BUSINESS ORGANIZATION: Objective 9.7 Pages 416 - 421

A new business must be organized and managed in a way to produce goods and services effectively and efficiently How a business is organized depends on its size, its purpose and the number of owners.

BUSINESS ORGANIZATION sole proprietorship partnership corporation

Entrepreneurs start businesses or create new products and ideas Role of Entrepreneurs Entrepreneurs start businesses or create new products and ideas

A business organization owned by one person sole proprietorship A business organization owned by one person

Examples of sole proprietorships Beauty shops, small restaurants, boutiques, and other small stores serving a surrounding neighborhood

sole proprietorship advantages Own boss Set hours of operation Set rules for operation Receive all profits

sole proprietorship advantages Responsible for success of business

sole proprietorship disadvantages Supply all capital Supply capital goods Pay workers and taxes

sole proprietorship disadvantages Takes all the risk Responsible for failures

partnership Businesses in which two or more people share cost, responsibilities, losses, and profits

Examples of partnerships Lawyers, doctors, dentists, contractors

partnership advantage Great amount of capital Shared risks and responsibilities Greater chance of success

partnership disadvantage Sometimes, partners disagree and dissolve the business

corporation definition A business organization charted by a state gov’t. and given power to conduct business, sell stock, and receive protection of state laws

Examples of corporations Ford Motor Company, American Airlines, Farm Fresh, Shell Oil Co., and Taco Bell

corporation advantage Permanent organization Many people share responsibilities and risks Run by a Board of Directors

corporation advantage Owned by stockholders

corporation disadvantage Investors share the profits Board of directors made major decisions – shareholder has only a small voice