5-1 Business in the U.S. Economy 5-2 Forms of Business Ownership

1. C H A P T E R 5 Economic Decisions and Systems 5-1 Business in the U.S. Economy 5-2 Forms of Business Ownership 5-3 Organizational Structure for Businesses

2. 5-1 Business in the U.S. Economy Goal 1 Describe the changing status of U.S. employment. Goal 2 Discuss the role of business in the U.S. economy. Goal 3 Describe three major types of businesses.

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

4. THE CHANGING U.S. JOB MARKET • Employment data • 6% increase from 06-14, an 8.8 mil job loss • Baby boomers started retiring in 2011 • Mini-boom of young workers  avg. working age will decrease • More non-whites in work force (currently 36%) • 1960’s: 35% of women worked; doubled by 2000; now makeup almost half work force

5. THE CHANGING U.S. JOB MARKET (continued) • Pressures on Employees • Downsizing  people work harder; more hours • People need second jobs • More education required (not typically a 4 year degree) tech jobs • Not enough time with family • People forced to take contingent work

6. 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- groups • Women

7. BUSINESS AND THE ECONOMY • Size of U.S. businesses • Roles of business • Impact on a community

8. PERCENT OF BUSINESSES BY EMPLOYEE SIZE

9. ROLES OF BUSINESS • Make and distribute products and services • Provide employment • Owners/investors profit • Pay taxes  money comes back to us in the form of government services

10. IMPACT ON COMMUNITY • New businesses bring new money • Pay wages  employees spend $ in town • Buy goods/services  businesses spend $ • Growing business attracts people from out of town • Increased housing, food, and other needs • Pay taxes to support community services • Larger businesses attract small businesses

11. BUSINESS ACTIVITIES • Generating ideas • Starting ideas, ideas for improvement • Research & development (R&D) departments • Raising capital • Starting capital, daily operation, expansion • Comes from loans, investors, and/or profits • Employing and training personnel • Hire and train new workers • Train for added procedures & responsibilities

12. BUSINESS ACTIVITIES • Buying goods and services • Used in manufacturing, resold, operational • Services needed to operate (delivery, adv., etc.) • Marketing goods and services • “Activities directed at providing the goods…” • Not just trying to make the sale, but keeping customer happy after the sale • Maintaining business records • Track performance, tax records, order info, etc.

13. Checkpoint  • What are the 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

14. TYPES OF BUSINESSES • Producers • Extractor: takes resources from nature • Farmer: cultivates land and raises livestock • Manufacturer: convert materials into products • Intermediaries • Wholesalers, retailers, specialized • Service businesses • Activities consumed immediately • Growing fast (60% of U.S. employment)

15. 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.

16. 5-2 Forms of Business Ownership Goal 1 Understand the three major forms of business ownership. Goal 2 Determine when each form of business ownership is most appropriate. Goal 3 Recognize other specialized business ownership forms.

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

18. BUSINESS OWNERSHIP • Proprietorship – owned by one person • Partnership – two or more owners • Corporation – many owners, called stockholders

19. Forms of Ownership

20. 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.

21. CHOOSING A FORM OF BUSINESS OWNERSHIP • Choosing a proprietorship • Easiest to start and end • If fails, personal assets will be seized • Choosing a partnership • More capital to invest, more skills • Must have partnership agreement • Choosing a corporation

22. CORPORATE FACTOIDS • Popular form of business for large companies • A corp. is treated like an individual • Need to submit articles of incorporation to state to become incorporated • Corporate bylaws dictate operating procedures • Board of directors makes major policy and financial decisions; issues stock

23. 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 must have clearly defined bylaws.

24. OTHER FORMS OF OWNERSHIP • Specialized partnerships and corporations • Limited liability partnership • Joint venture • S corporation • Limited liability company • Nonprofit corporation • Cooperatives: group of people combining for efficiency • Franchises: have permission to operate a business a certain way

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

26. 5-3 Organizational Structure for Businesses Goal 1 Understand important principles in designing an effective organization. Goal 2 Compare alternative organizational structures for businesses.

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

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

29. Checkpoint  • What is the difference between a mission statement and a goal? • A mission statement states 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.

30. TYPES OF ORGANIZATIONAL STRUCTURES • Functional organization structure • More traditional; top-down oriented • Focus on main business functions • Problems? • Matrix organizational structure • Newer type of structure; more horizontal • More collaborating to get specific projects done • Needs clear direction though

31. BUSINESS ORGANIZATION CHART

32. 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.