In-depth Notes on Organizational Structures and Business Ownership

Organizational Structures

Forms of Business Ownership

• Sole Proprietorship

  • Owned and operated by one individual
  • Common form in Canada, often with fewer than 50 employees
  • Advantages:
  • Ease of formation
  • Full control and flexibility
  • Profits taxed as personal income
  • Disadvantages:
  • Unlimited liability
  • Limited funds and skills
  • Less continuity

• Partnership

  • Association of two or more persons as co-owners for profit
  • Types: General, Limited, Limited Liability (LLP)
  • Advantages:
  • Ease of organization
  • Shared knowledge and skills
  • Combined capital
  • Disadvantages:
  • Unlimited liability (General Partners)
  • Potential for conflict among partners

• Corporation

  • Separate legal entity from its owners
  • Advantages:
  • Limited liability for shareholders
  • Perpetual existence
  • Greater access to capital
  • Disadvantages:
  • Double taxation
  • More regulations
  • Possible separation of ownership and control

• Cooperative (Co-Op)

  • Owned and operated by a group of individuals for mutual benefit
  • Emphasizes service to members over profit

Business Ownership in Canada

• Approximately 2.3 - 2.5 million business establishments in Canada.
• Employer Businesses: ~50% (around 1.15 million businesses).
• Indeterminate Businesses: Including self-employed and contract workers.
• Ontario and Quebec host about 2/3 of all businesses in Canada.
• Small and Medium-sized Enterprises (SMEs) account for 98-99% of all firms.
  • Small enterprises: <100 employees
  • Medium enterprises: 100-499 employees

Key Statistics on SMEs

1. 1.1 million SMEs in Canada.
2. 55% of SMEs have fewer than 4 employees.
3. Small businesses employed 69.7% of private sector workers in 2012.
4. SMEs contributed 54.2% of economic output (2005).
5. 90% of exporters have fewer than 100 employees, generating 25% of total Canadian exports.
6. Majority in wholesale trade & retail sectors.

Business Ownership Trends

• Merger: Combination of two companies to form a new one.
• Acquisition: Purchasing one company by another.
• Leveraged Buyout (LBO): Investors borrow money to acquire a company, using its assets as collateral.

Decision-Making Process in Management

1. Recognizing and Defining the Decision Situation

   • Define the issue at hand clearly.

2. Developing Options

   • Create multiple courses of action; investigate different possibilities.

3. Analyzing Options

   • Evaluate pros and cons of each alternative. Assess the practicality of options.

4. Selecting the Best Option

   • Often subjective; can involve multiple alternatives combined.

5. Implementing the Decision

   • Prepare for varying complexities in executing a decision.

6. Monitoring the Consequences

   • Ensure results are measured; be ready to make adjustments based on them.

Conclusion

• Understanding these concepts in business ownership and management is essential for a successful career in business and society. Focus on the advantages and disadvantages of each ownership structure, the importance of SMEs, trends in business ownership, and the decision-making process to succeed in your exams.