Sole Proprietor Forming A Partnership Case Study

Managing People and Organizations
Discussion Questions – 1
1. ‘Sole proprietor forming a partnership’ Explain.

There are different types of private sector organizations and some shift from one type to another. Often, this shift happens when the organizations are faced with difficulties or in order rise from the current level. Sole proprietor forming a partnership is a typical case of such a transition which has both benefits and drawbacks.

Sole proprietor and partnership are significantly different from each other. Sole proprietor refers to a person who sets up his own business and he is the only owner of it. A person who starts his own pastry shop will fall under this category and will be personally liable for all the business debts. On
What are the risks faced by company shareholders?

All businesses face risks as a result of changing forces in the business environment. These changing business environmental factors pose a risk to company shareholders as well.

First of all, political & legal factors can pose a risk to company share holders. These include trade barriers and restrictions, government tax, political stability. For instance, if the government of England imposes a new trade barrier which prohibits importing good from China, this can affect Toy shops of the country that have been importing toys from china, since they can no longer import anything from china. This will be a risk to the shareholders of the toy shops, because the profit they receive may decrease if the company loses reasonable suppliers.

Economic factors can also act as risk factors, since they can affect the purchasing power of people. When the unemployment rate of a country rises, this means ordinary people have less money with them. Therefore, demand for luxuries such as five star hotels, expensive spas may decrease which in turn can have a negative effect on the shareholders of those organizations. (For example, star class hotels) Since, it will be difficult for them to earn a high
For example, if a certain company gains a bad brand image in a country due to its’ poor product quality or customer service at one point, this can continually affect the demand for the goods of that company. This is because a bad name about the company has spread, and a negative cultural attitude has developed towards that particular brand. This may threaten the personal reputation of the popular shareholders of the company. Also, a bad company image can cause a risk to the finances of shareholders, because the company business may get affected.

Most importantly, technological advancements are a great risk to company shareholders today. For instance, introduction of instant messaging services such as Skype, Yahoo chat that can be accessed through the internet means less demand for SMS services offered by mobile phone operators. New technological discoveries like these pose a risk to the shareholders of those companies whose business is under threat, (in this example, shareholders of telecom companies) because their money spent on certain old technologies go to waste and profit levels are