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Business Essentials in the U.S. Economy

Explore forms of business ownership and organizational structures in the U.S. economy. Learn about the changing job market, types of businesses, and business impact on communities.

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Business Essentials in the U.S. Economy

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  1. C H A P T E R 5 5.1Business in the U.S. Economy 5.2Forms of Business Ownership 5.3Organizational Structure for Businesses Business Organization

  2. 5.1 Business in the U.S. Economy Learning Outcomes 5.1.1 Describe the changing status of U.S. employment. 5.1.2 Discuss the role of business in the U.S. economy. 5.1.3 Describe three major types of businesses.

  3. KEY TERMS • contingent worker • intermediaries • service business

  4. THE CHANGING U.S.JOB MARKET • Employment data • Pressures on employees

  5. Checkpoint  List several groups that will increase as a percentage of the total U.S. workforce in the next decade. • Younger workers (16–24 years of age) • Asian-, Hispanic-, African-American groups • Women

  6. BUSINESS AND THE ECONOMY • Size of U.S. businesses • 21.7 million businesses with no employees • 5.8 million with less than 20 employees • 526,000+ with 20–99 employees • 109,000 with 100 or more employees, 981 of these with more than 10,000 employees

  7. PERCENT OF BUSINESSES BY EMPLOYMENT SIZE

  8. ROLES OF BUSINESS • Make and distribute products for consumers, government, and other businesses • Provide employment for people

  9. IMPACT ON A COMMUNITY • Money introduced to a community • Taxes for the community to support community services • More jobs • More income

  10. BUSINESS ACTIVITIES • Generating ideas • Raising capital • Employing and training personnel • Buying goods and services • Marketing goods and services • Maintaining business records

  11. Checkpoint  What are the six basic activities completed by all businesses? • Generating ideas • Raising capital • Employing and training personnel • Buying goods and services • Marketing goods and services • Maintaining business records

  12. TYPES OF BUSINESSES • Producers • Extractors • Farmers • Manufacturers • Intermediaries • Service businesses

  13. Checkpoint  How does a manufacturer differ from an extractor? • An extractor takes natural resources, such as oil or timber, for direct consumption or for use in developing other products. • A manufacturer takes resources supplied by others and converts them into useable products.

  14. 5.2 Forms of Business Ownership Learning Outcomes 5.2.1 Understand the three major forms of business ownership. 5.2.2 Determine when each form of business ownership is most appropriate. 5.2.3 Recognize other specialized business ownership forms.

  15. KEY TERMS • proprietorship • partnership • corporation • partnership agreement • articles of incorporation • franchise

  16. BUSINESS OWNERSHIP • Proprietorship • Business owned and run by just one person • Partnership • Business owned and controlled by two or more people • Corporation • Separate legal entity formed by documents filed with a state

  17. Checkpoint  What are the differences between the three main forms of business ownership? • Business forms differ in the ways in which decision making and investments are made and to whom liabilities are distributed.

  18. CHOOSING A FORM OF BUSINESS OWNERSHIP • Choosing a proprietorship • Choosing a partnership • Partnership agreement is a written agreement among all owners. • Choosing a corporation • Articles of incorporation is a written legal document that defines ownership and operating procedures and conditions for the business.

  19. Checkpoint  Which form of business ownership is the most complex and difficult to form? • The corporation is more complex to begin than other business forms. • Forming a corporation requires much more bureaucracy, is more subject to government regulations, requires the organization of a board, and necessitates the establishment of clearly defined bylaws.

  20. OTHER FORMS OF OWNERSHIP • Specialized partnerships and corporations • Limited liability partnership • Joint venture • S corporation • Limited liability company • Nonprofit corporation • Cooperatives and franchises

  21. Checkpoint  What are the other specialized forms of business ownership? • Limited liability partnership • Joint venture • S corporation • Limited liability company • Nonprofit corporation

  22. 5.3 Organizational Structure for Businesses Learning Outcomes 5.3.1 Understand important principles in designing an effective organization. 5.3.2 Compare alternative organizational structures for businesses.

  23. KEY TERMS • mission statement • goal • policies • procedures • organization chart

  24. DESIGNING AN EFFECTIVE BUSINESS ORGANIZATION • Setting direction • Mission statement • Goals • Policies and procedures • Principles of effective organization • Responsibility, authority, and accountability • Unity of command • Span of control

  25. Checkpoint  What is the difference between a mission statement and a goal? • A mission statement communicates the purpose of existence for a business and what it hopes to achieve. • A goal is a more specific statement of what a business expects to achieve and may be used to measure a business’ success.

  26. TYPES OF ORGANIZATIONAL STRUCTURES • Functional organization structure • Work is arranged within main business functions such as production, operations, marketing, and human resources. • Matrix organizational structure • Work is structured around specific projects, products, or customer groups.

  27. Business Organization Chart

  28. Checkpoint  What problems can result from the use of a functional organizational structure? • Employees in a functional organizational structure may tend to lose sight of overall corporate goals. • Workers tend to be limited to specific duties and may not see their relationship to the organization as a whole. • This can result in lack of interest and motivation over time.

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