Business Enterprise and Forms of Business Ownership Notes

Define business enterprise.
Describe the various forms of business ownership.
Explain the common forms of business ownership specifically in the context of Singapore.

A business enterprise is defined as any type of operation that provides goods or services to customers with the goal of making a profit.
It involves the provision of tangible items or intangible activities to meet the needs and wants of a target market.
The primary motivations for a business enterprise, as summarized in the lecture, are to:
- Meet customer needs.
- Make profits.

Retail and Consumer Goods:
- Sheng Siong (Supermarket chain)
- Cold Storage ("The fresh food people")
- Harvey Norman
- Owndays
- Royal Sporting House
Food and Beverage (e.g., BreadTalk Group - "Eating is a Blessing"):
- BreadTalk
- Toast Box
- Food Republic
- Mini Wok Zhi Crab
Energy and Utilities:
- Union Gas Holdings Limited (Residential LPG provider)
- LUNGAS
- DYNA
Technical Specifications (Union Gas Example):
- Regulator details: 30 mbar pressure, flow rate of $1.3\,kg/h$ , and size of $22mm$ .
- Production/Testing Dates: 12.10.2014, 22.10.2014.

There are three primary forms of business ownership discussed in this lecture:

Definition: A business owned by exactly one person.
Characteristics:
- It is the easiest form of business to start.
- It is a very common form of business ownership, often seen in small retail or service operations.
Advantages:
- Quick and easy to set up.
- Registration cost is minimal.
- Easy to administer and manage – the owner is the boss and has total control.
- The owner keeps all the profits.
Disadvantages:
- Unlimited Liability: The owner is personally liable for all debts and losses of the business. Personal assets can be seized to pay business debts.
- Lack of Continuity: The business usually ends if the owner dies or chooses to close it. Efforts like the "New scheme to help retiring hawkers pass on stalls and skills" are designed to mitigate this lack of continuity in specific sectors like hawker culture.
- Limited Money: Raising capital is difficult as it relies on the owner's personal savings or small bank loans.
- Limited Management Skills: The owner must often perform all business functions (marketing, accounting, operations) alone, regardless of expertise.

Definition: A business owned by two or more people (legal limits vary, but the lecture focuses on the general structure).
Advantages:
- Quick and easy to set up compared to a company.
- Availability of higher capital and credit compared to a sole proprietorship, as multiple owners contribute.
- Shared management and combined skills (each partner brings different expertise).
- Owners keep the profits (distributed among partners).
Disadvantages:
- Unlimited Liability: Partners are generally responsible for the business's debts.
- Management Disagreements: Shared decision-making can lead to conflict between partners.
- Lack of Continuity: The business is subject to the partnership agreement and may dissolve if a partner leaves or dies.

Definition: A business entity that has a separate legal personality from its shareholders. It is considered an "artificial person" created by law.
Legal Rights of a Company:
- The right to start and operate a business.
- The right to buy or sell property in its own name.
- The right to borrow money.
- The right to sue or be sued.
- The right to enter into binding contracts.

Private Company:
- Typically has between 20 to 50 shareholders.
- Can raise funds among the shareholders or through bank loans.
Public Company:
- Has more than 50 shareholders.
- Can raise funds (capital) by offering shares and debentures to the general public.
- Examples in Singapore: DBS, SingTel, Sheng Siong.

Advantages:
- Limited Liability: Shareholders are only liable for the amount they invested in their shares; personal assets are protected.
- Increased Capital: Ability to raise significantly more money for investment through public share offerings.
- Perpetual Life: The company continues to exist regardless of the death or departure of one or more owners (perpetual succession).
- Talent Attraction: Ease of attracting talented employees through better stability and benefits.
Disadvantages:
- Higher Costs: Higher start-up and operational costs due to legal and registration requirements.
- Increased Regulation: Must comply with more government regulations and strict reporting standards.
- Potential Conflict: Possible conflicts between shareholders and the board of directors regarding the company's direction or profit distribution.

Definition: A business entity with a separate legal personality from its shareholders, considered an "artificial person" created by law.
Legal Rights: Can start and operate a business, buy or sell property, borrow money, sue or be sued, and enter into binding contracts.
Liability: Shareholders have limited liability, only responsible for their investment amount.
Continuity: Perpetual existence, continuing regardless of changes in ownership.
Structure: Can be private (20-50 shareholders) or public (more than 50 shareholders), allowing for extensive capital raising.
Regulation: Subject to strict governance and regulatory requirements.

Definition: A business owned by a single individual.
Liability: The owner has unlimited liability, personally responsible for all debts and obligations.
Continuity: Business typically ends with the owner’s death or withdrawal.
Structure: Easy to set up and manage, but limited in terms of raising capital and resources.

Definition: A business owned by two or more individuals.
Liability: Partners generally have unlimited liability, sharing responsibility for business debts.
Continuity: Subject to the partnership agreement; may dissolve upon a partner’s exit or death.
Structure: Benefits from combined skills and shared capital, but may face management disagreements.