Types of Businesses

Producers A person or business enterprise that generates goods or services from the development of raw material to the finished product Example  Restaurant

Extractor Extract raw materials for use in usable products Example  Farmer  Miner

Processor Takes the raw materials from the extractor/producer and gathers them to send to the manufacturer.  Example: A logger gathers the trees from the tree farmer and brings them to the saw mill.

Manufactures Takes raw materials from outside the company and turns them into a form that consumers can use Examples  Textile mill – turns cotton into yarn and then to cloth  Automobile plant – General Motors

Service Firm Logistics company that delivers the manufactured goods to the retailer/distributor.

Distributor Retailer or wholesaler who sells the finished goods to the consumer/end user.  Example: HEB or Sam’s Club

Trade Industries Service Producing Industry – Provide task or a service for money.  Healthcare facility  Insurance company Goods Producing Industry – Provide a tangible item for money. (something you can touch and take with you)  Manufacturing  Mining  Agriculture

Retailers The final business organization in an indirect channel of distribution Types  Department Store - Dillards  Discount Store - Target  Specialty Store – Foot Locker  Super Market – Brookshire Brothers  Convenience Store – Stop and Go  Specialty Superstore – Home Depot  Factory Outlet - Nike  Hypermarket - Costco  Non-store (online)Shopping - Amazon

Wholesalers Companies that assist with the distribution activities between businesses Examples:  United Distributing (food)  FTD (florist)  Sam’s Club

Service Business A business firm that does things for the consumer Examples  Airline – Southwest  Moving Company – Mayflower  Hair stylist

Private Enterprise Individual owned business with limited government direction  Businesses decide what to produce  Consumers decide what to purchase  Government regulates unfair business practices Since a pure market economy does not exist, most countries with limited government influence refer to their economy as a private enterprise. The United States is the best example of this type of economy with the limited amount of government intervention.

Forms of Business Ownership Sole Proprietorship  Individuals who want to work and make decisions independently  Little government regulation  Great risk for the owner  More than 50% fail in the first year. UNT in partnership with TEA, Copyright ©. All rights reserved 5

Forms of Business Ownership Partnership  The partnership is owned and controlled by two or more people.  Partners share an idea for a business.  Partners want to cooperate in managing and investing, and want to share the risks and rewards of the business.  Disadvantages include unlimited liability, uncertain life, and disputes among the partners. Unlimited Liability – full legal and financial responsibility for a business.

Forms of Business Ownership Corporation  Separate legal entity owned by one or more shareholders (or stockholders) and managed by a board of directors  Most complex and difficult to form  Subject to more regulations  Limited liability for investors – profits and losses are generated through the corporation’s operations.  Can live beyond the life spans of its owners because ownership can be transferred through a sales or gift of shares. Stock – shares of ownership in a corporation.

Other Forms of Business Ownership Limited Liability Partnership - the financial responsibility of business owners only for what they invested in a business. Joint Venture - a partnership that is made to share expertise on a project. The partnership ends when the project is completed. S-Corporation - limits its number of owners to 100. does not pay taxes, its owners pay taxes on their proportion of the corporation’s at their individual tax rates.

Other Forms of Business Ownership Nonprofit Corporation - a business whose main purpose is to provide a service rather than to make a profit. Franchise - a contractual agreement to use the name and sell the goods or services of an existing company. Cooperative - an organization of businesses owned and operated by the members who pool their resources and share the benefits.