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Business Studies

TYPES OR FORMS OF BUSINESS ORGANIZATIONS

The various forms / types of business organization can best be illustrate with the diagram below

 

TYPES /FORMS OF BUSINESS

A                                              B                                  C                                  D                      E

Sole

Proprietorship                         Partnership                 Co-operative               Private             Public

  • Shoe mending -manufacturing           society                         Limited            Limited
  • Kiosk ownership -farming          Thrift Co-op                 Liability           Liability
  • Farming – Estate            Farmers                       Company         Company
  • Supermarket, -Management             Consumers                  WABP LTD       Zenith Bank

-Consultancy,  Multi                           Frank & Sons   1st Bank

Purpose Co-op,            Addox Pet        UBA

Dev. Ltd           Unilever etc

Advantages and Disadvantages of Sole Proprietorship

 

ADVANTAGES                                                                                    DISADVANTAGES

1 It requires small capital to establish                                  1. The capital is usually small because it is

Personal  saving.

  1. The owner maintains close contact with customers 2. The sole proprietor may not have the                                                                                                required knowledge / experience
  2. The business is easy to establish
  3. The owner makes all decisions about the business 3. The business may not stand the competition
  4. All the profit belongs to the owner, etc. of bigger ones

4, When the owner dies, the business may also die.

  1. The liability of the sole proprietor is unlimited.

 

EVALUATION

  1. State three(3) advantages of a sole proprietorship business
  2. List and explain three (3) disadvantages of  sole proprietorship

 

ADVANTAGES / DISADVANTAGES OF PARTNERSHIP

ADVANTAGES                                                            DISADVANTAGES

  1. Two or more persons contribute capital 1. The mistake of one partner affects all others
  2. Two or more persons combine knowledge/ 2. Decision-making is slow.

Experience                                                                  3. Partners suffer unlimited liability

  1. The risk of the business is borne by the partners 4. No new partner can be admitted without the

consent of other partners

  1. Division of labour can be practised in administration

5.Better decisions are made by the partnership           5. Any partner can bring the partnership to an end.

 

EVALUATION

  1. Define a sole proprietorship.
  2. What is partnership?

 

ADVANTAGES/DISADVANTAGES OF CO-OPERATIVE SOCIETY

ADVANTAGES                                                                        DISADVANTAGES

  1. It is run democratically so each member 1. Capital is limited to the ability of members to pay. has one vote.
  1. It encourages saving habits among members 2. There can be mismanagement by unqualified people. executive
  2. Profits are shared in proportion to The decision-making process is longer compared contribution.                                                               with the sole  proprietor.
  1. Members are able to solve problems                 Lack of proper planning and ignorance may  affect

beyond their individual means because                          the success of the society.

of  co-operation.                                                         5. The society may fail due to lack of commitment from

  1. Every member is bound to benefit from the      elected officials

Co-operative society; it caters for the welfare of

members

 

EVALUATION

  1. Define a co-operative society.
  2. State three (3) advantages and three disadvantage of a co-operative society

 

Advantages and Disadvantages of Private Limited Liability Companies

Advantages                                                    Disadvantages

  1. It is separate from its owners             It is relatively more difficult to form than a sole proprietorship.
  2. Owners or shareholders enjoy          Ownership  is separate from management.

Limited Liability.                                             3. Decision making is relatively slow because of size.

  1. Capital is easier to accumulate than It cannot invite the public to contribute to its capital.

than that of a sole proprietorship.

  1. It is not compulsory to publish its

financial records.

 

ADVANTAGES AND DISADVANTAGES OF PUBLIC LIMITED LIABILITY COMPANIES

Advantages                                                                Disadvantages

  1. It can invite the public to buy its shares        It must publish its financial  statement in national dailies.
  2. It can employ experts. It must submit its financial plans to the Nigerian
  3. It can engage in research and development. Stock Exchange.
  4. It can enjoy perpetual existence. Establishment of a public Limited company is complex
  5. Shares are transferrable easily. and involving.
  6. Ownership is separate from the management of the companies.

 

EVALUATION

  1. State two differences between a private limited liability company and a public limited liability company.
  1. List three advantages and two disadvantages of a public limited liability company.

 

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

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

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