question_answer

Despite limitations of size and resources, many people continue to prefer sole proprietorship over other forms of organization. Why?

Answer:

Ans.     Despite limitations of size and resources, many people continue to prefer sole proprietorship over other forms of organization because of following merits:

1. Easy to start and close: It can be easily started and closed without any legal formalities.

2. Quick decision making: As sole trader is not required to consult or inform anybody about his decisions.

3. Secrecy: He is not expected to share his business decisions and secrets with anybody.

4. Direct incentive: Direct relationship between efforts and reward provide incentive to the sole trader to work hard.

5. Personal touch: The sole trader can maintain personal contacts with his customers and employees.

6. Social utility: It provides employment to persons with limited money who are not interested to work under others. It prevents concentration of wealth in a few hands.