Research Paper Essay Example | Topics and Well Written Essays - 2750 words - 1

Research Paper - Essay Example Exchange of a commodity between individuals with the aim of deriving mutual benefits or with profit motif is one of the available definitions for the term business. The definition however extends to multiple transactions and disqualifies isolated transactions, such as a single exchange in a person’s life, as business. A single exchange transaction or just a few number of exchange transactions like three times in a person’s lifetime, for instance, does not identify the individual as a businessperson and therefore fails to offer an accurate definition of business. A more accurate definition of business is therefore an activity whose primary objective is wealth creation through exchange of goods and services. This definition separates such transactions as sale of personal property as a disposal strategy because of lack of profit motive. Some examples of activities have also been identified with the definition of business. According to Maheshwari (1997), all activities in t he field of commerce and industrial based activities meets the definition of business and this includes activities in â€Å"basic industries, processing and manufacturing industries and the network of ancillary services, distribution, banking, insurance, transport,† among other sectors (Maheshwari, 1997, 1). ... Its formation is simple, requiring no formalities, and it requires small amount of capital to start because its scope can be narrow. The proprietor also enjoys all the derived profit from the business and has the sole decision making right, a property that allows for faster decisions because there is no consultation obligations. Sole proprietorships however faces a number of challenges such as difficulty to raise sufficient capital for ventures, limited sources of capital because of lack of collaterals, and lack of specialization that limits quality of goods or services from a sole proprietorship business (Kelly and McGowen, 2010; Gitman and McDaniel 2008). Lack of expertise in management and service delivery possibility of the proprietor overworking himself are other limitations of the form of business. The business’ life is also limited to the life of the owner (Schneeman, 2012; Miller, n.d.). Partnership is another form of organization for business activities and defines a group of individuals, normally between two and twenty people, with a common objective of making profit. The form of business has advantages such as a wider capital base from members’ contribution, possibility of rich skills and experience from members that can be organized into specialization, rich sources of ideas for decision-making. Members also share losses and this facilitates continuity because of reduced impacts (Pride, Hunges and Kapoor, 2010; Kimmel, Weygandt and Kieso, 2010). Disadvantages however include sharing of profits, lengthy decision-making processes that may also experience disagreements and unlimited liability of business partners (Sutherland and Canwell, 2008). Cooperatives have such advantages as low operation