ORGANIZATIONAL FORMS

Organizational Forms

Organizational Forms

This paper highlights the different forms of organizations. This paper is divided into two parts. Part 'A' deals with the forms of organization while Part 'B' requires a memo to be written highlighting the advantages and disadvantages of different organizational forms for a firm engaged in manufacturing of wood stuff and cabinets.

Part A: Forms of Organizations

a. Sole proprietorship

The simplest method of business association is sole proprietorship , in which a single person owns a business and is liable for that business's debts, whether to ordinary creditors or to people injured by the business. A small variation on this form is the partnership, in which general partners share in the profits and losses of the enterprise as well as liability to third parties. One partner's ultimate liability may depend on the wealth of the other partner or partners (Boyce, 2006). In general, people use these simpler forms for labor-intensive industries that do not require large capital outlays.

Small business can be viewed from a number of perspectives. In some cases, small business represents a family or partnership venture and serves simply as an alternative income source for individuals or partners who undertake the business. This alternative income source can be viewed as a substitute for traditional sources of income from employment with public or private enterprises. For these types of sole proprietorships or partnerships, leadership is defined through the actions of the individual small business owner, who typically has total control over the tactical and strategic actions of the business. The vast majority of businesses in the United States, which are typically defined as sole proprietorships, are this class of business (Jensen, 2007).

b. General partnership

At first, it has to be said that partnership is one of those catchall terms that may be used to convey all kinds of different meanings. On the one hand, some people consider any kind of relationship to be a partnership, and on the other hand, some genuine partnerships may be designated by other words (Boyce, 2006). In France for instance, in addition to practitioners (in the financial sector in particular), the only academics to have used the expression PPP are economists and town planning specialists. French lawyers refer more willingly to “outsourcing administration of public services” (more restrictive than PPP), and political scientists refer to the “co-production of public policy or negotiation of contractual policies” (which has a broader meaning). However, the expression PPP is becoming more generalized as the phenomenon has grown.

c. Limited partnership

A limited liability partnership (LLP) is a general partnership that elects LLP status under state law. Most state LLP statutes limit formation of LLPs to certain professions (for example, California limits LLPs to accountants, attorneys, and architects; New York limits LLPs to the professions defined in New York' education law, including the practice of law, dentistry, medicine, accounting, and architecture, among others). The most significant benefit of LLP status in certain states (including New York) is liability protection for the partners (Jensen, ...