Theory question 106
Business Organisations(a) Define the term limited liability.
(b) Explain any four problems of statutory public corporations in your country.
Show the model answer
Model answer
(a) Limited liability means that the owners (shareholders) of a business are responsible for its debts only up to the amount they invested; their private property cannot be taken to pay the firm's debts.
(b) Any four: inefficiency and poor management; political interference; corruption and embezzlement; inadequate funding; over-staffing; lack of profit motive leading to losses; poor maintenance of facilities; bureaucracy and delays; appointment of unqualified staff.
Explanation
Explain each problem and its effect on the corporation's performance.