DIF. FORMS OF OWNERSHIP

• What are the factors affecting the appropriateness of different forms of ownership?

  • growth
  • size
  • the need for finance
  • control
  • limited liability
• Why may growth affect the appropriateness of different forms of ownership?

  most businesses change their legal status as they grow, because they need to raise more capital. For example, sole traders may find it difficult to raise extra finance so they may decide to take on a partner
• Why may size affect the appropriateness of different forms of ownership?

  sole traders and partnerships are mostly small businesses, whereas public limited companies are larger with thousands of employees and huge turnovers
• Why may the need for finance affect the appropriateness of different forms of ownership?

  it is one of the main reasons why owners change their legal status, changing the type of organisation is often the only way to get more money
• Why may control affect the appropriateness of different forms of ownership?

  some owners like independence, this is why many owners remain sole traders
• Why may limited liability affect the appropriateness of different forms of ownership?

  if the company is limited, owners can protect their personal financial position. If not, they would have to use their own money to meet business debts
• What may a sole trader's business objectives be?

  they might be happy to make just enough to fund a comfortable lifestyle. They might not want the responsibility associated with other objectives, this is sometimes called profit satisficing
• What may a family business or medium-sized private limited companies business objectives be?

  they often do not wish to go public because they are afraid of losing control to outsiders. Therefore, they will have objectives other than growth
• Why may a multinational company's business objectives be?

  to get bigger and bigger so that they can dominate global markets