Chapter 1, Problem 10P

Summary Introduction

Organization:

An organization is a type of entity where in a group of people come together to achieve a common goal. A business organization exists basically in four types of forms namely sole proprietorships, partnerships, limited liability companies, and corporations.

Corporation

A corporation is a separate legal entity which is separate from its owners. It is an artificial body and continues to exist even after the death of its owners where in such case the ownership is transferred. The owners are separate from the legal body and hence they are not liable for any obligation of the corporation individually. Similarly, the corporation is also not liable for any of the personal obligations of its owners.

To Identify:

The strategies that the shareholders can adopt in order to motivate the managers to work in the interest of the owners of the company.