Central University Of

Karnataka
Guided By : Shailaja (Mam)
Presented By :

 Abin
 Akin
 Alwin
 Anusha
 Raja sekhar
 Deva raj
 Main forms of
business ownership

 Special forms of
business ownership

 Additional forms of
business
ownership

3
 Main forms

Sole
Partnership Corporation
proprietorship

4
 • Sole proprietorship

• Partnership

• Corporation

 Definition
A business that is
owned by one
person.
 Most common in
retailing, service, and
agriculture.

5
 • Sole proprietorship

• Partnership

• Corporation

Advantages Disadvantages

• Ease of Start-up and • Unlimited Liability

Closure • Lack of Continuity
• Pride of Ownership • Lack of Money
• Retention of All Profits • Limited Management
• Flexibility of Being Skills
Your Own Boss • Difficulty in Hiring
• No Special Taxes Employees

6
 • Sole proprietorship

• Partnership

• Corporation

 Definition-
A voluntary
association of two
or more people to
act as co-owners of
business for profit

7
 • Sole proprietorship

• Partnership

• Corporation

 General Partnership
Both Partners are liable for everything the business
does
 Limited Partnership
 One or more general partners manage the
business,
limited partners invest money
o Master limited partnership
 Owned and managed like a corporation, but often
taxed like a partnership

8
 • Sole proprietorship

• Partnership

• Corporation

Advantages Disadvantages

• Ease of Start-up • Unlimited Liability

• Availability of Capital • Management
and Credit Disagreements
• Personal Interest • Lack of
• Combined Business Continuity
Skills and Knowledge • Frozen
• Retention of Profits Investment

• No Special Taxes

9
 • Partnership

• Corporation

• Special forms

Definition- An artificial person created by law,

with most of the legal rights of a real person.

1. Closed Corporation
 Stock is owned by relatively few people and is not
sold to the general public.

2. Open Corporation
 Stock can be bought and sold by any individual.

10
 • Partnership

• Corporation

• Special forms

Advantages Disadvantages

• Limited Liability • Difficulty and Expense of

• Ease of Raising Capital Formation
• Ease of Transfer of • Government Regulation
Ownership and Increased Paperwork
• Perpetual Life • Conflict within the
• Specialized Management Corporation
• Double Taxation
• Lack of Secrecy

11
Licensing And Leasing

Presented BY :
Akin Saji
Licensing
Licensing a product means you allow someone else to
use your intellectual property, logo or design in
exchange for fees. Those fees can include a lump
sum, ongoing royalties or a percentage of the
licensee’s sales. You are still associated with the
product and have some control over how it is used.
For example, you may license a T-shirt manufacturer
to use your logo and branding only for their summer
line during certain months of the year. The T-shirt
manufacturer licenses your name and logo and agrees
to your terms to help them sell their own products.
 Importants of Licensing

Protection for you

Ensuring your company is properly licensed helps to bring protection to yourself, your
employees and your customers.
Protection for your employees and customers
A licence will also ensure your employees are protected if they are injured as well as
protecting your customers. If you sell food or sell a product that touches the human body, for
example, if you own nail salon, you will be required to have a specific licence as well as be
required to pass an annual inspection. This protects both you and your customers in case any
incidents occur.
Privacy
If you obtain a licence for your business, you are ensuring that your personal information
remains private. This includes everything from your address to your finances as they will not
be associated with the business and will almost guarantee you retain a level of personal
privacy.
Trust
Customers will more readily trust a company this is licensed, even
if your specific company isn’t required to obtain one. You may not
require a licence to play music in certain areas or to sell food on
the street, but obtaining one brings security. A licence proves your
company is trustworthy and stable and that you are dedicated to
your company’s success.
Good for the economy
With so many new businesses appearing every day, ensuring your
businesses is registered and licensed helps to formalise the
economy. It ensures the businesses sector is thriving, as well as
strong and protected. Small businesses can also only gain funding
or protection by the law once they are registered and licensed
Advantages of Licensing
You don't need to find money to commercialise your product - The licensee
will be responsible for costs of manufacturing, distribution, packaging,
marketing and sales, etc.
You can get your innovation to market faster - If you issue a licence to an
established business, you will be able to leverage their experience, infrastructure
and involvement. They will typically be more able to move your product into the
marketplace more easily and quickly.
You can break into new markets - Depending on the deal and the licensee, you
may be able to access markets that are closed to imports, avoid export taxes or
mitigate risks associated with international expansion.
You will be able to generate revenue - The licensee will pay for the right to
hold the licence to your patent. This can be a one-off payment, continuous
payments known as royalties, or variable payments depending on the profits.
You keep ownership of your intellectual property - Licensing allows you to
give suppliers, competitors or complementary businesses certain rights over your
patent while receiving royalty income and still retaining ownership of your asset.
Disadvantages of Leasing
loss of control (partially or fully) over
your invention
relying on the licensee's ability to
effectively commercialise your patent
risk of poor strategy or execution
damaging the product success
poor quality management damaging your
brand or product reputation
Leasing
A lease is a contractual arrangement calling for the lessee
(user) to pay the lessor (owner) for use of an asset.
Property, buildings and vehicles are common assets that
are leased.
A lease is a contract outlining the terms under which one
party agrees to rent property owned by another party. It
guarantees the lessee, also known as the tenant, use of an
asset and guarantees the lessor, the property owner or
landlord, regular payments for a specified period in
exchange. Both the lessee and the lessor face
consequences if they fail to uphold the terms of the
contract. It is a form of incorporeal right.
Advantages of Leasing
BALANCED CASH OUTFLOW
The biggest advantage of leasing is that cash outflow or
payments related to leasing are spread out over several
years, hence saving the burden of one-time significant
cash payment. This helps a business to maintain a steady
cash-flow profile.
QUALITY ASSETS
While leasing an asset, the ownership of the asset still lies
with the lessor whereas the lessee just pays the rental
expense. Given this agreement, it becomes plausible for a
business to invest in good quality assets which might look
unaffordable or expensive otherwise.
BETTER USAGE OF CAPITAL
Given that a company chooses to lease over
investing in an asset by purchasing, it releases
capital for the business to fund its other capital
needs or to save money for a better capital
investment decision.
TAX BENEFIT
Leasing expense or lease payments are
considered as operating expenses, and hence, of
interest, are tax deductible.
 Disadvantages of Leasing

LEASE EXPENSES
Lease payments are treated as expenses rather than as equity payments towards an asset.
LIMITED FINANCIAL BENEFITS
If paying lease payments towards a land, the business cannot benefit from any appreciation in
the value of the land. The long-term lease agreement also remains a burden on the business as
the agreement is locked and the expenses for several years are fixed. In a case when the use of
asset does not serve the requirement after some years, lease payments become a burden.
REDUCED RETURN FOR EQUITY HOLDERS
Given that lease expenses reduce the net income without any appreciation in value, it means
limited returns or reduced returns for an equity shareholder. In such a case, the objective of 
wealth maximization for shareholders is not achieved.
DEBT
Although lease doesn’t appear on the balance sheet of a company, investors still consider
long-term lease as debt and adjust their valuation of a business to include leases.
CENTRAL UNIVERSITY OF
KARNATAKA

PRESENTATION
ON
What Is Merger
 Strategic tools in the hands of management to achieve
greater efficiency by exploiting synergies.
 Arrangement where by two or more
existing companies combine in to one
company.
 Shareholders of the transferor company receive
shares in the merged company in exchange for the
shares held by them in the transferor company as per
the agreed exchange ratio.
Advantages of Merger
 Does not require cash.
 Accomplished tax-free for both parties.
 Lets the target (in effect, the seller) realize the appreciation
potential of the merged entity, instead of being limited to
sales proceeds.
 Allows shareholders of smaller entities to own a smaller
piece of a larger pie, increasing their overall net worth.
 Merger of a privately held company into a publicly held
company allows the target company shareholders to
receive a public company's stock.
 Allows the acquirer to avoid many of the costly and time-
consuming aspects of asset purchases, such as the
assignment of leases and bulk-sales notifications.
 Disadvantages of Merger
 Diseconomies of scale if business become too large, which
leads to higher unit costs.
 Clashes of culture between different types of businesses
can occur, reducing the effectiveness of the integration.
 May need to make some workers redundant, especially at
management levels - this may have an effect on
motivation.
 May be a conflict of objectives between different
businesses, meaning decisions are more difficult to make
and causing disruption in the running of the business.
 Reason for Merger
Industry Consolidation
• Tactical move that enables a company to reposition
itself (with a merger partner) into a stronger
operational and competitive industry position.

Improve Competitive Position

• Reduces competition, and allows the combined firm to
use
its resources more effectively.

Defensive Move
• Attractive tactical move in any economic environment -
particularly in a cyclical down-turn where a merger can be
a strong defensive move.
 Types Of Mergers
Horizontal Mergers
• Occurs when two companies sell similar products to the same
markets.

Vertical Mergers
• It joins two companies that may not compete with each other,
but exist in the same supply chain.

Market Extension Mergers

• To help two organizations that may provide similar products
and services grow into markets where they are currently weak.

Product Extension Mergers

• May merge when they sell products into different niches of the same
markets.
 Types Of Mergers
Conglomerate Mergers
• Occur when two organizations sell products in completely
different markets.
• Diversity in business portfolio is one of the key benefits.
CENTRAL UNIVERSITY OF KARNATAKA

PRESENTATION
ON

DIVERSIFICATION

AMAL
What is Diversification?
 Diversification is a corporate strategy to enter
into a new market or industry which the
business is not currently in, whilst also creating
a new product for that new market.

 Most risky section of Ansoff

matrix
Why do Firms Diversify?

 When they have excess resources, capabilities, and

core competencies that have multiple uses
 Diminishing growth prospects in present industry
 Cost saving opportunities
 Capture strategic fits
 Capture financial economies
 Spread business risk
 Leverage brand name
What is Related Diversification?
 This means that there is a technological similarity
between the industries, which means that the firm is
able to leverage its technical know-how to gain some
advantage.

 The company could seek new products that have

technological or marketing synergies with existing
product lines appealing to a new group of customers.
What is Unrelated Diversification?
 Involves diversifying into businesses with
 No strategic fit
 No meaningful value
chain relationships
 No unifying strategic
theme
 Approach is to venture into “any business
in which we think we can make a profit”
 Firms pursuing unrelated diversification
are often
referred to as conglomerates
Strategic options for Diversification
 Acquisition / Merger
 Acquire or merge with company competing
in market
 Greenfield Venture / Internal Development
 Start up new business unit and use it to enter
in to market
 Strategic Alliances and Joint Ventures
 Combine resources with partners
Strategies for entering new businesses

Diversifying into
New Businesses

Internal new
Acquisition Joint venture
venture (start-up)
Strategy options for a firm that is already Diversified

Strategy Options for a

Firm That Is Already
Diversified

Divest and Restructure

Stick with Broaden the
Retrench to through
the Existing Diversification
a Narrower Divestitures
Business Base with
Diversification and
Lineup New
Base Acquisitions
Acquisitions
Forward &
Backward
Integration
FORWARD & BACKWARD
INTEGRATION
Vertical integration is when a
company controls more than one stage of the
supply chain. That is the process businesses
used to turn raw material into a product and
get it to the consumer.
There are four phases of the supply
chain: commodities, manufacturing,
distribution & retail. A company vertically
integrates when it controls two or more of
these stages.
Types of vertical integration
There are two types vertical
integration. Both combine at least two of
the four phases of the supply chain. The
difference depends on where the company
originated
Forward integration
Forward integration is when a company
at the begining of the supply chain controls
stages farther along. Examples include iron
mining companies that own “downstream”
activities such as steel factories.
Backward integration
Backward integration is when a
business at the end of the supply chain
takes on activies “upstream”. An example
is when a movie distributor, such as
netflix, also manufactures content.
CENTRAL UNIVERSITY OF
KARNATAKA

PRESENTATION ON

JOINT VENTURE & STRATEGIC

ALLIANCE
Central University Of
Karnataka
Presentation On Topic Of

Managerial Functions And

Roles