Forms of Ownership and Management Principles Quiz

Business Ownership Structures and Corporate Governance

• Sole proprietorships have financial liability, limited managerial perspective, and resource limitations, with no employee benefits for the owner and a finite life span.
• Partnerships come in two forms: general partnership, where all partners have joint authority and liability, and limited partnership, where one or more persons act as general partners with unlimited liability, and the remaining owners are limited partners with limited liability.
• Partnerships offer simplicity, single layer of taxation, more resources than sole proprietorships, cost sharing, broader skill and experience base, and longevity, but they have unlimited liability and potential for conflict.
• The partnership agreement outlines investment percentages, profit-sharing, management responsibilities, decision-making strategies, succession and exit strategies, criteria for admitting new partners, and dispute-resolution procedures.
• Corporations are legal entities with shareholders who can be private or public, offering the ability to raise capital, liquidity, longevity, and limited liability, but they come with cost and complexity, reporting requirements, managerial demands, possible loss of control, and double taxation.
• There are private corporations, where all the stock is owned by a few individuals or companies, and public corporations, where stock is sold to the public.
• Limited liability companies (LLCs) combine limited liability with pass-through taxation benefits of a partnership and have no restrictions on the number of shareholders or members’ participation in management.
• Corporate governance encompasses policies, procedures, relationships, and systems to oversee the successful and legal operation of the enterprise, including the responsibilities and performance of the board of directors.
• Shareholder activism involves shareholders influencing executive decision making, and the board of directors oversees the company's overall direction and the selection of top executives.
• Joining forces can occur through mergers, acquisitions, hostile takeovers, leveraged buyouts, strategic alliances, or joint ventures, each with its own advantages and disadvantages.
• Mergers and acquisitions can increase buying power, revenue, market share, and access to expertise, but they require agreement on the merger process, blending of product lines and cultures, and often involve layoffs.
• Strategic alliances and joint ventures are long-term partnerships or separate legal entities established by companies to pursue shared business objectives.

Business Ownership Structures and Corporate Governance

• Sole proprietorships have financial liability, limited managerial perspective, and resource limitations, with no employee benefits for the owner and a finite life span.
• Partnerships come in two forms: general partnership, where all partners have joint authority and liability, and limited partnership, where one or more persons act as general partners with unlimited liability, and the remaining owners are limited partners with limited liability.
• Partnerships offer simplicity, single layer of taxation, more resources than sole proprietorships, cost sharing, broader skill and experience base, and longevity, but they have unlimited liability and potential for conflict.
• The partnership agreement outlines investment percentages, profit-sharing, management responsibilities, decision-making strategies, succession and exit strategies, criteria for admitting new partners, and dispute-resolution procedures.
• Corporations are legal entities with shareholders who can be private or public, offering the ability to raise capital, liquidity, longevity, and limited liability, but they come with cost and complexity, reporting requirements, managerial demands, possible loss of control, and double taxation.
• There are private corporations, where all the stock is owned by a few individuals or companies, and public corporations, where stock is sold to the public.
• Limited liability companies (LLCs) combine limited liability with pass-through taxation benefits of a partnership and have no restrictions on the number of shareholders or members’ participation in management.
• Corporate governance encompasses policies, procedures, relationships, and systems to oversee the successful and legal operation of the enterprise, including the responsibilities and performance of the board of directors.
• Shareholder activism involves shareholders influencing executive decision making, and the board of directors oversees the company's overall direction and the selection of top executives.
• Joining forces can occur through mergers, acquisitions, hostile takeovers, leveraged buyouts, strategic alliances, or joint ventures, each with its own advantages and disadvantages.
• Mergers and acquisitions can increase buying power, revenue, market share, and access to expertise, but they require agreement on the merger process, blending of product lines and cultures, and often involve layoffs.
• Strategic alliances and joint ventures are long-term partnerships or separate legal entities established by companies to pursue shared business objectives.