FORMS OF BUSINESS ORGANIZATIONS, 3-1, P.P THE SOLE PROPRIETORSHIP, THE PARTNERSHIP, THE CORPORATION

THE SOLE PROPRIETORSHIP EASIEST TO SET UP. EARNS 1/5 TH OF NET INCOME EARNED BY ALL BUSINESSES. ADVANTAGES-EASY TO START UP, EASY TO MANAGE, OWNER KEEPS ALL PROFITS, DOES NOT PAY SEPARATE BUSINESS TAX, PSYCHOLOGICAL SATISFACTION (IT’S YOURS!), EASE OF GETTING OUT OF BUSINESS.

SOLE PROPRIETORSHIP (CONT’D) DISADVANTAGES-UNLIMITED LIABILITY (PERSONALLY RESPONSIBLE FOR ALL DEBTS), HARD TO RAISE CAPITAL (MONEY $), SIZE AND EFFICIENCY (SMALL), USUALLY LIMITED EXPERIENCE RUNNING A BUSINESS, LIMITED LIFE (DIES WITH THE OWNER)

THE PARTNERSHIP GENERAL PARTNERSHIP-ALL PARTNERS RUN IT. LIMITED PARTNERSHIP-ONE PARTNER NOT ACTIVE IN RUNNING BUSINESS. EASY TO START (YOU GET A DOCUMENT MADE CALLED ARTICLES OF PARTNERSHIP)

PARTNERSHIP (CONT’D) ADVANTAGES-EASY TO START, EASE OF MANAGEMENT, NO SPECIAL TAXES, EASIER TO ATTRACT FINANCIAL CAPITAL (MONEY $), LARGER SIZE MAKES IT MORE EFFICIENT, EASIER TO ATTRACT TALENT. DISADVANTAGE-YOU ARE FULLY RESPONSIBLE FOR THE ACTS OF YOUR PARTNERS (LIMITED PARTNERSHIP-YOU ARE LIMITED IN LIABILITY TO THE SIZE OF YOUR INVESTMENT).

CORPORATIONS-A SEPARATE LEGAL ENTITY FORMING-GET A CHARTER (IT STATES THE NUMBER OF SHARES OF STOCK), SELL STOCK TO INVESTORS IF PROFITABLE, INVESTORS RECEIVE DIVIDENDS (PROFITS) COMMON STOCK (BASIC); PREFERRED STOCK (RECEIVE DIVIDENDS FIRST)

ADVANTAGES AND DISADVANTAGES (CORPORATION) ADVANTAGES-EASY TO RAISE FINANCIAL CAPITAL (MONEY$), CAN HIRE PROFESSIONL MANAGERS TO RUN, LIMITED LIABILITY (CORPORATION AND NOT OWNERS IS RESPONSIBLE), UNLIMITED LIFE. DISADVANTAGES-DIFFICULT AND EXPENSIVE TO GET CHARTER, SHAREHOLDERS HAVE LITTLE SAY, DOUBLE TAXATION, MORE GOV’T REGULATION

BUSINESS GROWTH AND EXPANSION, 3-2, P MERGER-A COMBINATION OF TWO OR MORE BUSINESSES TO FORM A SINGLE FIRM GROWTH THROUGH REINVESTMENT- TAKE MONEY FROM SALES AND RE- INVEST IN COMPANY.

GROWTH THROUGH MERGERS WHEN FIRMS MERGE, ONE OF THEM GIVES UP ITS LEGAL IDENTITY. REASONS FOR MERGING-NEED TO GROW, EFFICIENCY, ACQUIRE NEW PRODUCT LINES, TO CATCH UP WITH OR ELIMINATE RIVALS, TO LOSE ITS CORPORATE IDENTITY (IF ITS BAD)

TYPES OF MERGERS HORIZONTAL MERGER-BETWEEN TWO FIRMS THAT MAKE THE SAME THING. VERTICAL MERGER-THE TWO FIRMS DON’T MAKE THE SAME THING. TYPES OF BIG CORPORATIONS CONGLOMERATE-A FIRM WITH AT LEAST 4 BUSINESSES EACH MAKING UNRELATED PRODUCTS. MULTINATIONAL-A CORPORATION THAT HAS OPERATIONS IN SEVERAL COUNTRIES.

OTHER ORGANIZATIONS, 3-3, P.P NONPROFIT ORGANIZATION-OPERATES IN A BUSINESSLIKE WAY TO PROMOTE IT’S GOALS RATHER THAN TO SEEK FINANCIAL GAIN. COMMUNITIES AND CIVIC ORGANIZATIONS- SCHOOLS, CHURCHES, HOSPITALS, ETC. THEY USE ANY SURPLUS (PROFITS) TO FURTHER THE WORK OF THEIR INSTITUTION.

OTHER ORGANIZATIONS (CONT’D) COOPERATIVES: ASSOCIATION OF PEOPLE THAT PERFORM SOME ECO ACTIVITY THAT BENEFITS MEMBERS. A. CONSUMER COOPS-BUYS GOODS IN BULK. B. SERVICE COOPS-PROVIDES A SERVICE (EX:CREDIT UNION) C. PRODUCERS’ COOP-HELPS MEMBERS SELL THEIR PRODUCT. (EX:OCEAN SPRAY CRANBERRY)

OTHER ORGANIZATIONS (CONT’D) LABOR UNIONS-COLLECTIVE BARGAINING PROFESSIONAL ASSOCIATIONS- AMER. MEDICAL ASSO., AMER. BAR ASSO. (AMA, ABA) BUSINESS ASSOCIATIONS-CHAMBER OF COMMERCE, BETTER BUSINESS BUREAU

OTHER ORGANIZATIONS (CONCLUSION) GOVERNMENT- NON-PROFIT DIRECT ROLE: PROVIDES A GOOD OR SERVICE THAT COMPETES WITH PRIVATE BUSINESS (EX: TVA, FDIC, U.S. POSTAL SERVICE) INDIRECT ROLE-WHEN THE GOV’T ACTS AS AN UMPIRE FOR FAIRNESS, SUCH AS REGULATION OF PUBLIC UTILITIES. ALSO, SOCIAL SECURITY, COLLEGE AID TO STUDENTS, VET BENEFITS, AND UNEMPLOYMENT INSURANCE