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It will be difficult and unreliable to identify the most appropriate form of a business without a good awareness of the existing constrains such as the condition of capital, labour, technology and market etc.

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It will be difficult and unreliable to identify the most appropriate form of a business without a good awareness of the existing constrains such as the condition of capital, labour, technology and market etc. In the given case of Joe Bloggs' business, 'small' is far from enough to determine the business form. Therefore, during the essay, two assumptions of locating business in different area with different market conditions will be made respectively, in order to find out the optimal solution of Joe's business from the view of location. Firstly, assuming that Joe Bloggs' business is started up where the population density is comparatively lower, such as a small town or a relatively poorer place where the majority of consumers prefer cheaper GM food. The market demand of organic food is low because of its relatively higher price. Therefore, survival becomes the most pressing problem that Joe's business is facing. In this case, to be a sole trader is considered as the best way to help a small business to survive. Under such kind of market condition, business will try to be as small as it can. Set up cost will be minimized since the sales will not be big enough to spread it. The smaller turnover also turns down the requirement of cash flow and therefore make it possible for a sole trader to afford. ...read more.


That is, to assume that Joe Bloggs' business is located in a big city where the market demand of organic fruit and vegetables is high, for example, an area with large amount of ABC1 families which are proved to be the major consumers of organic food. Survival will be much easier under this assumption. Thus, the advantages that assists business growth should be considered firstly while the selecting the forms the business. The growth of Joe's business requires sufficient capital, security of personal property, high business efficiency and nice personnel structure. Being able to meet all these conditions, a private limited company is likely to provide most opportunities for the business growth. When the business is expanding, a bigger shop, more staffs and larger amount of equipment are required. In other words, it needs a lot of money. Consequently, gathering enough money will be his essential problem if Joe starts his business as a sole trader. Personal saving, reinvest from the previous profit or the loans from the bank are all restricted and therefore hard to provide enough money to support the business growth. The only possibility is that Mr. Blog is rather rich or he would like to mortgage all his private possessions to get a relatively large amount of loans from the bank. ...read more.


The most significant one is 'alienation' that means losing motivation of the work. The jobs inside a Ltd. tend to specialise as much as they can in order to achieve the efficiency. Nevertheless it makes the works repetitive and boring. On the other hand, not like sole trader or partnership business, staffs will not benefit directly from the business since they are not owners. Therefore, it is necessary for workers to lose their enthusiasm and finally lower the efficiency and quality. This is especially harmful for Joe's business based on the high quality and personal customer service. However this problem can be solved basically by introducing team-working and selling shares to the workers. In a efficient team, individuals will still be specialised but having a common goal of what exactly they are working for. Together with parts of the ownership, there will be enough motivation for everyone to work hard. To conclude, it is shown that when the organic food market of the business location is critical, being a sole trader is cheaper, more flexible and private and therefore becomes the easiest way to survive; Private limited company can provide most opportunities for business expansion, thanks to its advantages in capital, limited liability, efficiency and structure, but all of these depend on a good location with a high demand market. In other words, market condition of the business location is the determinant of the business' form. ...read more.

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