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Business Organizations

Business Organizations. Ch. 8. Overview. Section 1: Sole Proprietorships Section 2: Partnerships Section 3: Corporations, Mergers, & Multinationals Section 4: Other Organizations. Sole Proprietorships Sec. 1 . Key Vocabulary Business organization Sole proprietorships

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Business Organizations

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  1. Business Organizations Ch. 8

  2. Overview • Section 1: Sole Proprietorships • Section 2: Partnerships • Section 3: Corporations, Mergers, & Multinationals • Section 4: Other Organizations

  3. Sole ProprietorshipsSec. 1 • Key Vocabulary • Business organization • Sole proprietorships • Business license • Zoning law • Liability • Fringe benefits • Objectives: • Describe characteristics of a Sole Proprietorship • Analyze advantages & disadvantages of a Sole Proprietorship

  4. Characteristic of a Sole Proprietorship • Business owned & managed by a single individual • That’s it…just one owner, thus the word “sole” • Nifty facts to know: • Most entrepreneurs started out as sole proprietors • 75% of businesses in US • Only 6% of all US sales

  5. Sole Proprietorship • Advantages: • Easy to setup • Few regulations • Owner gets the profits after taxes • Owner has full control • Easy to discontinue • Disadvantages: • Unlimited Personal Responsibility • Limited access to resources • Lack of permanence

  6. Section 2: Partnerships • Key Vocabulary • Partnership • General partnership • Limited partnership • Limited liability partnership (LLP) • Articles of partnership • assets • Objectives: • Describe characteristics of the three main types of partnerships • Analyze advantages & disadvantages of a partnership

  7. Characteristics of a Partnership • Business organization owned by two or more persons • All agree on specific division of responsibilities and profits • Three types: • General • Limited • Limited liability • Nifty facts to know: • About 7% of all businesses in US • 5% of all sales • 10% of all income earned in US in a year

  8. Partnerships • Advantages: • Ease of setup • Few regulations • Shared decision making and specialization • Larger pool of capital • No special taxes • Disadvantages: • Unlimited liability unless you’re an LLP • Potential for Conflict b/t partners

  9. Section 3: Corporations, Mergers, & Multinationals • Key Vocabulary • Corporation • Stock • Closely held corporations • Publicly held corporations • Certificate of incorporation • Dividend • Horizontal merger • Vertical merger • Conglomerate • Multinational corporation • Objectives: • Describe characteristics of a corporation • Analyze advantages & disadvantages of incorporating • Compare & contrast types of corporate combinations • Describe role of multinational corporations

  10. Characteristics of a Corporation • Legal entity, or being, owned by individual stockholders (or shareholders) • Like an individual, a corporation • pays taxes • can engage in business • can make contracts • can sue and be sued • Types of Corporations • Closely held: examples are Mars Candy, Rolex, LEGO, IKEA • Publicly held • Nifty facts to know: • 20% of all businesses in US • 90% of all sales • 70% of all income earned

  11. Typical Corporate Structure • Owners: people who buy stock • Board of Directors: elected by stockholders • Corporate Officers: appointed by Board • Managers: hired by Corporate officers • Employees: hired by managers

  12. To incorporate or not to incorporate • Advantages of incorporating • Limited liability • Transferable ownership • Ability to attract capital • Owners don’t need special skills, just money • Long life • Disadvantages of incorporating • Expensive & difficult to start up • Double taxation • Loss of control • More regulations

  13. Mergers • Sometimes companies want to joint together or one wants to buy a competing company. Sometimes a company buys another company just to make more money. • Types of Mergers • Horizontal • Not many examples today b/c gov’ts fear monopolies • Vertical • Examples: American Apparel, ExxonMobil, Apple • Conglomerate • Examples: Boeing, Comcast, Dow Chemical, Procter & Gamble, Time Warner, Trump Organization, Viacom

  14. A word about Multinationals • Companies that operate in more than one country • Typically the largest corporations • Why would a corporation want to operate in more than one country? • Are there any disadvantages to operating in more than one country?

  15. A few famous multinationals, to name a few • Activision Blizzard • AMD • Apple • Aeropostale • Baskin-Robbins • Bic • Billabong • Black & Decker • Boeing • Bridgestone • Capital One • Caterpillar • Coca-Cola • Costco • Dell • Dunkin’ Donuts • Facebook • Ford • Google • Johnson & Johnson • Krispy Kreme • L’Oreal • McDonald’s • Mattel • Michelin • Microsoft • Motorola • Nestle • Nike • PepsiCo • Red Bull • Samsung • Sony • Southwest Airlines • Starbucks • Toyota • Wal-Mart

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