Chapter 8: Business & Labor Business Organization: an establishment formed to carry on commercial enterprise Sole Proprietorship: a business owned and managed by a single individual
Advantages of a Sole Proprietorship Ease of Start Up Relatively Few Regulations Sole Receiver of Profit Full Control Easy to discontinue
Disadvantages of Sole Proprietorships Unlimited Personal Liability Limited Access to Resources Lack of Permanence
Partnerships Partnership: a business owned by 2 or more persons who agree on a specific division of responsibilities and profits General Partnership: partners share equally Limited Partnership: only one partner is required to be the general partner Ex-NY Yankees, Oakland Raiders
Partnerships cont… Limited Liability Partnerships: All partners are limited partners Articles of Partnership: a partnership agreement UPA: Uniform Partnership Act-orders common ownership interests, profit and loss sharing and shared management responsibilities
Advantages Ease of start up Shared Decision Making Specialization Larger Pool of Capital Tax Breaks
Disadvantages Unlimited Liability Potential for conflict
Big Time Business
Corporation: a legal entity owned by stock holders Stock: certificate of ownership in a corporation Closely Held Corporation: issues stock only to a few people, often family members Publicly Held Corporation: sells stock on the open market
Advantages of Incorporating Limited Liability Transferred Ownership Ability to attract capital Long Life
Advantages to Stock Holders Limited Liability Profit
Mergers Horizontal Mergers: two or more firms in the same market combine; ex-Daimler and Chrysler Vertical Mergers: two or more firms involved in different stages of producing the same good or service. Ex-Carnegie Steel, drives the suppliers out of business because they produce their own
Conglomerates Business combination merging more than three businesses that make unrelated products
Multinationals Large corps that market and sell their products all around the world.
Franchises Franchises
Advantages of Franchises Management Training and Support Standardized Quality National Advertising Programs Financial Assistance Centralized Buying Power
Disadvantages of Franchises High Fees Royalties Strict operating Standards Purchasing Restrictions Limited Product Line
Cooperative Organizations Cooperative: a business organization owned and operated by a group of individuals for their shared benefit aka-co-ops
Consumer Co-Ops : retail outlets that are owned and operated by consumers Goods are sold to the members at discounted prices Goods are bought in bulk Members work to maintain their discounts
Service Co-Ops Credit Unions
Nonprofit Organizations YMCA American Red Cross Churches Hospitals Synagogues
Professional Organizations AMA-doctors AVA-vets Bar Association-lawyers Business Associations-Better Business Bureau Labor Unions: AFL-CIO, Teamsters
Assign P 188 1-7 P 193 1-6 P 200 1-8 P 204 1-8