Question

Read the following text carefully :

Raghav loved baking and started a small café in his neighbourhood. He personally managed the menu, finances and customer orders. Word spread quickly and soon the café became a popular weekend spot. However, as the number of customers grew, Raghav found it difficult to handle supplies, accounts and marketing alone. He was also facing shortage of capital to meet customers' demands.

He discussed the matter with his friend, Vikas, who said that in today's era of specialization, expansion and diversification, it is not possible for a person to handle everything alone.

Vikas suggested that his sister, Mira, who was a chartered accountant with six years experience in hotel management, could join him. Mira would not only contribute capital but also her valuable experience to the business and help in expanding the café's reach. Raghav agreed and they decided to run the café jointly.

On the basis of the given text, answer the following questions -
Identify the forms of business organisation highlighted above.

Hint:

To easily identify business structures in case studies:

• If a single individual owns, manages, and bears all business risks alone $\to$ Sole Proprietorship.
• If two or more people agree to pool capital, share responsibilities, and split profits/losses jointly $\to$ Partnership.

Answer 1

Step 1: Analyzing the Initial Phase of the Business:
The text states that Raghav launched a small neighborhood café where he *“personally managed the menu, finances and customer orders.”* Because he owned, financed, and managed the business entirely on his own, this represents a Sole Proprietorship.

Step 2: Analyzing the Transition Phase of the Business:
As customer demand grew, Raghav faced capital and operational shortages. To address these challenges, he brought in Mira, who *“would not only contribute capital but also her valuable experience...”* and they *“decided to run the café jointly.”* This joint ownership agreement represents a Partnership.

Step 3: Stating the Identified Forms of Business Organisation:
The two business structures highlighted in the text are:

• Sole Proprietorship (during the initial phase when Raghav ran the café alone).
• Partnership (during the subsequent phase when Raghav and Mira agreed to run the café jointly).