Businesses & Labor Chapter 3. Business Organization Company started in order to carry out transactions in a market

Businesses & LaborBusinesses & Labor

Chapter 3Chapter 3

Business OrganizationBusiness Organization

Company started in order to carry out Company started in order to carry out transactions in a markettransactions in a market

Types of BusinessesTypes of Businesses

Sole ProprietorshipSole Proprietorship

PartnershipPartnership

CorporationsCorporations


Owned by one personOwned by one personResponsible for all profits & debtsResponsible for all profits & debtsMost common in United StatesMost common in United StatesCan be run from home, internet, store, etcCan be run from home, internet, store, etcEx:Ex:

Local restaurantLocal restaurantSpecialty StoreSpecialty StoreShoe repairShoe repair


AdvantagesAdvantagesEasy to startEasy to start

CapitalCapitalLicense from local governmentLicense from local government

Person runs businessPerson runs businessComplete controlComplete controlKeep all profitsKeep all profitsEasy to close if it doesn’t work outEasy to close if it doesn’t work out


DisadvantagesDisadvantagesUnlimited personal liabilityUnlimited personal liability

Responsible for all debtResponsible for all debtCan be sued and have to payCan be sued and have to payBusiness fails, owner comes up with money to pay Business fails, owner comes up with money to pay

off debtoff debt

Difficult to expandDifficult to expandSometimes hard to raise moneySometimes hard to raise money


Business owned by 2 or more peopleBusiness owned by 2 or more peopleLeast common Least common SmallSmall

2 or 3 owning a business2 or 3 owning a businessWadahlWadahl

LargeLargeMany partnersMany partnersLaw firmsLaw firms


Need legal papersNeed legal papersDefine roles of ownersDefine roles of ownersList rules for adding new partnersList rules for adding new partnersExplain how things are dividedExplain how things are divided

Share debts & profitsShare debts & profitsShare decision makingShare decision makingPartners specialize in a specific areaPartners specialize in a specific area


AdvantagesAdvantagesEasy to startEasy to startEasier to manageEasier to manage

One person not responsible for everythingOne person not responsible for everything

Larger than sole proprietorsLarger than sole proprietorsEasier to get capitalEasier to get capitalEasier to expandEasier to expand


DisadvantagesDisadvantagesAll partners responsible for businessAll partners responsible for businessOne partner makes mistake, all will sufferOne partner makes mistake, all will sufferDisagree about things may cause business to Disagree about things may cause business to

failfail

CorporationCorporation

A business that has been divided into A business that has been divided into shares of stockshares of stock

StockStockShare of ownership in a businessShare of ownership in a businessStockholder/shareholder – buy stock in a Stockholder/shareholder – buy stock in a

corporationcorporationOwn part of business & entitled to part of Own part of business & entitled to part of

year’s profityear’s profit


DividendDividendProfit given to stockholdersProfit given to stockholders

Board of directorsBoard of directorsPeople that make important decisions for the People that make important decisions for the

corporationcorporationAppoints managersAppoints managersDecides what to do with profitsDecides what to do with profits


Organization that has all rights of Organization that has all rights of individualindividual

CanCanBuy & sell propertyBuy & sell propertyEnter into legal contractsEnter into legal contracts

Ex:Ex:General MotorsGeneral MotorsExxonExxonWal-MartWal-Mart


Not easy to set upNot easy to set upNeed CharterNeed Charter

Official paper giving permission to start a Official paper giving permission to start a corporationcorporation

Government permissionGovernment permissionLists name, address & purposeLists name, address & purpose


AdvantagesAdvantagesMoney is raised through sale of stockMoney is raised through sale of stockStockholders have no risk of losing personal Stockholders have no risk of losing personal

propertypropertyEasy to raise capitalEasy to raise capitalOwners can hire professional managers to run Owners can hire professional managers to run

company – don’t need to be experts company – don’t need to be experts


DisadvantageDisadvantage

Difficult & expensive to get a charterDifficult & expensive to get a charterOwners have little say in how business is run Owners have little say in how business is run

– board of directors make decisions– board of directors make decisionsGovernment makes more rulesGovernment makes more rulesProfits can be taxed twiceProfits can be taxed twice

Labor ForceLabor Force

All people who work for moneyAll people who work for moneyBureau of Labor StatisticsBureau of Labor Statistics

Keep track of changes in job marketKeep track of changes in job marketDepartment of LaborDepartment of LaborNumber of people in labor forceNumber of people in labor forceNumber of employed & unemployedNumber of employed & unemployed


People working and looking for jobsPeople working and looking for jobsConsidered employed ifConsidered employed if

16 years or older16 years or olderWorked at least one hour for pay in past weekWorked at least one hour for pay in past weekPast week, worked 15 hours or more without Past week, worked 15 hours or more without

pay – farmpay – farmHad jobs in past week but did not work for Had jobs in past week but did not work for

good reason – sick or vacationgood reason – sick or vacation


UnemployedUnemployedTemporarily out of workTemporarily out of workLooking for jobsLooking for jobs

Not considered unemployedNot considered unemployedStay at home parentsStay at home parents full-time studentsfull-time students retired people are not retired people are not

Human CapitalHuman Capital

Education, training and experience that Education, training and experience that makes a person useful in the workplacemakes a person useful in the workplace

More human capital – more money they More human capital – more money they makemake

Levels of LaborLevels of Labor

Unskilled LaborUnskilled Labor

Semiskilled LaborSemiskilled Labor

Skilled LaborSkilled Labor

Professional LaborProfessional Labor

Unskilled LaborUnskilled Labor

Lowest amount of human capitalLowest amount of human capitalPaid hourly wagesPaid hourly wagesNo required training or specialized skillsNo required training or specialized skillsEx.Ex.

FactoryFactoryFarmFarmCleaning jobsCleaning jobs

Semiskilled LaborSemiskilled Labor

Require minimal amount of trainingRequire minimal amount of trainingPaid hourly wagePaid hourly wageOperate certain types of equipmentOperate certain types of equipmentEx.Ex.

CooksCooksLifeguardsLifeguardsConstruction workersConstruction workers

Skilled LaborSkilled Labor

Operate complex equipmentOperate complex equipmentNeed little supervisionNeed little supervisionEarn hourly wageEarn hourly wageEx.Ex.

Bank tellersBank tellersCarpentersCarpentersComputer techniciansComputer techniciansChefs Chefs

Professional LaborProfessional Labor

Highest level of educationHighest level of educationPaid salaryPaid salary

Get fixed amount no matter number of hours Get fixed amount no matter number of hours workedworked

Ex.Ex.TeachersTeachersManagersManagersDoctorsDoctorsComputer programmersComputer programmers

Organized LaborOrganized Labor

Labor unionsLabor unions

Group of workersGroup of workers

Join together to take concerns to company Join together to take concerns to company managementmanagement

Labor UnionsLabor Unions

Works for its membersWorks for its members

Fight forFight forFair wagesFair wagesFair working conditionsFair working conditionsBenefitsBenefitshourshours

Working ConditionsWorking Conditions

Late 1800’sLate 1800’sMachines were not safeMachines were not safeLong hoursLong hoursLittle payLittle pay

Businesses new people needed their jobs Businesses new people needed their jobs to surviveto survive

UnionsUnions

People wanted someone to speak for themPeople wanted someone to speak for them

Members of labor force got togetherMembers of labor force got together

Created organized groups called unionsCreated organized groups called unions

Unions were created to protect workers interestsUnions were created to protect workers interests

Union dues – money paid to support the unionUnion dues – money paid to support the union

Labor UnionsLabor Unions

Knights of LaborKnights of Labor

American Federation of LaborAmerican Federation of Labor

StrikesStrikes

Workers refuse to work until company Workers refuse to work until company agreed to talkagreed to talk

Protest in front of factoriesProtest in front of factoriesTried toTried to

Get higher payGet higher pay8 hour workday8 hour workdaySafer working conditionsSafer working conditions

Wagner ActWagner Act

Law passed by congressLaw passed by congress

19351935

Workers had the right to join unionsWorkers had the right to join unions

Workers were able to bargain with Workers were able to bargain with employersemployers

Collective BargainingCollective Bargaining

Union leader meet with employers Union leader meet with employers DiscussedDiscussed

PayPayWorking hoursWorking hoursbenefitsbenefits

Only went on strike if collective bargaining Only went on strike if collective bargaining did not succeeddid not succeed

Today Labor UnionsToday Labor Unions

American Federation of laborAmerican Federation of labor

American Postal Worker UnionAmerican Postal Worker Union

American Federation of TeachersAmerican Federation of Teachers

Words To KnowWords To Know

Fringe benefitFringe benefitBenefit given to workers other than wagesBenefit given to workers other than wagesEx: - vacation pay, sick leave, pensions, Ex: - vacation pay, sick leave, pensions,

insuranceinsuranceCollective bargainingCollective bargaining

Management & labor reach agreements Management & labor reach agreements through negotiation & compromisethrough negotiation & compromise


StrikeStrikeWork stoppage by laborWork stoppage by laborUsed to win an agreement with managementUsed to win an agreement with management

Scab LaborerScab LaborerWorker who crosses a picket line to do the job Worker who crosses a picket line to do the job

of a striking workerof a striking worker


BoycottBoycottRefusal to buy goods or services until an Refusal to buy goods or services until an

agreement is reachedagreement is reached

LockoutLockoutClosing of a business by management to Closing of a business by management to

force workers to accept terms of an force workers to accept terms of an agreementagreement

Words to KnowWords to Know

ArbitrationArbitrationOutside party decides the terms of an Outside party decides the terms of an

agreementagreementHas to be accepted by both sidesHas to be accepted by both sidesUsed only when groups can’t come to an Used only when groups can’t come to an

agreementagreement

Documents

Businesses & Labor Chapter 3. Business Organization Company started in order to carry out transactions in a market