TYPE OF BUSINESS
The type of business is decided to be a partnership business because of following factors.
FACTORS CONSIDERED WHILE MAKING DECISION RELATED TO TYPE OF BUSINESS
Following are the factors that are considered while making a decision with respect to selection of type of business.
PRIMARY FACTORS
Following are the primary factors m which have directly affected the decision with respect to selection of type of business.
ESTABLISHMENT
Partnership is relatively easy to establish as compared to other form of businesses as it does not require huge capital for establishment. Moreover, there are less legal requirements and complexities in order to establish a partnership firm as compared to other form of businesses. This makes the partnership business more preferable than other forms of business.
OWNERSHIP
Since the partnership firm is owned by two or more people, therefore it is easy to manage the business efficiently and effectively. Moreover, it also enhances the ability of the company to raise funds robustly at the time of need because two or more people have more borrowing capacity as compared to a sole owner.
EFFECTIVE DECISION MAKING
In partnership business, strategic business decisions are made collaboratively with other partners. This enhances the overall efficiency of the decisions made by the business because more people are involved in the decision making unlike other forms of business. Hence, more effective decisions are made in the partnership business as compared to other forms of business.
TAXATION
There are more tax benefits available to the partnership firm as compared to other forms of business. The income in the partnership firm is split in order to get separate incomes for the respective partners, this further result in tax savings. Moreover, there are more tax exemptions available to a partnership firm as compared to other forms of businesses.
LIABILITY
The partnership firm has the advantage of unlimited liability, in which the partners of the firm are jointly and severally liable for the debts of the company. This makes the partners of the company more conscious while performing business operations as they would be responsible for all the liabilities of the company. This enhances their overall performance which subsequently results in an increase in overall efficiency of the company.
FLEXIBILITY OF LEGAL STRUCTURE
The legal structure in the partnership firm is more flexible than any other forms of business as it could easily be adapted with the changing legal requirements prevailing in the industry. This also saves time and cost of the firm in order to make changes in the legal structure as compared to other forms of business.
ACCOUNTABILITY
In other forms of business, the directors of the company are accountable to the shareholders for the profits and losses of the business, whereas in partnership business, the directors are themselves the care takers of the company’s assets and its profits and losses.
LEGAL REQUIREMENT AND DOCUMENTATION
In partnership business, there are few legal requirements with respect to incorporation and carrying out the operations of the business. Moreover, in partnership business, there are fewer complexities with respect to filling and maintaining documents as compared to other forms of the business.
CONFIDENTIALITY
In the partnership business, unlike other forms of business, the firm is not required to publish its accounts in to the public. This helps the company in maintaining confidentiality of the records and affairs of the business.
COMPETENT STAFF
In a partnership business, the employees of the firm usually possess highly proficient skills as well as competent as compared to employees in other forms of business. This makes the partnership firms more competent and efficient in operating its business activities as compared to other forms of business.
ATTITUDE OF TOP MANAGEMENT
The attitude of top management towards the business in a partnership firm is more significant as well as they are more committed towards the profitability and operations of the business as compared to other forms of business because of direct shareholdings and financial interest in the business.Hot Subways Case Solution
SECONDARY FACTORS
Following are the secondary factors that should be considered and evaluated thoroughly with respect to their impact on the business of the firm, in order to make effective strategic decisions. Moreover, these factors do not have a direct effect on the decision of the business with respect to selection of type of business. However, these general factors should be considered while making important business decisions......................
This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.
