ENFUCO_MOD4

• Sole Proprietorship


  A business owned and operated by a single person
• Advantages of Sole Proprietorship

  • Ease and cost formation
  • Secrecy
  • Distribution and use of profits
  • Control of the business
  • Government regulation
  • Taxation
  • Closing the business
• Disadvantages of Sole Proprietorships

  • Owner's Lack of Ability and Experience
  • Difficulty in Attracting Good Employees
  • Difficulty in Raising More Capital
  • Limited Life of the Firm
  • Unlimited Liability of the Proprietor
• Partnership


  A legal association of two or more persons as co-owners of an unincorporated business
• Types of Partnerships


  • General partnership - Association of two or more persons with unlimited liability; actively involved in the business
  • Limited partnership - Arrangement in which liability of one or more partners is limited to the amount of assets they invested
• Partnership Agreement


  A document designed to prevent or at least minimize disagreements between partners
• Advantages of Partnerships


  • Ease of formation
  • Pooling of knowledge and skills
  • More sources of capital
  • Ability to attract and retain employees
  • Tax advantages
• Disadvantages of Partnerships


  • Unlimited liability
  • Potential conflict between partners
  • Difficulty in dissolving the business
• Corporation


  A legally chartered enterprise with most of the legal rights of a person, including the right to conduct a business, to own and sell property, to borrow money, and to sue and be sued
• Advantages of Corporations


  • Limited liability
  • Ease of expansion
  • Ease of transferring of ownership
  • Relatively long life
  • Greater ability to hire specialized management
• Disadvantages of Corporations


  • More expensive and complicated to organize
  • Double taxation
  • More extensive government restrictions and reporting requirements
  • Employees lack personal identification and commitment
• Organizing


  The means by which management blends human and nonhuman resources through the design of a formal structure of tasks and authority
• Formal Organization


  The organizational structure which clearly defines the relationships, channels of communication and responsibilities resulting from the delegation of authority
• Types of Formal Organizations

  • Line type
  • Functional type
  • Line and staff type
  • Committee type
• Informal Organization


  Groups not formally sanctioned by the firm
• Importance of Organizational Structure in Small Business

  • Its simplicity is conducive to an immediate start-up in operations
  • It is a good launching mechanism for the more sophisticated organizational structures
  • It is adaptable to small-scale operations as all employees will be fully occupied with work
• Directing


  Guiding and motivating employees to accomplish organizational objectives
• Effective Directing Needs


  • Communicating with subordinates
  • Counseling
  • Motivating
  • Disciplining
• Communication Process


  • Sender
  • Encoder
  • Medium
  • Decoder
  • Receiver
• Kinds of Control


  • Start-up
  • Early Growth
  • Late Growth
  • Resource Maturity
• Controlling


  The process of efficient performance to attain the objectives of the firm
• Marketing


  The function concerned with planning and implementing the conception, pricing, promotion, and distribution of products or services that will satisfy the firm's objectives
• Marketing Concept


  A match must be made between the firm's intended customers and its product or services offerings
• Marketing Strategy Planning


  • Devise a marketing strategy
  • Engage in marketing research
  • Develop a marketing mix
• Target Marketing


  The activity of selecting well-defined groups of potential customers and tailoring a marketing mix to their needs and preferences
• The Marketing Mix


  • Product offering
  • Price
  • Promotion
  • Place (or distribution)
• Types of Market Research

  • Primary research
  • Secondary research
• Market Share


  The individual firm's sales as a percentage of the total sales in a specific market
• Market Potential


  The total sales volume that all competitors could achieve in a particular market segment
• Sales Potential


  The portion of the market potential that the company could achieve
• Company Sales


  The actual sales made by the company