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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