Types of Ownership

Business Ownership Types

• Sole proprietorship is a popular type of ownership among small businesses.
• One advantage of a sole proprietorship is that the owner has complete control and decision-making authority.
• One disadvantage of a sole proprietorship is that the owner has unlimited liability, meaning personal assets are at risk in case of business failure.

Partnerships

• A partnership is a type of business owned by two or more individuals.
• A partnership needs more resources and leadership talent than a sole proprietorship.
• One disadvantage of a partnership is that partners are personally responsible for the actions of other partners.
• A limited partnership has unlimited liability for the general partners and limited liability for the limited partners.
• The main advantage of a partnership is that it allows for shared decision-making and risk-bearing.

Corporations

• A corporation is a type of business that is separate from its owners, known as shareholders.
• The main disadvantage of a corporation is that it is subject to double taxation, meaning profits are taxed at the corporate level and again at the individual level.
• Corporate governance refers to the system of rules and practices by which a corporation is directed and controlled.

Mergers and Acquisitions

• A leveraged buyout (LBO) is a type of transaction where a company is acquired using a significant amount of debt.

Collaborative Business Arrangements

• A joint venture is a type of partnership that involves a long-term collaboration between companies to jointly develop, produce, or sell products.
• The main purpose of a joint venture is to achieve specific business objectives, such as developing a new product or entering a new market.
• A strategic alliance is a type of partnership that involves a collaborative agreement between companies to achieve mutual benefits.
• The main purpose of a strategic alliance is to improve competitiveness, increase profitability, or gain access to new markets or technologies.
• The main difference between a strategic alliance and a joint venture is that a joint venture involves a separate legal entity, while a strategic alliance does not.
• Establishing a joint venture as a separate legal entity allows for shared ownership and decision-making authority, as well as limited liability for the partners.