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Questions and Answers
A vertical merger involves the joining of two firms from completely unrelated industries.
A vertical merger involves the joining of two firms from completely unrelated industries.
False
A sole proprietorship can have multiple owners.
A sole proprietorship can have multiple owners.
False
Franchisees are individuals who sell the rights to use a business’s name and sell its products.
Franchisees are individuals who sell the rights to use a business’s name and sell its products.
False
One disadvantage of a sole proprietorship is unlimited liability.
One disadvantage of a sole proprietorship is unlimited liability.
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Google acquired Android for $50 million in 2005.
Google acquired Android for $50 million in 2005.
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Shared profit in a franchise refers to the royalties paid to the franchisor.
Shared profit in a franchise refers to the royalties paid to the franchisor.
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Partnerships can only involve two owners.
Partnerships can only involve two owners.
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A general partner in a partnership has limited liability.
A general partner in a partnership has limited liability.
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One of the advantages of franchises is the potential for lower start-up costs compared to starting an independent business.
One of the advantages of franchises is the potential for lower start-up costs compared to starting an independent business.
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A Private Limited Company can invite the public to subscribe for its shares.
A Private Limited Company can invite the public to subscribe for its shares.
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The procedure for starting a proprietorship in Bangladesh includes obtaining a trade license.
The procedure for starting a proprietorship in Bangladesh includes obtaining a trade license.
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Limited partners have management responsibilities in a partnership.
Limited partners have management responsibilities in a partnership.
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The minimum number of directors required for a Public Limited Company is 3.
The minimum number of directors required for a Public Limited Company is 3.
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One advantage of sole proprietorship is the ease of starting and ending the business.
One advantage of sole proprietorship is the ease of starting and ending the business.
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A Private Limited Company can have a maximum of 100 members.
A Private Limited Company can have a maximum of 100 members.
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A Public Limited Company can start its business immediately after incorporation.
A Public Limited Company can start its business immediately after incorporation.
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Partnerships have no advantages compared to sole proprietorships.
Partnerships have no advantages compared to sole proprietorships.
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Manufacturing businesses primarily sell raw materials to customers.
Manufacturing businesses primarily sell raw materials to customers.
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Tamim's factory is an example of a service business.
Tamim's factory is an example of a service business.
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The combination of two companies to form a new company is known as an acquisition.
The combination of two companies to form a new company is known as an acquisition.
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A trading business manufactures its own products.
A trading business manufactures its own products.
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Limited liability means that owners are fully responsible for all losses of the business.
Limited liability means that owners are fully responsible for all losses of the business.
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A corporation is considered a separate legal entity from its owners.
A corporation is considered a separate legal entity from its owners.
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Common stockholders do not have voting rights in a corporation.
Common stockholders do not have voting rights in a corporation.
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One disadvantage of partnerships is the risk of disagreements among partners.
One disadvantage of partnerships is the risk of disagreements among partners.
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Dividends are paid first to preferred stockholders before common stockholders.
Dividends are paid first to preferred stockholders before common stockholders.
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Public limited companies cannot be traded on stock exchanges.
Public limited companies cannot be traded on stock exchanges.
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Corporations face double taxation on their profits.
Corporations face double taxation on their profits.
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The board of directors is appointed by the corporate officers of a corporation.
The board of directors is appointed by the corporate officers of a corporation.
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Study Notes
Introduction to Entrepreneurship
- Course title: Introduction to Entrepreneurship
- Course code: EDC:101
- Lecture dates: 6-8
- Instructor: Mustaqim Muhib Haque (MQMH)
- Institution: East West University
- Entrepreneurship Development Center
News of the Day
- Unemployment statistics: Approximately 8 lakh graduates unemployed.
- Unemployment rate (by education level): Data provided in percentage form for 2017 - 2022
- Population: 16.98 crore in 2022 and 16.13 crore in 2017
- Labour force: 7.28 crore in 2022 and 6.35 crore in 2017
- Unemployed population (aged 15 or older): 25.82 lakhs in 2022 and 27 lakhs in 2017
- Youth labour force (aged 15-29): 2.68 crore in 2022 and 2.01 crore in 2017
Basic Forms of Business Ownership
- Sole Proprietorship: A business owned and usually managed by one person.
- Partnership: A legal business form with two or more owners.
- Corporation: A separate legal entity distinct from its owners.
Sole Proprietorship
- Advantages: Ease of starting and ending the business, being your own boss, pride of ownership, leaving a legacy, retention of company profits, no special taxes.
- Disadvantages: Unlimited liability, limited financial resources, management difficulties, overwhelming time commitment, few fringe benefits, limited growth, limited life span.
Procedure for Starting a Proprietorship in Bangladesh
- Choose a name for the business
- Rent commercial space
- Fill out trade license application form
- Obtain a trade license from city corporation
- Obtain e-tin certificate
- Open a bank account in business name
Partnerships
- Definition: A legal business form involving two or more owners.
- Types: General partnership (all owners share in operating the business and liability), limited partnership (one or more general and limited partners).
- General partner: An owner with unlimited liability who actively manages the business.
- Limited partner: An owner who invests in the business but has limited liability (for losses beyond investment) and no management responsibility.
- Advantages: More financial resources, shared management and pooled complementary skills and knowledge, longer survival, no special taxes.
- Disadvantages: Unlimited liability (for general partners), division of profits, disagreements, difficulty of termination
Corporations
- Definition: A legal entity separate from its owners, possessing legal rights and responsibilities like an individual.
- Ownership: Usually owned by multiple individuals/organizations holding shares (stock).
- Stockholders: Corporate owners, can buy, sell, give, receive as gifts, or inherit shares.
- Stock types: Common stock (voting rights), preferred stock (no voting rights, dividends paid first).
- Dividends: Cash profits distributed to stockholders.
- Board of Directors: Governing body elected by stockholders who appoint corporate officers.
- Advantages: Limited liability, ability to raise capital, perpetual life, ease of ownership change, attracting talented employees, separation of ownership and management.
- Disadvantages: Initial cost, extensive paperwork, double taxation, size, difficulty of termination, possible conflicts between stockholders and board of directors.
Private Limited Company & Public Limited Company
- Open (public limited): Corporation whose stock is bought/sold on exchanges and individuals can purchase shares.
- Closed (private limited): Corporation owned by a relatively small number of people.
- Key differences: Maximum number of members, whether public can subscribe to shares, commencement of business after incorporation.
The Corporate Hierarchy
- Owners influence management by electing the board of directors.
- The board hires officers, sets their pay, and establishes company objectives.
- Officers hire managers and staff, usually with human resources department support.
Types of Business Activities
- Manufacturing: Raw materials are converted to finished goods based on customer demand (e.g., water bottling).
- Trading: Finished goods from a manufacturing unit are sold to the consumer (e.g., pharmacy).
- Service: Expertise is provided instead of a physical product (e.g., personal services, medical services).
Mergers & Acquisitions
- Merger: Two or more companies combine to create a new entity, usually a separate corporation.
- Acquisition: One company buys another (usually through stock purchase).
Types of Mergers
- Vertical: Combining companies involved in related business stages (e.g., a raw material supplier merging with a manufacturer).
- Horizontal: Joining firms in the same industry (e.g., two soft drink companies combining).
- Conglomerate: Bringing together companies in unrelated industries.
Franchises
- Franchise agreement: An arrangement where an individual buys the rights to use a business’ name, product concept, and sell products in a given territory.
- Franchisor: The company that develops the product/idea.
- Franchise: The right to use the franchisor's name and sell products in a specific area.
- Franchisee: The individual who buys a franchise.
- Advantages: Personal ownership, management and marketing assistance, nationally recognized name, financial advice, lower failure rate.
- Disadvantages: Large start-up costs, shared profits/royalty, management regulations, coattail effects, restrictions on selling, fraudulent franchisors.
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Description
This quiz covers the fundamental concepts of entrepreneurship, including different forms of business ownership like sole proprietorships, partnerships, and corporations. It also addresses current issues such as unemployment statistics and trends affecting new businesses. Test your understanding of these essential topics in entrepreneurship.
