Cheryl Cluxton has been making a wooden document organizer in her ...

[daltonest1984]

Cheryl Cluxton has been making a wooden document organizer in her home workshop for friends. Lately, other friends and acquaintances have been requesting that she make one for them. She is considering starting a business to manufacture and sell these organizers. After considering all the factors, she will begin as a sole proprietorship. Explain why she probably made this decision. Then briefly describe the circumstances under which she might want to expand to a proprietorship or corporation as the business grows.

Question 2

Describe two different types of foreign direct investment.

[wshriver]

Answer to Question 1

Answers should include the following concepts:
(1) Sole proprietorship has the advantages of ease of starting, freedom to make decisions, keeping all the profits, and pride of ownership.
(2) A partnership might become practical as the business expands and needs additional investment and/or additional skills a partner might contribute.
(3) A corporation would facilitate additional investments and have tax advantages without the disadvantages of a partnership.

Answer to Question 2

A foreign company may buy land or other resources in another country or it may buy a company in another country.