Among all the organizational forms of business, this paper separates out two most functional: sole proprietorship and corporation. Both of them can lead either to enormous profits or to great losses and represent two absolutely successful business receipts. The great advantage of a sole proprietorship is lack of corporate tax and unlimited personal profit. All the money a person earns do belong to him. That is a big plus for businessmen. On the other hand, all debts and losses a person incurs also become his or her own problem to solve. Mostly low start-up costs give an opportunity to set up an entrepreneurial activity. Thus, all the liability belongs to the owner of business that has both positive and negative sides as the development of it depends completely on the abilities and economical luckiness of the person. It may be hard to break through the average network of small businesses in order to get large profit but the owner will never pass the buck for failure to anyone else. This type of organizational form is for confident and successful leaders with economic background (Perez 1).
Corporation is another organizational form considered to be one of the most effective, though it is completely different from the sole proprietorship. The main benefit of it lies in the limited liability of shareholders, which make their life easier in times of corporation crisis. They will not be fully responsible for the company’s debts or losses. Meanwhile, the policy of double taxation for corporation makes it an unattractive entrepreneurial activity if profits are not as high as they have been expected. Corporation requires higher investments and it is not so easy to start and manage, according to all governmental restrictions. However, it is not so dependent on personal abilities or personal crisis as the ownership can be reassigned and business will still exist even in hard times for some of shareholders. Thus, corporation is perfect for team players who are willing to deal with huge projects and are not afraid of cooperation. Implication of right choice of the organizational form will become apparent in profits and long-lasting life of business.
The following description will emphasize the cases of well-known corporations and their strategies of success. Consideration of positive examples is an important motivation and assistance in understanding an appropriate business policy.
State Farm Company is one of the largest companies in the Fortune 500 list. It successfully operates since 1922, when former insurance agent George J. Mecherle created a firm, which focused on auto insurance mainly of farmers. Nowadays State Farm includes various companies, which operate in variable areas, such as life, health, and property insurance; finance, banking, community, education, and social programs. The headquarters of State Farm Company is located in Bloomington, Illinois. Nevertheless, since 1922 it has grown significantly and now it has branch offices in New York, Wisconsin, New Jersey, Texas, Florida, and other states.
As the company tries to keep pace with new technologies and demands, the incomes of State Farm constantly increase. The company involves celebrities to attract customers, pays great attention to marketing, etc. Such step as optimization of the company’s logo in 2011 reflects positive influence of marketing decisions. In the light of developing mobile technologies, State Farm optimized its services for mobile users. Thus, the company involves diverse methods and business solutions to obtain more potential, and as the field of insurance is quite competitive, results reflect success of the company. State Farm also focuses on small businesses, which are constantly increasing both in the USA and the world, so, there is a space for further expansion. In future the company may start collaboration with the neighboring states, such as Canada or Mexico. If looking into the initial brand’s slogan, “like a good neighbor, State Farm is always there’, it may be accordingly implemented in the neighborhood countries. Thus the company will expand its markets and may grow to become the world’s largest insurance company.
The company’s initiative of giving loans to policyholders can be also considered as very potential step that helps to combine insurance and financial businesses. It will assist in future development as well as increase successful company’s policy in trade providing services and customer relationships.
It is important to note that sometimes despite the quality business policy a corporation may encounter non-itself related issues, which influence business greatly. Crisis started in 2008 but FED has done nothing to prevent it. Instead, it approved the merging of Bear Stern by Morgan Chase and guaranteed 30 millions of dollars for emergency needs. Frederic Mishkin, member of the Board of Governors of the Federal Reserve System, left his chair in August, 31st, 2008, just right after the crisis appeared leaving the country to cope with problems on its own. These are the action of FED for averting and overcoming the crisis. For instance, such big companies as General Electric always have spare capital for the case of emergency. However, the crisis of 2008 has obviously influenced its activity and profits. In order to save the company’s incomes and develop the company, the CEO had to work out new strategies and plans. It seems that a key factor for successful overcoming of crisis for General Electric was involvement in absolutely different industry. Despite cutting its own funds, the company continued concentrating efforts in a variety of new segments, such as aviation, healthcare, home and business solutions (Ferreira 3). It also resorted to heavy industry, thus taking almost all the important areas of market under control.
One of the solutions for reaching the margins was refusal from consumer finance and focusing on small and middle business companies. It helped to save productivity in all other segments.
Another strategic solution of General Electric that can be considered as very successful was paying more attention to creating a specific market with specified targets instead of competing the rivals. Concentration on out-of-the-box decisions and solutions and giving opportunities to creativity helped the company to increase profits to almost 6% since crisis collapsed. Besides, the corporation was always devoted to its quality principles. Cost reduction or crisis consequences should not influence the quality of services or products; otherwise, the company would lose its current and prospect clients and its reputation.
Moreover, in 2009, the company stepped into the most profitable area. “We realized in 2009 we needed to be in software, and in 2010 we decided to build it ourselves rather than buy,” recalls Mr. Immelt” (A Hard Act 2). This area does not need any resources except the human mind. Thus, investments in proper researches were made. All these strategies made General Electric overcome hard times and even increase its profits.
As a conclusion, it should be said that business law is a very wide area. However, the main task for anyone involved in it is to pay attention to such factors as forms of business one wants to set up and operate, and to the strategies of managing business in different situations, which may occur on the way to success. Provided examples are samples of such successful strategies and may be used in one’s business law experience.