7. Types and Forms of Business Organizations

1. Define «business entity»? (any business organization that exists as an economic unit)

2. What types of business entities do you know? Differentiate between them. (type refers to business activity of an organization: service, merchandising (buy and sell), manufacturing(producing))

3. What are the main forms of business organizations? (single proprietorship, partnership, corporation)

4. Speak about advantage and disadvantage of a single proprietorship (ease of establishment (small financial investment and the legal red tape is minimal) independence, secrecy present tax advantages, because proprietors pay taxes only on the personal income they earn from their businesses); limited resources, in case help is required might appear to be too expensive for a proprietor, the proprietor’s unlimited liability)

   1. a partnership (many of the advantages of proprietorships, greater potential profit, legal status, a high credit rating, an unlimited life span, because new partners can replace retiring ones; the unlimited liability of the active partners, the potential for interpersonal problems, management problem inherent in partnerships)

   2. a corporation (no other form of business ownership can match the success of the corporation in bringing together money, resources, and talent; in accumulating assets; and in creating wealth, limited liability of owners (shareholders risk only their shares), unlimited life span; public disclosure requirements, cost of running, taxes)

5. Which business is unlimited, which is limited? Why? (corporation is limited, i.e. limited liability of owners in case of bankruptcy, partnership and sole proprietorship are unlimited)

6. What is limited liability?

7. If you wanted to set up your own business which one would you prefer?

8. Who do limited liability companies attract equity investors? (to limit the downside risk for shareholders in case of failure)

9. Differentiate between private and public companies. (two senses: can be treated as state and private sector companies, as corporations – the one which is open to the public is public (shares are traded on stock exchange), the one private is not open to general public and is privately owned, e.g. shares are offered only to the employees)

10. What is meant by «to go public»? (nationalization) Can a public company go private? (sure, privatization)

11. What does the title Inc. Imply? In what country is it used? (The USA, incorporated)

12. What is MNC, joint venture, mixed venture? (Multinational company (see below), joint venture refers to the situation when two or more companies own certain share in one company, one of the partners is the government=mixed venture)