economics, material



Business organisation are set up to produce and distribute goods and services. They are set up to engage in economic activities.

Before we further the definition of business organisation. We need to discuss the word ‘enterprise’ is defined as the acceptance of risks of production which arise through uncertainty. Entrepreneurs are the enterprises. They decide what goods and services are to be provided. Once they have made their decisions, they will go all out to assemble the factors that enable the production of such goods and services.

Business organisations are enterprises set up by individuals or groups of individuals, government and their agencies, for the main purpose of providing goods and services.

The various types and sizes of organisation set up by individuals or group of individuals are all known as Private. They can be Sole proprietorship, Partnership, joint stock companies or cooperatives. They are established by law, otherwise, they are free to use their time and resources as they like.

The state, local municipal, or urban governments may own enterprises. The enterprise set up by these government bodies are called Public enterprises. Such organisations are different from Public Limited Liability Companies found in the Private sector. In Nigeria, the public enterprises of the various governments include the Ajaokuta Iron and Steel industry, Nigeria Television Authority (NTA), Power Holding Company of Nigeria (PHCN), Nigeria Port Authority (NPA) etc.

Features of Private enterprises

  1. It is owned and established by Private individuals
  2. Its motive is to maximise profit
  • It is managed and controlled by private individuals
  1. Individuals provide capital
  2. Risk is borne by owner
  3. They are accountable to owner
  • It is set up through incorporation or registration

Features of public enterprise

  1. It is not profit oriented
  2. Set up by act of parliament
  3. Set up to provide essential service
  4. They are owned by the government
  5. Government provides capital


Write out the difference between private and public enterprises


Generally, business organisations can be grouped into sole proprietorships, partnerships and joint stock companies.

Each type of firm has its own characteristics and advantages and disadvantages.


This is a one man business firm is formed and run by one man.

Features of sole proprietorship

  1. Unlimited liability: the owner of the business is personally liable for the debt incurred by the firm.
  2. No perpetual existence: the business can simply cease to exist in the death or retirement of the owner.
  3. Not a legal entity: under the law, the owner and the business are the same. It is not a legal personality distinct from its owner. It cannot sue or be sued on its own.
  4. Single ownership: it is owned exclusively by a single individual called the sole trader.
  5. No share of profit: in one man business, the profit or loss goes to the owner alone. Nobody will share from the profit.

Advantages of sole proprietorship

  1. It requires small capital
  2. It is easy to firm
  3. Decisions affecting the business is quickly taken
  4. The sole owner is able to enjoy the business alone.
  5. It is formulate the policy alone.

Disadvantages of sole proprietorship

  1. It is not a spate legal entity
  2. There could be poor management ability
  3. The possibilities of expansion is limited
  4. There is no economies of large scale production
  5. He bears risk and loss alone

Sources of fund

  1. Loan from government
  2. Loan from friends
  3. Personal savings
  4. Loan from bank
  5. Credit purchase

Bringing a sole proprietorship to an end

  1. Death
  2. Bankruptcy
  3. Insanity of the owner
  4. Personal decision


Section 1 of the partnership act defined partnership as the relationship which subsists two to twenty people carrying on a business in common with a view of profit making and the sharing exercise confined by only its members in partnership deed.

Features of partnership

  1. Capital is from member’s contribution: the source of capital of partnership is from individual partners.
  2. Unlimited liabilities of partners: there is usually an unlimited liabilities for partners. They are liable for total debts.
  3. Not a legal entity: a partnership business is not a separate legal entity. It is not distinct from its members.
  4. Limited membership: the total number of partners can be up to twenty except in banking and some other businesses, which may not exceed 10.
  5. Motive is profit: the motive of setting up partnership business is to maximise profit.



  1. Contractual capacity of partner: all the individuals in the partnership must have contractual society. They should have the ability to enter into contract.
  2. Preparation of agreement: a deed of partnership stating the rules and regulation of the business should be prepared.
  3. Registration of business: a partnership firm should be registered under the registration of business name laws.
  4. Short term venture: partnership is suitable for carrying out business activities that are short term in nature.

Ways of determining the existence of a partnership

  1. Intention: intention of the partnership should be expressed or implied.
  2. Sharing of profit: the partners have agreed to share the profit of the firms.
  3. Profit motive: they carry on a business with a view to making profit.
  4. Common participation: all partners have a say in the management of the firm.
  5. Holding oneself as a partner: each partner is an agent of the firm. Therefore, they must present themselves as such.


A partnership is registered under the registration of the business name and do not use ‘limited’.

The following particulars of each partner should accompany the registration of business name.

  1. Present forename and surnames
  2. Nationality
  • Sex
  1. Permanent residential address
  2. Other business occupation


This is a document drawn up by the partners which contains the rules and regulations guiding the business. It is a document which clarify the respective positions and duties of the partners in a business.

Contents of deed of partnership

  1. Name f the partners and other particulars
  2. Name of the business
  • Signatories of the account
  1. Duration of the partnership
  2. Amount of capital to be contributed and the interest to be charged on capital
  3. Rights of each partner
  • Duties of each partner
  • Amount of salary to be paid
  1. The nature of the business
  2. Method of admission of new partner
  3. Dissolution of partnership
  • Registered office
  • Partnership account procedure
  • Terms and condition


  1. For record of terms and conditions
  2. It takes care of dependents of a partner
  • There will be rules and regulation
  1. It is useful for settling dispute

Where there’s no agreement

If the partners has no specific agreement, the following provision of the section 24 of the partnership act of 1890 must be applied.

  1. There is no interest on capital
  2. No salary for partner
  3. Profit and losses are to be share equally.
  4. Five percent interest a year on loan made by partner in excess of the capital.
  5. No partner may introduce a new person without the consent of all existing partners.


  1. Limited partnership: this is registered and formed under the limited partnership act. It is a form of partnership in which there should be at least one ordinary partner who should be responsible for all the debts of it fails. Here, partners do not take equal part in management and running of the business.

Features of limited partnership

  1. Unlimited liability: they are liable to the full extent of the debts of the firm. There properties will be sold to settle the liabilities.
  2. Equal powers: all partners have equal power to take decision.
  3. They have equal responsibility in management.
  4. Agent of the firm: all partners every action binds on the other partners.


  1. General partners: he/she is entitled to take full administration and management of the firm.
  2. Active partners: this is partner who participates actively and positively in the daily activities of the firm.
  3. Limited partner: this is a partner who has contributed in the financing of the business but cannot take active part in the management of the firm.
  4. Dormant (sleeping) partner: this is a partner who contributes capital but does not participate actively in the running of the business. He is liable to the action of others.
  5. Nominal partner: this is a partner who allows his name to be used by the firm for patronage who does not contribute capital or engage in the day to day running of the business.


Utmost good faith means all parties to a contract must disclose all relevant particulars.

  1. Render true accounts
  2. Give accounts to other partners
  3. Give account for profit made in a completing business


The joint stock company is usually the most important form of business organisation in the economy. A large number of people can buy shares in the company.

A joint stock company could be a private limited company or a public limited company.


A private limited company is founded by two to fifty persons who buy shares in the company. The company enjoys limited liability but its shares are not offered for public subscription and the shares of one member cannot be disposed of without the agreement of the other member.

Advantages of private limited company

  1. Company enjoys limited liability
  2. Management is separated from shareholding
  3. It has a wider source of capital

Disadvantages of a private limited company

  1. Private limited pay corporate tax compared sole proprietorship and partnership that pays personal income tax
  2. Shares of private limited company are not offered for public subscription.

The public limited company

A public limited company has at least seven members. The members can dispose of their shares in the company whenever they wish and do so through the stock exchange. A public limited company is allowed to appeal to the public for funds through public subscription.

Advantages of a public limited company

  1. The company enjoys limited liability
  2. The management of the company is separate from shareholding
  3. The company has a wider scope of raising capital to finance its understating.
  4. A vital asset of a public company with limited liability is that shares are easily transferred to other companies or individuals.

Disadvantages of a public limited company

  1. A public limited company is required by law to furnish the registrar of companies with almost all vital information about itself.
  2. The management of a public limited company is separate from its shareholding or ownership.
  3. Because of the large number of workers, there may often be labour unrest. A powerful trade union could hold the company to ransom.


Cooperative societies is a business organisation principally aimed at organising non-profit motive to protect its members from exploitation of capitalist at an exorbitant prices.

Types of cooperative

  1. Consumer cooperative: are organised by consumers who wish to advance their interests in retail purchases.
  2. Producers’ cooperatives: are organised by producers, mainly primary producers, who want to market their products themselves.


The enterprises of cooperative societies are owned and managed by members’ societies themselves. Each member has an equal voting rights in the decision making irrespective of the number of shares held.


  1. Member contribute money periodically or take on shares.
  2. A large, viable enterprise can attract loans from commercial banks.


  1. Enable members to pool their resources towards goods at moderate prices.
  2. Members gain profits from their organisation.
  3. They obtain financial assistance through the societies.
  4. They act as social forum for members


Population refers to the number of people living in a specific geographical area at a particular time.

The question of population become highly relevant in an economic because of its tremendous relationship with the production, distribution and consumption stages of economic activities as well as its necessity in various economic planning being embarked upon by the government.

Terms in population

  1. Birth rate: the crude birth rate in a particular year in the population of a country is measured as the number of live birth in that year per one thousand people in such population.
  2. Death rate: death rate in a year in the population of a country is measured as the number of death in the year per one thousand people in a population.
  3. Infant mortality: the infant mortality refers to the death rate among the infants before they get to adulthood.
  4. Life expectancy: the life expectancy implies the average number of years for survival. This can be great in some countries and it can be small in some other countries.


The growth rate of the population of a country is the rate at which the population


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