When a business proposal is formulated, it requires different types of businesses to implement it. For this reason, this paper will discuss the business scenario provided at a higher perspective while providing a bits brief interpretation. This interpretation is geared at providing the basis for the management decision regarding the business type suitable for the implementation of the business proposal provided by the scenario. The expounds on the Sole Proprietorship, Partnership and Corporation types of business while including their advantages and disadvantages making it easier for the manager to choose the most suitable for the scenario in question. Finally, the paper concludes on the note that due to the constraints provided in the scenario, the best business type to be utilized in the partnership.
Key words: Sole Proprietorship, Partnership, Corporation
Proposal for Business
Developing a business proposal can be an easy task but implementing it is the hardest task, as maximum market research has to be conducted for the appropriate decision making process to be adopted during the implementation stage. The business scenario provided asserts that a person who is lacking in management and financial skills while at the same time has a low networth has come up with a business proposal which when implemented can improve the home appliances industry significantly (Jennings, 2006). The new technology proposed might be applicable in a wide range of products hence after gaining market recognition it can be channeled into other products. Being quite saturated in the market might attach many risks to the proposal as the sales of this product might be on the downturn soon after consumers have no need to purchase it due to saturation. Its growth rate is 2% every year, which is also risky as those industries such as the auto industry with a 4% growth rate have been on the down turn recently. Though, the technology might be new to the market and can be applicable to other products hence increasing sales and market penetration, its implementation is risky as new investment is required for each risk and opportunity.
Businesses being an organization that is legally recognized for providing services and good to governmental agencies, consumers and businesses, can be legally divided into the categories of Sole Proprietorship, Partnership and Corporation. A Sole Proprietorship is a type of business in which ownership and operation is bestowed on one single person. Its advantages are that the 100% decisions are made by the owner, can be simply set, less costly and have simple tax returns. Disadvantages include personal liability for all debts, limited personal resources for expansion, and limited skills exhibited by owner (Pride et al, 2010). A partnership is a business in which more or two people come together with the goal of making profits. Its advantages include resources and skills can be pooled and tax returns of partnership flow into personal return. Disadvantages include requires legal partnership agreement, disagreements between the partners during the decisions making process and personal liability still exists. A corporation is a business that encompasses a limited liability entity formed on the based on not-for profit or for-profit organization. Its advantages include no liability to stakeholders, unlimited resources and greater needed talent attraction. Its disadvantages are the answering of the managers to multiple owners, more financial reporting requirements, more capital for startup and maintenance and double taxation.
The best business type top be adopted by the provided scenario is the partnership. This is because, the inventor being a person with minimum financial and management skills as well as a low net worth can afford the implementation of the proposal through the contributions of partners. The partnership can include two people with the other person bringing in further financial and management skill as well as resources (Jennings, 2006). When future need for more investment arises, more partners can be included in the partnership. Under a partnership, the proposer will still have a say in the making of decisions whereas if it were a corporation he would have to relinquish this role to some extent. Sole proprietorship would not be suitable because of the need for further resources as well as management and financial skills. Being an industry that is saturated, a partnership can easily venture into the production of other products easily as compared to corporation, which will require comprehensive decisions to be made. The partnership can manage to change the production process when the downturn of annual growth rate begins because decisions can only be made easily by the partners while at the same time the availability of resources can be assured easily.
Implementing a business proposal may be difficult but when the best business type is adopted, the implementation stage can be made very easy. The business scenario provided can be implemented through the three types of business of Sole Proprietorship, Partnership and Corporation. The best business type for the implementation of the proposal made is a partnership as the inventor of the business proposal can acquire the financial and management skills as well as resources needed for the business venture (Pride et al, 2010). He will not be forced to relinquish his contribution in the decision making process as the partners have the mandate of contributing to the decision making process. Being a business venture into an already saturated market, the partners have to be careful to apply the technology to other products to ensure that the sales volumes are increased to reduce the chances of a downturn. The partnership is a good venture, as many benefits will be recognized from it. In conclusion, to cater for the risks that come with the implementation of the business proposal, the technology can only be implemented through a partnership.
Jennings, M. (2006). Business: Its Legal, Ethical, and Global Environment. Mason, OH: Thomson/West.
Pride, W. M., Hughes, R. J., & Kapoor, J. R. (2010). Business. Mason, OH: South-Western Cengage Learning.