This an educational ppt about Introduction to business

1. Forms of Business
Ownership

2. What Type of Business IsWhat Type of Business Is
Appropriate for You?Appropriate for You?
Consider the following factors beforeConsider the following factors before
starting a business –starting a business –
 Capital Requirements–Capital Requirements– The amount ofThe amount of
funds necessary to finance the operationfunds necessary to finance the operation
 Risk–Risk– The amount of personal property aThe amount of personal property a
person is willing to lose by starting the businessperson is willing to lose by starting the business
 Control-Control- The amount of authority the ownerThe amount of authority the owner
exercisesexercises

3. What Type of Business IsWhat Type of Business Is
Right for You?Right for You?
 Managerial Abilities–Managerial Abilities– The skills needed toThe skills needed to
plan, organize and control the businessplan, organize and control the business
 Time Requirements–Time Requirements– The time needed toThe time needed to
operate the business and provide guidance tooperate the business and provide guidance to
the employeesthe employees
 Tax Liability–Tax Liability– What taxes a business mustWhat taxes a business must
pay to various government organizations onpay to various government organizations on
earnings of the businessearnings of the business
Each of these factors should beEach of these factors should be
considered along with your ownconsidered along with your own
personalpersonal

4. Sole ProprietorshipSole Proprietorship
A business owned and managed by one
Individual
Example – restaurant, roadside shop
The capital (money) needed to start and
operate the business is normally provided
by the owner through personal wealth or
borrowed money

5. Sole ProprietorshipSole Proprietorship
 The sole proprietor usually is an
active manager
Controls the operation
Supervises the employees and
Makes decisions
 The managerial ability of the owner
usually accounts for the success or
failure of the business

6. Advantages of ProprietorshipAdvantages of Proprietorship
 Ease of starting – it involves a minimum
number of problems
 Control – as boss make final decisions
 Sole participation in profits and losses
 Use of owner’s abilities, managerial expertise
for the success of the business
 Tax breaks – no income tax/ low tax
 Secrecy – no information to the public
 Ease of dissolving

7. Disadvantages of ProprietorshipDisadvantages of Proprietorship
 Unlimited liability
 Difficulty in raising capital
 Limitations in managerial ability
 Lack of stability
 Demands on time
 Difficulty in hiring and keeping high-
achievement employees

8. PartnershipsPartnerships
A business owned by two or more people.
A partnership can be based on written contract
or a voluntary and legal oral agreement
Types of partnerships –
(A) General Partnerships –
A partnership in which at least one partner has
unlimited liability for the debt of the business; A
general partner has authority to act and make
binding decisions as an owner
Partners generally share profits and losses
according to a plan specified by agreement
between them

9. PartnershipsPartnerships
B) Limited Partnerships
A partnership with at least one general
partner, and one or more limited partners
who are liable for loss and up to the
amount of their investment
General Partners
The general partners arrange and run the
business
General partners have unlimited liability in
the partnerships

10. Partnerships
Limited Partners
The limited partners are investors only
They receive protection from liability
Legally, may have no say in managing
the business
They are liable for loss only up to the
amount of capital invested

11. PartnershipsPartnerships
C) Joint Venture
 Special type of partnership
characterized by cooperation between
two or more businesses to share
business decision making, investment
risks, and profits in a business venture
for a specific time period

12. Partnership ContractPartnership Contract
A contractual agreement is called articles of
partnership. A written partnership agreement
includes the following main features –
 Name of the business partnership
 Type of business
 Locating of the business
 Expected life of the partnership
 Names of the partners and the amount of each one’s
investment
 Procedures for distributing profits and covering losses
 Amounts that partners will withdraw for services
 Procedure for withdrawal of funds
 Duties of each partners
 Procedures for dissolving the partnership

13. Advantages of PartnershipAdvantages of Partnership
 More capital
 Combined managerial
skills
 Ease of starting
 Clear legal status –
sound legal advice
available about
partnership issues
 Tax advantages –
partnership as business
does not pay tax

14. Disadvantage of PartnershipDisadvantage of Partnership
 Unlimited liability
 Potential
disagreements
 Investment
withdrawal
difficulty
 Limited capital
availability
 Instability

15. CorporationsCorporations
 A business that is a legal entity
separate from its owners
 Need millions of Taka to operate
industries such as automobile
manufacturing, pharmaceutical,
toiletries etc
 Attracts numerous investors

16. Different Types of CorporationsDifferent Types of Corporations
 Domestic Corporation – An enterprise
organized under the laws of one state or
country and doing business within that state or
country
 Foreign Corporation – A business
incorporated in one sate or country and doing
business in another state or country
 Nonprofit Corporations – An enterprise
(universities, mosques) that is not driven by a
profit-seeking motive

17. Forming a CorporationForming a Corporation
 Legal status of a corporation stems from
a charter
 Charter – A State’s written agreement
giving a corporation the right to operate
as a business

18. Corporate Policy MakersCorporate Policy Makers
 A corporation’s policy is established by a board
of directors, which is elected by the
shareholders or owners
 The board must put together the best possible
team of managers to run the day-to-day
operations
 Directors are elected by the shareholders
(usually each share of common stock entitles
the shareholder to one vote)
 Proxy – a written statement signed by a
shareholder of a corporation, allowing someone
else to cast his or her number of vote

19. Advantages of CorporationAdvantages of Corporation
 Limited liability
 Skilled management team
 Transfer of ownership
 Greater capital base
 Stability
 Legal entity status

20. Disadvantages of CorporationDisadvantages of Corporation
 Difficulty and expense of starting
 Lack of control
 Multiple taxation
 Government involvement
 Lack of secrecy
 Lack of personal interest
 Credit limitations

21. MergersMergers
Combining two or more business
enterprises into a single entity
Horizontal Merger – A merger
involving competitive firms in the same
market
Vertical Merger – A merger in which a
firm joins with its supplier
Conglomerate Merger – A merger
involving firms selling goods in unrelated
markets

22. Other forms of business
 Co-operative Society:
A Co-operative society is essentially an association
of persons who joined together in a voluntary basis f
or the further once of their common economic
interests. It must be formed and registered under
Cooperative Act 1940 in our country.

23. Charateristics :
1) Free membership
2) Number of members-minmum 15
3) Objective-economic welfare
4) Formation
5) Collection of capital: 5000 or one fifth of total capital
6) Limited liability and transferability of shares
7) Distribution of profit-25% statury reserve, BOD 9% and
registrar approve 20%
8) Govt control
9) Audit of accounts

24. State Enterprise:
An enterprise owned by State either establisehd
by govt or acquisition of private business
such as: Nationalized bank and insurance,
Bangladesh Railway, WASA, Radio etc.

25. Cartel
A cartel is an agreement between competing firms to
control prices or exclude entry of a new competitor in
a market. It is a formal organization of sellers or
buyers that agree to fix selling prices, purchase
prices, or reduce production using a variety of tactics.
The term cartel originated for alliances of
enterprises roughly around 1880 in Germany.[

26.  Private vs public cartel:
 A distinction is sometimes drawn
between public and private cartels. In the case of
public cartels, the government may establish and
enforce the rules relating to prices, output and other
such matters.

27. Trust
When the shareholders of a number of firms submit
their interest or share to another supervising or
trustee organization it is called trust. Interested firms
or organization submit their total or controlling shares
to a new organization acting as trustee.

28. Holding or Parent Company
 A holding company is an organization that contains
other companies called subsidiaries. The company
must present consolidated financial statements to its
investors and the Securities and Exchange
Commission. Its managers and Board of Directors
generally maintain control of the subsidiaries.