Advantages and Disadvantages of Sole Proprietorship

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This image is an advertisement of a catering service as a business operated by a single business owner. It is an example of a sole proprietorship. Shoney as the business owner must have chosen the sole management due to the various advantages associated with such business operations.

First, a sole proprietor is entitled to sole decision making. Shoney must have wanted to have total control of the business without the influence of other people. Shoney is the sole manager. He enjoys the autonomy of decision making. Actually, too many managers may result into a delayed decision making process. Many managers may result into time consuming decision making process. Again, sole proprietorship allows the owner to have control of all the business assets. For example in this case, Shoney owns all the assets of this catering firm. All the cooking utensils, the capital, the profit, all the assets belong to him.

A sole proprietor is his own boss (Bolman & Deal, 2017). Everyone would like to be their own bosses. This feeling must have compelled Shoney to start a sole business instead of cooperation where there would be very many bosses who must work together for business to succeed. Besides, Shoney enjoys the right to decide the prices for the services that they offer. He can also decide for himself what services the business would provide based on his own evaluation and customer demands. Sole proprietorship makes easier the provision of the services (Bolman & Deal, 2017).

Lastly, sole proprietorship allows Shoney to enjoy all the profits made by the business. This principle is likeable by everyone. When a business progresses and makes huge profit, for a sole proprietor, it is all his to enjoy. All these factors most probably are the considerate points that led Shoney into choosing this kind of a business organization.

b) General Partnership

Fig.2: A picture of a law poster

A general partnership is formed by two or more partners. They are all liable and enjoy equal rights. They share both the profit and the losses equally. In forming a general partnership, the persons only consider the value added to the business by the other partner (Bolman & Deal, 2017). This is so because; the business can as well operate as a sole proprietorship.

First, general partnership allows each partner to incorporate the assistance of the other. For example, in order to expand a business, one may consider bringing in another partner who shall add more capital into the business for its expansion. This reason, might have led the partners in the above business to consider starting the general partnership instead of the sole proprietorship where the management funds entirely depends on the financial capabilities of the owner.

Joint management of the business must have also influenced the partners to join together. In general partnership, there is a joint responsibility of the partners (Bolman & Deal, 2017). Each is responsible for the losses and the profits made. They shoulder each other especially in terms of the losses. Again, the partners through their various ideas may help make proper decisions that facilitate the growth of the business.

Business stability is also another factor that led the partners in the above business to come up with the partnership instead of a sole proprietorship. A partnership cannot be dissolved by one partner, although resignation of one partner may lead to its dissolution. The reason being, all partners must amicably agree before the business is dissolved. These facts results into its stability and reliability.

c) Corporation

Fig. 3: An image of Rich’s corporation products

This picture is for a product produced by a corporate business. In a corporate business, the shareholders are not liable to debts incurred by the corporation (Bolman & Deal, 2017). This one factor is very influential in choosing corporation as a form of business organization. In considering this fact, the corporation members for the above product might have been influenced due to their freedom of liability. If the business incurs any debts, it is not for the shareholders to pay but the corporation itself.

Once the business has been started, the members of the corporation are able to sell shares within the corporation in order to make more profit. In fact, the corporation itself is a source of income and market for its shareholders. Again, this is an important reason as to why one would prefer corporation as a business organization at the expense of the other business forms

Corporation can also deduct the cost of income it offers to its employees and officers. In this regard, the corporation is able to cut down on the expenditure that can render it insolvent. As a corporation, the money control is very significant in essence to the much capital needed to start the corporation. Therefore, when the corporation itself offers the shareholders a chance and the privilege to retrench and control its expenditure, it is sure anyone would prefer the corporation at the expense of other businesses.

Lastly, some corporations can also elect the corporation as a corporation. This especially in the United States of America would give them the right to be exempted from the federal income tax. Again, this factor will influence many to start a corporation so that they can save the much money paid as tax and further develop the corporation.

d) Limited Liability Company

Fig.4: Domino’s premise picture

From the name, a limited liability company offers members liability to their personal assets. For example, if the company is sued for debts, the members’ personal assets are protected so that they cannot be used to compensate the debtor. The company is treated as a different entity from the individual members; therefore, their property is protected as personal property and is not liable to the company itself (Bolman & Deal, 2017). This legal right is more than adequate to influence an individual to start the business organization. The reason explains why the specimen herein is for a limited liable company and not any other business entity.

A limited liability company also offers the members’ unlimited chances for those who want to join (Bolman & Deal, 2017). The number of its members is not restricted as compared to other forms of businesses. The specimen shown above is for this company. The owners perhaps decided to explore this legal privilege offered by the company so as to start it instead of others who require restricted number of members for its operation.

The company also creates the freedom of management to its owners. In a limited liability company, the owners are not required to form a board of directors to manage it. Considering this, the members especially the chief executive officer has the total power to manage the company within his jurisdiction without the influence of the board of directors.

Lastly, Limited Liability Company gives the owners the freedom of flexible allocations. In this company, the owners agree on how to share the profits and the losses which has not to depend on the owners themselves. They give percentages for sharing which is proportional to their shares.

Importance of Knowledge of the Business Organizations

Starting a business is demanding because it is a way of gaining own controlled income without being in a formal employment. However, it is important to know what form of business to engage in because all the business organizations have different advantages and disadvantages that can either grow or lead to the fall of the business started.

First, this knowledge is important because it will help the individual to know the amount of capital needed to start the business. Not all the business organizations require same capital to start (Bolman & Deal, 2017). For example, it is easier to start a sole proprietorship because it requires very little capital. Besides, the management depends on one individual as compared to other forms like a partnership that requires more than one person to operate.

The knowledge also provides an individual with the regulations needed for the operation of the business. For instance, the regulations required for starting a limited liability company are totally different from those required to start a sole proprietorship (Bolman, & Deal, 2017). Again, what matters in business is the profit and the liability of the assets. If one needs a business where the personal assets are not liable, then he will need to start a business that offers such rights.

Question Two

a) Duties of Corporate Officers

Corporate officers in any business organization have the primary duty of managing the organization (Bratton & Gold, 2017). They higher and maintain labor within the organization in order to facilitate its growth and development. Labor provision is chief in any company because it is what decides the nature of services provided by that company. In IMB, the CEO has always ensured that there is constant flow of qualified human labor. Besides, new machines are purchased yearly to help improve the production rate of the company. Again, the corporate officers have the role of decision making within and outside the organization that must be in line with the company’s development goals.

b) The Obligations and Loyalty of Directors

The directors are mostly entitled to decision-making and supervision of the chief executive officer of the organization. They monitor the executive officer and acts as his/her control. They also form the board of management which is in a higher corporate ladder as compared to the chief executive officer (Bratton & Gold, 2017). As a result, the directors are charged with a responsible role of contracting and firing the chief executive officer. This role makes them very important and in an entire position to ensure that the company is led by the best person. In addition, it makes them to be responsible for the company’s growth and development.

The directors are answerable to the owners of the company (Bratton & Gold, 2017). The owner decides the people to form members of the board. For example, in a state owned company, it is the state that appoints members to be in the board of directors. Likewise, in a privately owned company, it is the private owner who mandates the people to take control of the board.

Lastly, in regard to this data, the board members in the United States are fairly compensated for the work they do. For instance, they only meet for short hours to come up with decisions which run the organization. Looking at this pay closely, we realize that their pay is much better than the other employees who do the donkey work. Although their role is very significant, their workload is less and light.

c) Leadership and Management Skills of the Current CEOs

Most chief executive officers tend to be very innovative in this competitive market (Bratton & Gold, 2017). They come up with new programs that help steer their companies forward. For a fair competition, they invent new services and products that can put forward their companies. For example, the innovation of new software applications in the software companies like Microsoft is very vital in helping the company gain monopoly in the international market.

Many executive officers also struggle to be visionary in terms of their goals and targets (Bratton & Gold, 2017). It is obvious that if you do not set achievable and visionary targets for your company, you stand out to be displaced by other companies which are visionary and result oriented. Such results are only possible to achieve with clear plans that are set within a period of time. This kind of competition has compelled most chief executive officers to develop strategic plans that are supposed to steer the company higher with a span of time.

These skills showcased by most managers explain the assertion of the Stanford University 2017 CEO Talent Survey. Indeed it is true that for one to succeed in the managerial position, one’s personality matters a lot (Bratton & Gold, 2017). A competitive leader is able to adapt to the new system of management and market demands. In the current market, technology innovation has become the greatest competition ever. A good chief executive officer should be able to adapt to this change in order to fit into the new market.

d) Right v. Right

This company is just trying to adapt to the principle of right v. right. In this principle, every decision seems right except, the impact is totally different (Schwartz, 2017). The decision maker has to ensure that the decision chosen over the other is the best and the most appropriate. For example, Yuichi narrates to us how he impersonated an infant to satisfy the demands of a dying man who really wanted to see his grandchild. In this case, it was right to give him the child although it was wrong to deceive him with the wrong child.

e) Ethical or Unethical Choices

Based on the ethical theories, one is required to maintain good ethics at work (Johnson, 2017). A case study of a nurse persuaded by her boss to engage in sex with psychic patients, however, remains a question of ethics and making right choices. In business, many bosses tend to make only the right decisions for their clients. Anyone who becomes a whistle blower is deemed as a threat to the organization and is punished severely. Still, it is always right to be ethical in all the operations of a business because it is the founding morality in every successful organization.

f) Company Behavior

The act of creating a robot police was entirely ethical. According to corporate social responsibility, any invention that is more helpful than harmful to the people is completely ethical and acceptable (Schwartz, 2017). The directors here were then trying to come up with robot police in order to protect their officers plus the people from more harmful situations. This is purely right because it is aimed at protecting lives.

Question Three

a) Globalization in Relation to Facebook

Globalization is a state where business organizations gain a worldwide influence and attraction (Tulung, 2017). It is indeed true that Facebook has gained a world market. Many people across the world use Facebook to communicate with their friends, to advertise their businesses and also to open forum for discussions. With the new trends of regulations by countries across the globe, I advise the company to begin regulating the content of what goes online by its customers. The problem facing Facebook is ethical. Many countries believe that the content displayed is in most cases unethical and addictive.

b) Location Advantages

Facebook should analyze countries where they have not been limited. As they struggle to meet the demands of the global market, such friendly countries should be given first priority. In most cases the company should vary the content it offers in different countries. Location advantages simple means the places where a business enjoys hospitability for development (Tulung, 2017). The company should concentrate in these countries so that in case of a civil unrest, the company is still able to maintain the market in these countries.

c) Facebook Country Recommendation

Kenya is the best country for Facebook to take time and invest in. Compared to other countries, Kenya so far has not given legal restrictions on Facebook. This means that the country is not hostile. The business can then develop successfully well because there is a potential market in future for the company. Besides, Kenya has a competitively good number of Facebook users. With more concentration of the company in this country, it is sure to gain huge market.

d) Facebook Interest

Multi-domestic refers to different strategic approaches used by companies that operate in more than one country (Tulung, 2017). It is in the best interest of the Facebook to apply this approach especially in the legal terms. The ethical issues facing the company are different from one country to another; hence, it will favor the company if it identified the issues independently per country and dealt with them differently.

e) Facebook Legal Terms

Facebook will still go to court and must ensure they understand the legal terms of every country. It is this principle that leads to the mindset of multi-domestic view. Countries are different; therefore, the company must deal with their issues independently in order to suite in the markets of such countries.

f) Contract Terms

If the provisions were not part of the contract, Facebook can only prevent the lawsuits by applying legal terms they used in another country in the same region. For example, if Uganda takes Facebook to court, they can defend themselves with the legal terms they signed with the east African bloc market. The countries operate almost on one market. This will make it possible for them to have similar ethical issues.

g) Infrastructure Purchases

The company should procure all the infrastructure required from their USA based location then distribute them to other countries. This will help them to avoid purchases which are never delivered. The most important thing here is that the company will have few people responsible in handling the purchases. Besides, it will have few suppliers who shall channel all the supplies to one terminal.

Question Four

a) Fake News

In this link, the social media users spread through the United States a claim that the Florida state had legalized the use of marijuana. This claim was not true. The purpose however, was to satirize the rampant use of the drug in this particular state. The news, Florida state legalizes marijuana ( was published on March 23, 2018.

b) Question at hand

In looking at this news item critically, one is able to judge its validity based on the sources. According to the source of this news, it would be wrong for someone to reason and conclude that the news is valid. In most cases and from experience, the source of this news has always been known for disseminating inaccurate news items.

c) The Empirical Reasoning

Empirical reasoning refers to the factual reasoning (Paxton, Ungar & Greene, 2012). In this category, we argue based on the evidence cited. For example, in this news item, empirically it is falls because there is no enough evidence provided to validate it.

d) The Conceptualized Reasoning

It refers to the arguments made in line with our perceptions (Paxton, Ungar & Greene, 2012). According to this news item, the perception of the reader will determine its validity. Some will conceive it as valid news if they ever expected the state to legalize marijuana.

e) Reasoning Fallacies

Based on this news item, it is an informal fallacy for the reader to conclude through his reasoning the validity of the information (Hitchcock, 2017). Again, it may appear a formal fallacy if the reader concludes on the validity based on the cited source. In checking the validity of the information, the facts provided should guide the reasoning of the reader and not their fallacies (Hitchcock, 2017).


Bolman, L. G., & Deal, T. E. (2017). Reframing Organizations: Artistry, Choice, And Leadership. John Wiley & Sons.

Bratton, J., & Gold, J. (2017). Human Resource Management: Theory And Practice. Palgrave.

Hitchcock, D. (2017). Do The Fallacies Have A Place In The Teaching Of Reasoning Skills Or Critical Thinking?. In On Reasoning And Argument (Pp. 401-408). Springer, Cham.

Paxton, J. M., Ungar, L., & Greene, J. D. (2012). Reflection And Reasoning In Moral Judgment. Cognitive Science, 36(1), 163-177.

Schwartz, M. S. (2017). Corporate Social Responsibility. Routledge.

Tulung, j. E. (2017). Resource availability and firm’s international strategy as key determinants of entry mode choice. Jurnal aplikasi Manajemen, 15(1), 160-168.

January 19, 2024

Business Economics

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