Unemployment
Unemployment exists where people capable and willing to work are unable to find suitable paid employment.
Unemployment may occur for many different reasons: frictional, seasonal, structural, and cyclical.
Frictional unemployment arises because workers seeking jobs do not find them immediately; while looking for work they are counted as unemployed. This type is regarded as inevitable.
Seasonal unemployment occurs when industries have a slow season, such as construction, fruit picking and other outdoor work.
Structural unemployment arises from an imbalance between the kinds of workers wanted by employers and the kinds of workers looking for jobs. The imbalances may be caused by inadequacy in skills, location, or personal characteristics.
Cyclical unemployment results from a general lack of demand for labour. When the business cycle turns downward, demand for goods and services drops; consequently, workers are laid off.
Unemployed workers usually register at the local employment exchange from which employers can hire them. The unemployed are paid certain benefits.
Forms of Business
Business is a commercial enterprise performing all those functions that govern the production, distribution, and sale of goods and services for the benefit of the buyer and the profit of the seller.
There are three legal forms of ownership: sole proprietorship, the partnership and the corporation.
THE SOLE PROPRIETORSHIP is a business owned and operated by one person. All assets in the firm are owned by the owner, he is solely responsible for all personal and business debts and any losses. The advantages of the proprietorship are: simplicity of organization, minimal legal restrictions, tax advantages and others. Disadvantages are: limited life of the firm, unlimited liability of proprietor and others.
THE PARTNERSHIP is an association of two or more persons. Partnerships are based upon a partnership agreement. There are three types of partnerships: general partnership, limited partnership and joint ventures. Advantages of the partnership: ease of organization, tax advantage and others. Disadvantages are: unlimited liability, limited life, divided authority, danger of disagreement.
THE CORPORATION is an association of stockholders. There are two kinds of corporations: closed and public. In a closed corporation capital stock is not sold to the public. A public or open corporation offers its stock to the public that is to anyone who wants to buy it. The principal owner of a public corporation is the majority stockholder. Advantages of the corporation: limited liability, ease of expansion, unlimited life. Disadvantages are: profit sharing, government regulation, lack of freedom, taxes and others.
Wholesaling
Wholesalers are the institutions which stand between the manufacturer and the retailer. The wholesaler buys goods in bulk from producers and sells them in small quantities to retailers. In doing so he helps the production process.
Wholesaler economises the distribution. The most important function of a wholesaler is to contact manufacturers and potential customers.
The wholesaler keeps stocks as shoppers like to obtain goods immediately.
The wholesaler arranges imports from abroad. Foreign manufacturers prefer to deal with a wholesaler.
Wholesalers may be classified into three groups: manufacturer-owned operations, merchant wholesalers and merchandise agents and brokers. Manufacturers can establish their own wholesaling office or branch, the latter providing more services to its customers. Depending on the industry or geographical location merchant wholesalers are called distributors, jobbers, or dealers. Among merchandise agents there are selling agents, brokers, commission agents and action companies. They are all compensated by either a commission or a brokerage fee.