A business is defined simply as an entity or organized system for conducting business or commercial activities. Companies may be for-profit establishments or non-profitable ones which operate with the intention of profitably satisfying a social objective or furthering a social cause. In the United States, there are currently three main types of business entities recognized by law: partnerships, corporations, and sole proprietorships. In business language, a partnership is described as a group of two or more people who share an interest or responsibility for the management and conduct of the business.
The most important distinguishing characteristic of a partnership is its mode of operation. Partners form a relationship by operating through a written agreement. Partnerships are established with the intention of profiting from the partnership and, in most instances, the profit or gain made by the partnership is distributed among all members equally. Partnerships may be classified in different ways. They can either be general partnerships or limited partnerships.
General partnerships allow the two partners to make contributions to the business without having to add anything to the cost of doing business, while limited partnerships give the partners an exclusive right to the property and profits of the partnership. Limited partnerships usually have a number of key terms that distinguish them from other types of business structures. Among these key terms are directors, shareholders, and creditors.
All business relationships result in two parties and one or both of these parties benefit from the relationship. The major benefit of a business relationship is that both partners are directly involved in the decision making process as to what the company does and how it does it. This is a major benefit because it is very difficult for a businessman to make business decisions independently because they are either directly tied to the goods and services offered or indirectly tied to certain circumstances that affect their profit potential. For instance, a manufacturer produces a product that is good and acceptable to consumers, and then sells it to retailers at a profit. The manufacturer has direct involvement with the profits, but he also has to consider the retailers’ satisfaction as well.
Another important advantage of a business relationship is that it helps a businessman meets his various human wants and needs. For instance, if a businessman wants to buy new clothes for his employees, then he cannot do so if he does not have a reliable clothing supplier or if the latter’s goods cannot satisfy his human needs. The business relationship provides a bridge between the needs of the human wants and the needs of the good and necessary goods and services that are needed to satisfy those human wants and necessities. This connection is not only beneficial to the manufacturer himself but also to the employees, customers, and purchasers of his products.
On the other hand, if an organization lacks a proper structure because there is no set or accepted set of organizational goals or objectives, it is said to be lacking a firm structure. The most common example of an absence of structure in modern organizations is the absence of division of labor, where different tasks are assigned to different members of a staff or a department, each of which performs in a very different way. Thus, the output of a particular activity may not match the output of another function. Another example is the existence of a large number of functions or personnel in an organization without any efficient system for information transfer or communication. A firm, which tries to solve such problems through effective organization, is a successful organization.