Chapter 8 - Business Organizations

1. Activator – Chapter 8Write down three occupations that you’re considering for your future. Categorize each of your choices based on who your employer might be for each job.

2. Chapter 8 - Business Organizations • Business organization (firm) –establishment formed to carry on a commercial enterprise. • 3 types - Sole proprietorship, partnership, corporation • Each has different levels of liability (responsibility) • Liability – legal obligation to pay debts incurred by the business • Each are engaged in bringing goods, services, or both to consumers in the market

3. Sole Proprietor • Sole proprietorship – a business owned and managed by a single individual • Most common type of business organization • 75% of all businesses are sole proprietorships in the U.S.

4. Partnership • Partnership – a business organization owned by two or more persons who agree on a specific division of responsibilities and profits • Account for about 5 % of all businesses • General Partnership – partners share equal liability and responsibility • Doctor’s lawyers, accountants, small family businesses • Limited Liability Partnership – all partners are limited from personal liability, in the case of another partners mistakes. • Legal buffer from personal liability • Articles of Partnership – outline the agreements between partners.

5. Corporation • Corporation – is a separate legal entity, or legal being, owned by individual stockholders, each of whom faces no liability for the firm’s debt • Stock – a certificate of ownership in a corporation • Partial owner , i.e. 1000 shares, purchase 1, 1/1000th owner of the company • Corporation has a separate legal identity, an entity separate from its owners • Account for 20% of all businesses, but 90% of all products sold

6. Figure 3.3Ownership, Control, and Organization of a Typical Corporation

7. Corporation • Closely held – privately held corporations, that do not trade stock on the public exchange • Publicly held – sells stock on the market to investors in order to grow the business

8. Other Organizations • Business Franchise – semi-independent business that pays fees and royalties to a parent company • Business is granted right to sell using the name, product and brand of the company • Zaxbys, McDonalds, Subway, etc. • Cooperative – Co-0ps, business organization owned and operated by a group of individuals for their shared benefit

9. Mergers • Merger – combine with another company to become one entity • Horizontal merger – firms in the same market with a similar good or service merge • Vertical merger –firms involved in producing different goods or services merge • Conglomerates – business mergers with more three or more businesses • Multinationals – large corporation that produces and sells its goods and services throughout the world

10. Other Organizations • Nonprofit Organizations – business that gears towards benefiting society (philanthropy) • Business Organization – promote the business interests of an area • Better Business Bureau • Labor Unions – organized group of workers whose aim is to improve working conditions, hours, wages and fringe benefits for its members.

11. Landinguin/Henning • Jasmine Gerald • NishaHankerson • Fabiana Johnson • Dekel Joseph • Taneka Murphy • Tabahri Newberry • Shaquail Bell • Rebecca Bullard • Greg Burchett • Darren Cowart • Michael Diggs • Shaquail Ellis • Matt Forrest • Minnie Gallarza • Jordan Armstrong

12. Advantages of Sole Proprietorships • Ease of Start – Up – Small amount of paperwork and legal expense • Authorization – must obtain a business license • Site Permit – operate out of the home or obtain a certificate of occupancy for a building • Name – use personal name or register business name • Relatively Few Regulations – least amount of government regulation; subject to certain health codes/zoning laws • Sole Receiver of Profit – Owner keeps all profits • Full Control – sole proprietors can do what they please with the firm • Easy to discontinue – very easy to dissolve the business

13. Disadvantages of Sole Proprietorships • Unlimited Personal Liability – legally bound to debts or lawsuits • Limited Access to Resources – pay out of pocket for operating costs • Lack of Permanence – business is based on the health/life of the s.p.

14. Advantages of Partnerships • Ease of Start – Up – easy and inexpensive to establish • Articles of Partnership – spells out each partner’s rights and responsibilities

15. 3 Business Organizations Chart Sole Proprietor Corporation Corporation Business Franchise Main Advantage Main Advantage Main Advantage Main Advantage Main Disadvantage Main Disadvantage Main Disadvantage Main Disadvantage Examples Examples Examples Examples

16. Binder Check – Due Tuesday 11-1 • Reflection Questions Day 2 • Essential Questions (2) • Daily Tens (7) • Video Questions – Browser Wars/Google • Ch. 7 +8 Study Guide • Ch. 7 +8 Crossword Puzzle • Ch. 7+8 VIS Terms • Chapter 7/8 - Notes • Test Corrections-Standards Sheet

17. Study Guide Chapter 7 + 8 • Perfect/Pure competition • Many buyers and sellers, identical products, buyers + sellers are well informed, no barrier to entry. • Barrier to entry • Monopoly • Natural • Prices are not competitive, dictated by monopolist. • Patent • Government • License • Price discrimination • Market power • Monopolistic • Many firms, product differentiation, low barrier to entry, little control over price • Running shoes, pens, cars, etc., gas station near highway, publix, designer t-shirt

18. Partnership Sole proprietorship Closely Publicly Partnership Corporation Multinational Horizontal Vertical Conglomerate Franchise Cooperative Consumer Service Producer Study Guide Chapter 7 + 8 • Oligopoly • Collusion, price fixing • Antitrust • Microsoft • Business organization • Sole proprietor • Partnership • General • Limited • Limited liability • Articles of partnership • Corporation • Sole proprietorship • Corporation • Stock/share

19. Extra Credit • List the 4 market structures in order from least competitive to most competitive. • What does it mean to have market power? • Which of the four forms of nonprice competition (physical characteristics, location, service level, image/status), would reflect the following? • A fast food restaurant near the beach • A new shape for a running shoe • Publix, “Where shopping is a pleasure” • Express brand clothing vs. Target

20. Essential Question #1 one person • How do the 3 business organizations differ? • A sole proprietorship is owned and operated by ___________________ • Partnerships are owned by _______________ • Corporations are owned by ___________________ 2 or more people Essential Question #2 shareholders • 2. What are the characteristics of each market structure? • Perfect competition, products are ___________________, _____________ firms, consumers are _____________, ________________ barriers to entry. • Monopolistic competition, products are __________________, but not _________________, __________________ firms, __________________ barriers to entry. • Oligopoly, products are ________________ or _____________, and are controlled by ___________ firms. ____________ barriers to entry • Monopoly, ___________ product, controlled by ___________ firm, ______________ barriers to entry identical many informed no similar identical many low Identical similar a few high one one complete