Other Forms of Business Ownership

Apart from sole trading concerns, partnership firms, companies, and co-operatives, there are several other forms of business ownership that exist to fulfill specific economic, social, or developmental needs. These forms are less common than the main types but play an important role in modern business systems. The major alternative forms of business ownership are as follows:

1. Public Enterprises

Public enterprises are business organizations owned, managed, and controlled by the government at the central, provincial, or local level. Their primary objective is public welfare and economic development, rather than profit maximization.

Features:

• Ownership: Entire or majority ownership lies with the government.

• Control: Operated and managed by government authorities or appointed boards.

• Objective: Providing essential goods and services at reasonable prices, promoting balanced regional development, and creating employment.

• Capital Source: Funded through government budgets and public funds.

Examples:

• Nepal Electricity Authority (NEA)

• Nepal Telecom

• Nepal Oil Corporation

Advantages:

• It aids in the development of infrastructure and strategic industries.

• It ensures the equitable distribution of goods and services.

• Profits, if earned, contribute to government revenue.

Limitations:

• Often criticized for inefficiency, bureaucratic delays, and lack of innovation.

• Political interference may affect operational decisions.

2. Joint Ventures

A joint venture is a business arrangement where two or more parties (domestic or foreign) come together to undertake a specific project or business activity by sharing ownership, capital, risk, and profit.

Features:

• A company is formed for a specific project, period, or business purpose.

• There are shared capital investment and management responsibilities.

• This is common in large infrastructure, technology, or international trade projects.

Examples:

• Nepal is collaborating with foreign companies for hydropower projects.

• Ncell Axiata is a joint venture that has received foreign investment in telecommunication.

Advantages:

• Access to advanced technology, capital, and expertise.

• It assists domestic firms in entering global markets.

• Risks and costs are shared among partners.

Limitations:

• Conflicts may arise between partners.

• Differences in culture, management style, or objectives can affect performance.

3. Franchising

Franchising is a business model where the franchisor (original business owner) grants the franchisee (local businessperson) the right to use its brand name, trademark, and business system to sell goods or services.

Features:

• Franchisee operates under the franchisor’s established brand.

• The franchisee pays an initial fee and regular royalties.

• Standardized products, services, and quality are maintained.

Examples:

• International franchises like KFC, Pizza Hut, and Baskin Robbins operating in Nepal.

Advantages:

• The franchisee's business risk is reduced due to a proven business model.

• This ensures fast business expansion for the franchisor.

• Customers trust the established brand.

Limitations:

• Franchisee has limited freedom in decision-making.

• Franchise fees and royalty payments can be high.

4. Multinational Corporations (MNCs)

Multinational corporations are large business organizations that operate in more than one country, usually with their headquarters in one country and branches or subsidiaries in others.

Features:

• Global scale of operation.

• Centralized control but decentralized operations.

• Huge capital base and advanced technology.

Examples:

• Unilever, Nestlé, Toyota, Coca-Cola.

Advantages:

• Transfer of technology and managerial skills.

• Employment generation in host countries.

• Availability of quality products and services.

Limitations:

• Can dominate domestic markets and reduce the competitiveness of local firms.

• They may repatriate large profits back to their home countries.

5. Non-Governmental Organizations (NGOs) and Non-Profit Organizations

Some business-like organizations are formed for social, educational, charitable, or developmental purposes rather than profit. They are commonly registered as NGOs or non-profit institutions.

Features:

• Operate without the profit motive.

• Funded through donations, grants, or membership fees.

• Work in areas like education, health, rural development, and social welfare.

Examples:

• NGOs working in rural micro-enterprise development, skill training, or women’s empowerment.

Advantages:

• Address social issues and supplement government efforts.

• Promote inclusive and sustainable development.

Limitations:

• Dependence on external funding.

• Limited scope for large-scale commercial activities.

Summary Table

Conclusion

Other forms of business ownership complement traditional structures like sole trading, partnerships, companies, and co-operatives. They reflect the diversity and dynamism of modern economic systems, addressing specific development goals, market demands, and global business trends. Understanding these forms is essential for students to analyze how different organizational structures contribute to economic growth and social progress.