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Structures of International Business Organizations

Learn about sole proprietorships, partnerships, corporations, and other business forms. Discover low and high-risk methods for international business involvement. Understand multinational companies and their concerns.

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Structures of International Business Organizations

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  1. 5 CHAPTER Structures of International Business Organizations 5-1 Forms of Business Ownership 5-2 Operations of Global Businesses 5-3 Starting Global Business Activities

  2. GOALS Describe the advantages and disadvantages of a sole proprietorship. Describe the advantages and disadvantages of a partnership. Explain the characteristics of a corporation. Name other forms of business ownership. 5 LESSON 5-1Forms of Business Ownership

  3. 5 Percentage of U.S. Businesses by Method of Organization • Sole Proprietorships, 72% • Partnerships, 9% • Corporations, 19%

  4. Advantages Ease of starting Freedom to make business decisions Owner keeps all profits Pride of ownership Disadvantages Limited sources of funds Long hours and hard work Unlimited risks Limited life of the business 5 The Sole Proprietorship

  5. Advantages Ease of creation Additional sources of funds Availability of different talents Disadvantages Partners are liable Profits are shared among several owners Potential for disagreement among owners Business can dissolve suddenly 5 Partnership

  6. Advantages More sources of funds Fixed financial liability of owners Specialized management Unlimited life of the company Disadvantages Difficult creation process Owners have limited control Double taxation 5 Corporation

  7. 5 Percentage of Sales by Method of Businesses Organization • Sole Proprietorships, 4% • Partnerships, 13% • Corporations, 83%

  8. 5 Other Forms of Business Organization ***Municipal corporations – is an incorporated town or city organized to provide services for citizens rather than to make a profit. --Many cities have partnerships with cities in other countries, import goods and sevices, and engage in cultural exchanges.

  9. 5 Other Forms of Business Organization **Nonprofit corporations – are created to provide a service and are not concerned with making a profit. Ie. Churches, synagogues, mosques, some hospitals and private colleges, charities, American Red Cross, Salvation Army, Boy Scouts of America, Girls Scouts.

  10. 5 Other Forms of Business Organization ***Cooperatives – is a business owned by its members and operated for their benefit. --The group is organized to purchase food or other goods and services at a lower cost than usual. -- A credit union is a cooperative created to provide savings and loan services to its members.

  11. GOALS Describe the activities and characteristics of multinational companies. Identify concerns related to multinational companies. 5 LESSON 5-2Operations of Global Businesses

  12. 5 Multinational Companies • Multinational companies in operation • Characteristics of multinational companies • Worldwide market view • Standardized product • Culturally-sensitive hiring • International and local perspective • Concerns about multinational companies

  13. GOALS Identify five low-risk methods for getting involved in international business. Discuss higher-risk methods for getting involved in international business. 5 LESSON 5-3Starting Global Business Activities

  14. 5 Methods for Getting Involved in International Business

  15. 5 Low-Risk Methods for Getting Involved in International Business • Indirect exporting – occurs when a company sells its products in a foreign market without any special activity for that purpose. • Direct exporting – occurs when a company actively seeks and conducts exporting.

  16. 5 Low-Risk Methods for Getting Involved in International Business • Management contracting – is an agreement under which a company sells only its management skills. • Licensing – is selling the right to use some intangible property (production process, trademark, or brand name) for a fee or royalty.

  17. 5 Higher-Risk Methods for Getting Involved in International Business • Franchising – is the right to use a company name or business process in a specific way. • Joint ventures – an agreement between 2 or more companies from different countries to share a business project.

  18. 5 Higher-Risk Methods for Getting Involved in International Business • Turnkey project – allows a company to enter a foreign market by creating a ready-to-use business faciility. • Foreign direct investment (FDI) – occurs when a company buys land or other resources in another country.

  19. 5 Higher-Risk Methods for Getting Involved in International Business • Wholly-owned subsidiary - is an independent company owned by a parent company.

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