a brief summary about analyzing the forms of business oraganization

1. ENTREPRENEURSHIP
SKILLS

2. QUESTIONS
There are many forms of business organization an entrepreneur can pursue
Analyze forms of business organizations under the following guiding topics

3. SOLE PROPRIETORSHIP
• Sole means single and easy to form
• Sole proprietorship refers to the owners of the business owned by one
person who takes the responsibility on risks to the business
• He either enjoys the profit or suffers the losses of the business alone

4. FEATURE OF SOLE PROPRIETORSHIP
1. Ownership; this is the business unit, which is owned and controlled by
single person
2. Capital; the capital is provided by the sole trader himself
3. Management; the sole trader manages all the affairs of the business
4. Profit and loss; the sole trader enjoys all the profit alone and suffers all
the losses himself
5. Objective; the main aim of the sole trader is to make maximum profit
6. Liability; the sole trader has limited liability
7. Flexibility; the sole trader’s business is very flexible
8. Legal entity; the sole trader has no separate legal entity

5. Advantages of sole trader
 Formation; it is very easy to form
 Personal interest; with the profit motive, the sole trader has personal interest in
the business and works very hard to increase his profit.as result there is
efficiency
 Decision making; the sole trader makes all his decision
 Profit; the sole trader enjoys all the profits himself
 Control and management; the sole trader control all the business himself.so, there
is direct relationship between the employees and the sole trader
 Personal attention: the sole trader can have personal contact with the customers
 Flexibility; the sole trader can change his business tactics at any time
 Privacy: the sole trader can keep all the business secrets to himself

6. Disadvantages of sole trader
 Limited capital: the trader is the only person who provides capital
 Unlimited liability: the sole trader has unlimited liability
 Uncertainty: the death insolvency or insanity of the sole trader will bring
the business to an end
 Losses: the sole trader must suffer all the losses himself
 Hasty decision: as there is no one to advise the sole trader, his decisions
may sometimes be fatal for the business
 Lack of specialization; as sole trade business is small and he does all work
himself, he cannot have expert to work for him
 Control: it will be very difficult for the sole trader to control all the affairs
of the business especially if it expands

7. PARTNERSHIP
 According to the act
This refers to the relationship which subsists between the people carrying on a
business in common with view of making profit

8. FEATURES OF PARTNERSHIP
i. Definition: The relationship between persons who have agreed to share the profit of
the business carried on by all or any of them acting for all
ii. Formation: is formed by the agreement among persons to do the business and to
shares profits and losses of the business
iii. Number of members: it can be owned by the two to twenty persons in ordinary
partnership business there is no limit to the number of partners in a professional
partnership business
iv. Capital; the partners provide capital for the business
v. Profit and losses: the profit and loses are shared among the members in an agreed
ratio according to the terms of agreement
vi. Unlimited liability: the partners also have unlimited liability

9. Advantages of partnership
 Easy formation, partnership is formed by the agreement there are no legal
complications in the forming a partnership business
 Large capital, all the partners contribute capital
 Management; as all partners play an act role in the management of the
business, it become much easier to control the business
 Sharing of losses, the losses are borne by the by all the partners
 Better decisions, ideas are discussed by all the partners and the best
decisions are taken
 Flexibility: by are agreement the partners can change their business tactics
very easily

10. Disadvantages of partnership
 Lack of continuity: the death, uncertainty or insanity of any partner bring the
business to a temporary halt
 Future conflicts: partnership is based on agreement so, if there is a
disagreement between partners it could be fatal for the business
 Small capital: as their limit to the number of partners in a partnership
business, capital can be raised only for the 20 partners
 Unlimited liability
 No separate entity: there is no separate entity
 Danger of implied authority: as there is agency relationship, there is danger of
implied authority

11. PRIVATE LIMITED COMPANY
 These companies are formed by submitting the necessary requirement
to the registrar of the companies Once this is satisfied the registrar of
the companies’ such a company will receive certificate of incorporation

12. Feature of private limited company
 It is registered under company act with word ‘Ltd’ as part of the name
 The business is a separate legal entity from its shareholders
 All the shareholders have limited liability
 The company is controlled by the board of directors, elected by the
shareholders by the principal of share-one vote
 Ownership is opened to the private individuals; whose are not
transferable without the consent of the other shareholders
 The company is not allowed to issue share to the public
 The company can their business after receiving the certificate of
incorporation from the registrar

13. Advantages of private limited company
 The private limited company has independent legal status it enters in to the
contract, sue and be sued in its name
 With limited liability, the company can attract more capital
 In private company, the founders of the business can usually keep control of it
by holding majority of the shares
 The shareholder of private limited company enjoys limited liability
 Disadvantages of private limited company
 The shares in the private limited company can transfer shares only with the
consent of other shareholders
 A private company is allowed to appeal to the public for extra capital
 The accounts of the company must be filed annually with the registrar of the
companies

14. PUBLIC LIMITED COMPANY
 These are stock joint companies that have sold stock to the general
companies and thus attracts public in form of share capital
 L e ordinary or preference shares
 Such companies are usually quoted at the stock exchange where
shares bought and sold the companies

15. Feature public limited company
 It is registered under company act with the word ‘P.L.C’ ‘’ as part of the
name
 The business is a separate legal entity from its shareholders
 All shareholders have limited liability
 Company is controlled by a board of directs, elected by the
shareholders, by the principle of ‘one share-one vote’
 The company can start their business after the certificate of Trading is
issued

16. ADVANTAGES OF PUBLIC LIMITED
 The public limited company has independent legal status it can enter
into contracts
 The shareholders of a public limited company enjoy limited liability they
are liable for the business debts up to the nominal value of the shares
they hold in the company
 With limited company liability, the company can attract more capital
 A public limited company can appeal to the public for extra capital
 There is no restriction on the transfer of shares
 Public limited companies are normally larger than other companies

17. DISADVANTAGES OF PUBLIC LIMITED COMPANY
 The formalities of forming a public limited company are quite complex
 Sometimes a public limited company grow so big that it can becomes difficult
to manage
 Once established, a public limited company must comply with many
regulations
 The account of public limited company must be published, so there can be
little secrecy about its affairs
 The owners of the owners of the public limited company can exercise very
little control over it
 Raising capital can be very expensive as normally merchant bank is hire to
organize the share issue

18. FIVE TYPES OF BUSINESS GROWTH
Business growth can be classified into four main types
1. Organic business growth
2. Strategic business growth; this approach works well for long time goals
and companies that have gone through organic growth
3. Internal business growth; This approach can be implemented between
organic and strategic types
4. Partnership or merge business growth; As the name suggests, this
approach implies cooperation with another company for mutual benefits

19. GIVE SOME OF
THE TYPES OF
ARTIFICIAL
GROWTH

20. Speech recognition
 If you use apple’s Siri or Microsoft’s Cortana, then you have already interacted
with artificial intelligence, it’s a computer, not a real person, on the back -end
of the phone or computer
 Companies are implementing voice recognition software across their phones
and internet-based customer service systems, hence allowing people to
interact with computers as if they were human

21. Natural language generation
 It’s a natural thing for people to talk to computers, but can computers talk to
people and talk like people?
 That’s what developers “natural language” generation soft ware are trying to
accomplish create artificial intelligence that can generate text that reads with
the same nuances of human speech

22. Machine learning
Decision management

23. Cyber defense
 Humans, frankly, aren’t doing that great of a job keeping the world safe from
cyber threats and cyber-attacks
 Breaches are becoming harder to detect and defend against
 But chances are automated computer machine systems may do a better job
than humans at detecting and destroying threats to our data

24. 4.HOLDING COMPANIES
 The company act of law of Kenya defines a holding company as one which has
more than half of equity share capital of another company of which it is a
member or control a bigger percentage of the board of directors of one more
other company which are called subsidiary companies
 A holding company may be public or private depending upon wishes of the
promoters or shareholder
 In Kenya, a good example of a holding company is ICDC

25. 5. FRANCHISING
 A franchising is a member of distributing products or services involving
franchiser, who establishes the brands, trade mark or trade name and
business system and a franchisee who pays a royalty and often ritual fee the
right to do business under the franchisers name and system