business ownership Flashcards
advantage of public coporation
promote public welfare–cater ppl need
easier to get fund – support by government
lower price – government may subsidize
advantage of issuing shares
no interest burden
no redemption obligation
advantage of issuing bonds
bondholders do not have tight to vote in AGM so the current owner’s control over the firm is not diluted
lower risk of being taken over
what is the disadvantages of being a private limited company instead of a listed company
cannot issue shares to general public to raise capital
difficult to transfer its ownership
advantage of providing the service by a public corporation instead of a private enterprise
easier to get information about the general public from the government for decision making
can provide stable service with a lower price
easier to get loan with the backup of the government
example of public corporation
Airport Authority Hong Kong
Hong Kong Export Credit Insurance Corporation
example of government department
Census and Statistics department
Inland revenue department
example of government department financed by trading funds
Hong Kong Post
Companies Registry
do partnership needs to have consent of other owners when transferring ownership?
yes
both partnership and private limited company need consent
why people switch from sole proprietorship to partnership
To invite more investors to get new funds for expansion of his business
To make use of different expertise from partners
pros and cons when gov buy back share in MTR
pro
Government will have a better control of the train fare and it can freely reduce the fare to relieve the burden of the passengers
If MTR is fully owned and supported by government that would make it easier for MTR to get loans to fund its operation and investment.
Cons
It may lower the efficiency of MTR management and reduce its sensitivity to market price signals
The money involved in the purchase of MTR is substantial that the government may have better alternatives uses of the money such as education and medical services.
advantages of public corporation over a government department
aims at profit maximization and is more efficient
less bureautic inefficiency which leads to a more flexible operation
higher incentive to use resources more efficiently and lower the production cost
more responsive to consumers demand
advantages of partnership over sole proprietorship
wider source of capital
better division of labour among owners
risk and cost can be shared among owners
advantages of partnership over private limited company
lower tax rate
simple legal setup procedure (save cost)
advantages of private limited company over partnership
limited liability
wider source of capital
lasting continuity
