Ho Chi Minh City University Of Foreign Languages And Information Technology

HOW TO FORM A
BUSINESSS
Lecturer : Ngo Van Binh
Subject: Introduce To Business
 The keypoints of our
BASIC FORMS OF BUSINESS
presentation 1
OWNERSHIP

2 PARTNERSHIPS

CORPORATIONS & CORPORATE

3 EXPANSION:
Merges and Acquisition

Our aim 4 FRANCHISE & COOPERATIVE

Have a clear understanding of the

business model and how to operate it
effectively
 How you form your business can make a
tremendous difference in your long-term success

Basic forms of business

ownerships
In 2020, up to 134,941 new businesses were established
in Viet Nam and this number is constantly increasing.
That's why knowing more about these types of business
will give you more advantages
Types of ownerships

72% 8% 20%
SOLE PROPRIETORSHIP PARTNERSHIP CORPORATION
Sole proprietorships:
This is the easiest kind of business to explore in your quest for an interesting career

Ease of start/end Being your own boss

Advantages of sole
proprietorships
Leaving a legacy and Pride of ownership
No special taxes Retain profit
Sole proprietorships:
This is the easiest kind of business to explore in your quest for an interesting career

Unlimited liability
Limited financial Limited life span
resources
Disadvantages of sole
proprietorships

Management
Few fringe benefits
difficulties
Limited growth
Time commitment
PARTNERSHIPS
Partnerships are created for
efficiency in business
Several types of
partnerships
General partnership

Limited partnership (LP)

PARTNERSHIPS
Advantages Disadvantages

• More financial • Unlimited liability

resources • Division of profit

• Share management • Disagreements among

• Longer survival partners

• No special taxes • Difficulty of termination

 NEW FORM OF
PARTNERSHIPS

It was created to limit the

disadvantage of unlimited liability
PARTNERSHIPS

It acts like a corporation and is

traded on the stock exchanges
like a corporation, but is taxed
like a partnership and thus
avoids the corporate income
Master limited tax.

partnership (MLP)
PARTNERSHIPS

LLP limits partners’ risk of losing

their personal assets to the
outcomes of only their own
acts , omissions and those of
Limited liability people under their supervision.

partnership (LLP)
Corporations Corporation: a large company or

Corporate group of companies what is

controlled together as a single

expansion
organization
OUR KEYS

Conventional (C) corporation

Stockholders

Individuals can icorporate

S corporations

Limited liability companies

UNDERSTANDING BUSINESS Advantages
• Limited liability
• More money for investment
• Size
• Perpetual life
• Ease of ownership change
• Ease of drawing talented employees
• Separation of ownership form
Advantages & management
Disadvantages of
corporations
Actively encouraging referrals can generate
more leads.
Disadvantages
• Initial cost
• Extensive paperwork
• Double taxation
• Two tax returns
• Size
• Difficulty of termination
• Conflict with Stockholder and Broad
Types of corporations
S corporations

Conventional (C) corporation

Limited liability companies

In order to be an S • Have no more than 100
shareholders
• Have shareholders that are

corporation, a individual or estates and

who are citizens or
permanent resident of the

company must U.S

• One class of stock
• <25% income from passive
sources
Limited Liability Companies (LLC)
LLC is a compny similar to an S corporation but without the special eligibility requirement

Advantages
• Limited liability
• Choice of taxation
• Flexible ownership rules
• Flexible distribution of profits & losses
• Operating flexxibility
Advantages and
Disadvantges of LLC
Disadvntages
• NO stock
• Limited life span
• Fewer incentives
• Taxes
• Paperwork
 Limited Liability Company

67 Billion
Revenue 2020

5 Billion
3.2 Billion

Company
LG ELCTRONICS VIETNAM NGHI SON PETROCHEMICAL
SAMSUNG
HAI PHONG CO.LTD FILTER
VIETNAM
Joint Stock Company
DOJI GOLD & MOBILE WORLD
GEMSTONE INVESTMENT

4,3 Billion 3,8 Billion

up 13% from 2019 down 4% compared to 2019
REVENUE 2020 REVENUE 2020
In English, Merger and Acquisition, abbreviated: M&A

MERGER AND
ACQUISITION

M&A is a general term used to describe the

consolidation of companies or assets through
various types of financial, transactions, offer
to buy, business acquisition.
Types of M&A
Horizontal Merger: the joining of two companies
trading and competing on the same product line
(in the same market).

Vertical Merger: the joining of two companies

involved in diffenrent urelated industry.

Conglomerate Merger: the joining of firms in

completely unrelated industry.
 • Companies Overpay to Acquire Another Firm
• Acquiring Company Overestimates Cost Savings and
Why merger don't Synergies

work? • Managers Disagree About

• Integrating Operations
• Obsession with Cost Cutting Hurts Business,
Costing
Top Employees & Customers
Combined M&A
Advantages Disadvantages

• Quick access to the market, • The interest of minority

advantage technology, shareholders are often affected
management experience
• Conflict between major
• Take advantage of the customer
shareholders
system
• Increase market share, business • Corporate culture is mixed
value
• Increase capital expanding , • The trend of humn resource
transformation
competitive scale
• Achieving economies of scale
• Attract good personnel
• Avoid the risk of bankruptcy
 • LBO is an attempt by employees,

Leveraged management, or a group of investors to

purchase an organization primarily
through borrowing.

Buyout (LBO) • The employees, managers, investors

become the owners of the firm.
• Individual + Loan = Purchase of Company
• Company = Collateral
UNDERSTANDING BUSINESS

FRANCHISE &
COOPERATIVE
 UNDERSTANDING BUSINESS

Franchising has penetrated

every aspect of U.S and
global business life by offer-
ing products and services
Franchise
that are reliable, convenient,
and conpertitively priced.
Franchising clearly has some
advantages.

Franchising clearly has some advantages.

FRANCHISE
Advantages
• Management and marketing assistance
• Lower failure rate
• Personal ownership
• National recognized name
• Financial advice and assistance

Advantages &
Disadvantages
Disadvantages
• Coattail effects
• Management regulation
• Share profit
• Lager start up costs
• Restriction on selling
• Fraudulent franchisor
Franchise model
•Franchise model according to business goals

•Home-Based Franchises In fact, there is no

specific regulation on
•E-Commerce in Franchising
franchise models.
•Using Technology in Franchising

•Franchising in Global Markets

•Product distribution franchise

•Franchise using business formula

•Exclusive Franchise
 Cooperation is that isolated and powerless individuals can,
by combining with one another, achieve advantages
available to the rich and the powerful so that they may
advance not only materially but also morally. In other words

Cooperatives
a cooperative is a business organization that is owned by
those who use its services, the control of which rests equally
with all the members.
 Reference list
1. Understanding Business (eleventh edition) - Nickels
Mchugh Mchugh.
2. English for Business Studies (third edition) - Ian
MacKenzie.
3. ./https://baocaocongty.com/top-10-cong-ty-lon-nhat-viet-
nam-2020/
4. . /https://www.quora.com/Why-are-so-many-new-
businesses-choosing-a-limited-liability-company-LLC-form-
of-ownership
5. Chapter 5 - Choosing a form of business powerpoint
Questions:
1/Which is not a type of partnerships?
A. General partnership
B. Limited partnership
C.Master Limited partnership
D. Advanced Partnership.
2/ What is the definition of Corporation?
A. A large company or group of companies that is controlled together as a single
organization.
B.A state-chartered legal entity with authority to act and have liability separate from its
owners- its stockholder.
C. A unique government creation that looks like a corporation but is taxed like sole
proprietorship and partnerships.
D.A person who owns shares in a company and therefore gets part of the company’s
profits and the right to vote on how the company is controlled.
3/ Which is the advantage and the disadvantage of
LLCs ?
A.Limited liability
B.Size
C.Perpetual life
D.Double taxation
4/ Which is a benefit of Home-Based Franchise?
A.Flexible works hours
B.Opportunity to expand using technology.
C.Both A&B
D.No correct answer
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