question_answer

Mahika is a sole proprietor. She started with a beauty parlour in 2003. It was a successful venture and over the years, she opened five branches in the vicinity. She herself is taking care of all the branches. She dedicates one day in a week to all branches. However, she has branch manager for each branch but she feels that handling so many branches alone has started reducing performance of the organization. She feels that she needs to change form of organization.

(a) Identify two benefits of remaining a sole proprietor.

(b) Mention one form of business that is most suitable to her.

(c) Identify two advantages of the organization identified in part b.

Answer:

Ans.     (a) Two benefits of remaining a sole proprietor are as follows:

(i) She will enjoy all the profits alone. She need not share her profits with anybody.

(ii) She will have complete control over the organization and it will lead to easiness in decision making. There will be no conflicts as such.

(b) The form of business that can suit her requirements is partnership.

(c) Two advantages of partnership form of business are as follows:

(i) More capital can be brought into the business. Not only capital, partners bring new skills and ideas to a business

(ii) Decision making can be much easier with more brains to think about a problem.

Partners also share responsibilities and duties of the business.