What major advantages of corporations have given rise to their dominance as a form of business organization? Include specific examples in your answer.

kandi125 | Student

Corporation - a public limited company that is an incorporated body recognized by law as a separate entity from the person(s) who own it. A corporation is also known as a joint stock company because a number of persons contribute to its stocks. 


1. A corporation, for example, American Apparel Inc., can acquire starting capital for business establishment by borrowing from banks and other financial institutions and selling shares and stocks to the public. Consequently, it can raise the large amounts of capital necessary for business investment faster than a partnership or sole proprietorship business. 

2. There is no ceiling on the number of members a corporation can have; only a minimum of 7 members is required. Thus, corporations like Imperial Oil are usually very large with many employees and are, therefore, more likely to achieve economies of scale. This is because they purchase raw materials in greater quantities (bulk) in comparison to smaller businesses, and because their production is often standardized through the use of machinery.

3. The owner(s) and the corporation are legally regarded as separate entities. Thereby, if there are legal issues a lawsuit cannot be filed against the owner(s) or any member of the board, but has to be filed against the business. A famous example of this is the case of Liebeck versus McDonald's.

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