP):- It is a form of business which is a combination if both corporation and partnership. It is basically not incorporated.
So we can see that none of the four forms of business organization has all the features of an ideal form of business organization.