Forms of Business Ownership (ANSWERED)

QUESTION

Required Resources

Read/review the following resources for this activity:

Textbook: Chapter 4
Lesson
Minimum of 1 scholarly source

Initial Post Instructions

Consider a for-profit organization in your area that you currently work for (or a company your organization competes with or one you would like to work for). What type of ownership model does the company/organization use? Why do you think this type of ownership model was chosen? What would be different in your organization if a different ownership model were used?

ANSWER

Forms of Business Ownership: Partnerships

My organization competes with United Parcel Service, Inc. (UPS), whose services are similar to FEDEX. UPS is a common carrier in air freight, while FedEx also has FedEx Ground, which shows that the two companies are the bread and butter of each other.

UPS is a smaller retail setting, which is franchisee-owned. This ownership is independent as it serves retail customers and small businesses, customers. Therefore, their business model is 55 per cent B2B and 45 per cent B2C. However, UPS manages its businesses in air, domestic, ground, commercial etc., on its own.

UPS is a partnership with 178 partners, 89 are channel partners, and 89 are technology partners. This model was chosen because of the nature of its operations. UPS needs a channel for successful operations as well as a sales force. Therefore, partnering was necessary as opposed to a sole proprietorship or other ownership models. At the same time, the business will need management of different stages of the supply chain.

If UPS chose other ownership models like a sole proprietorship, it would face problems related to unlimited liability for debts given the absence of a legal distinction between private and business assets (Callaway, Wolf, Kramer, 2002). Even in the beginning, UPS did not start as a sole proprietorship as there were capital requirements, which would be challenging. Therefore, the capacity to raise capital to keep the business going would be difficult and limited (Baik, Lee, and Lee, 2015). At the same time, the retail businesses partnering with UPS in the form of franchisees limit the dangers of going out of competition.

Given ownership by one person, the responsibility in day-to-day business decisions can be hectic as the business involves various supply chains. Therefore, the business will need decision-making from other shareholders to keep the supply chain active. Lastly, the aspect of employee retention can be challenging if one person owns UPS. You find difficulty handling employees involved in various parts of the supply chain, who may end up leaving, creating an increase in costs used in hiring and recruiting costs.

References

Baik, Y. S., Lee, S. H., & Lee, C. (2015). Entrepreneurial firms’ choice of ownership forms. International Entrepreneurship and Management Journal, 11(3), 453-471. https://doi.org/10.1007/s11365-013-0289-9

Callaway, C. A., Wolf, D., & Kramer, D. (2002). Choosing a business structure. ASHRAE Journal, 44(4), 42. https://www.proquest.com/openview/1cfd6c8b96e0e6e35f257e5c71d80f7a/1?pq-origsite=gscholar&cbl=41118