“Business Organizations and Competition”

Three Types of Business Sole Proprietorship – one person or family Partnership – two or more Corporation – owned by stockholders

Sole Proprietorship Advantages Easy to set up Pride Profit Make immediate decisions No corporate income tax

Sole Proprietorship Disadvantages Unlimited liability Startup money Lose personal assets

Partnership Advantages Easy to get start up money No corporate income tax Use each partner’s special talents

Partnership Disadvantages Unlimited liability Legal structure

Corporation Advantages Ease of raising money Ownership can be easily transferred Limited liability

Corporation Disadvantages Expensive to set up Stockholders have little say in the business Government regulations and double taxes

Charter A federal government document that gives someone permission to form a corporation.

Conglomerate When four or more corporations that sell different products merge together.

Multinational A corporation that has locations in different countries.

Stockholders Investors that purchase certificates of ownership towards a corporation.

New York Stock Exchange The oldest, largest, and most prestigious exchange in the U.S.

Dow Jones Industrial Average It measures the stock performance of the NYSE.

Reading Stock Market Reports stock symbol closing price highest and lowest for year # of stocks traded highest and lowest for day net change name of company

Types of Labor Unskilled Semi-skilled Skilled Professional

Unskilled Requires no specialized skills, education, or training Hourly wage Ex. Dishwasher, messengers, janitors, and many factory and farm workers

Semi-skilled Requires minimal specialized skills and education Hourly wage Ex. Lifeguards, short order cooks, and some construction workers

Skilled Requires specialized abilities and training to do tasks such as operating complicated equipment Usually hourly wages Ex. Auto mechanics, bank tellers, plumbers, firefighters, chefs, and carpenters.

Professional Demands advanced skills and education. Salary Ex. Managers, teachers, doctors, actors, professional athletes, and computer programmers.

Five Reasons for Income Inequality Education Wealth Discrimination Ability Monopoly Power

Frictional – workers who are between jobs. Five Types of Unemployment Frictional – workers who are between jobs. Ex: “just moved into town”

Seasonal – changes in weather or changes in demand.

Structural – change in the economy reduces demand for workers and their skills.

Technological – when workers with less skills, talent, or education are replaced by machines. This is called “automation.”

Cyclical – directly related to swings in the business cycle. Ex: recession, depression

Employment, Labor, Wages

Unemployment Rate The number of unemployed individuals divided by the total number of persons in the civilian labor force.

Union Association of skilled workers who perform the same kind of work.

Strike Refuse to work until certain demands are met.

Picket Parade in front of the employer’s business carrying signs about the dispute.

Boycott Mass refusal to buy products from targeted employers or companies.

Lockout Refusal to let the employees work until management demands are met.

Collective Bargaining – when union and management agree to get together and negotiate. Mediation - bringing in a third party to help settle dispute. Arbitration – union and management agree to let the third party make the decision.

Injunction - A court order not to act. It forces them to negotiate. If it is against the union, they cannot strike. If it is against management, they cannot lockout their employees.

Seizure – Government takes over the company to negotiate with workers.