Business Organizations. Sole ProprietorshipPartnershipCorporation Characteristics (2-3) Advantages...

Business OrganizationsBusiness Organizations

Sole Proprietorship Partnership Corporation

Characteristics(2-3)

Advantages(2-3)

Disadvantages(2-3)

Read pgs. 60-70 and complete the following chart::

Sole Proprietorships

• Keep all profits

• Easy to manage

• “Be your own boss”

• Easy to start / end

• No special taxes

Advantages Disadvantages

• Difficult to raise capital

• Unlimited Liability

• Inefficient

• Don’t attract the best employees

Partnerships

• Limited Liability (L.P.)

• Shared losses

• Easier to manage

• No special taxes

• Easier to raise capital

• More efficient

Advantages Disadvantages

• Unlimited Liability (G.P.)

• Share profits

• Potential for owner disagreement

• More difficult to start

• Limited Life

Corporations

• Easy to raise capital• Limited Liability• Share losses• Economies of scale• Attract best workers• Unlimited Life• Easy to Transfer

Ownership• Can issue bonds

Advantages Disadvantages

• Share profits

• Difficult to start

• Little say in day-to-day operations

• Corporate income tax – Double Taxation

• Government regulation

Corporate Structure

Public Corporations

Private Corporations

Why “Go Public?”

• Corporation: Corporation: WWEWWE

• Date Went Public: Date Went Public:   Oct 19, 1999   Oct 19, 1999

• Shares Offered (mil.): Shares Offered (mil.):   10.00  10.00

• IPO Price:IPO Price: $17.00 per share $17.00 per share

• Offering Amount (mil.): Offering Amount (mil.):   $170.00  $170.00

Why “Go Public?”

Hybrid Organizations

• Limited Liability Corporation or Limited Liability Company

LLC LLP

• Limited Liability Partnership

Advantages and disadvantages vary, depending on the law of the state in which and LLP or LLC operates.

Homework

• Read pgs. 72-77

• Complete pg. 77 #2,3,5,6

Business Expansion

• Mergers

• Conglomerates

• Multinationals

Mergers

• Horizontal Merger–Firms in the same industry

• Vertical Merger–Firms in the same supply chain

• Conglomerate Merger–Firms in many different markets

under one company umbrella

Horizontal Merger

How does the government decide if it will allow a merger?

Does it reduce competition in a way that will hurt consumers?

Horizontal Merger

Horizontal Merger

Banking Mergers: 2007-2008

Vertical Merger

Who is the King of the Vertical Merger in America?

Conglomerates

• Companies that operate four or more distinct businesses, none of which constitutes more than 50% of their total revenue.

• Translation: Companies that do lots of different “stuff”

Conglomerates

Multi-Nationals

• Companies that operate in more than one nation.

Homework

• Read Pgs. 79-83

• Complete pg. 83 #4-7

Cooperatives

• Consumer Cooperatives

• Service Cooperatives

• Producer Cooperatives

Consumer Cooperatives

Well, sort of…

Service Cooperatives

Producer Cooperatives

What do you notice about these products?

Non-Profit Organizations• A Non-Profit Organization (NPO) has no

owners who receive profits if the revenues of the business exceed its costs.

• NPOs are legally constituted and their goals typically center on activities of public or private interest without any commercial or monetary profit purposes.

• NPOs are active in a wide range of areas, including the public service, charity, philanthropy, education, and religion.

Non-Profit Organizations

Does anyone make money working for a non-profit?

Labor Unions

Groups of people who work in the same industry (or for the same company) who come together to achieve some common goal(s).

Better Pay

Better Working Conditions

Job Security

Labor Unions

Are labor unions good or bad for the economy?

Professional Associations

Groups of people who work in the same profession (usually “white collar” jobs) that come together to promote the public perception of their profession

Professional AssociationsWhy might someone join a professional association?

Business Associations

Business Association – a group of unrelated businesses that comes together to help its members market their products.

The Government

• Protector

• Regulator

• Consumer

• Producer

• Provider