Business Organization C H A P T E R 5 Business Organization 5.1 Business in the U.S. Economy 5.2 Forms of Business Ownership 5.3 Organizational Structure for Businesses

5.1 Business in the U.S. Economy Learning Outcomes 5.1.1 Describe the changing status of U.S. employment. 5.1.2 Discuss the role of business in the U.S. economy. 5.1.3 Describe three major types of businesses.

KEY TERMS contingent worker intermediaries service business

THE CHANGING U.S. JOB MARKET Employment data Pressures on employees

Checkpoint  List several groups that will increase as a percentage of the total U.S. workforce in the next decade. Younger workers (16–24 years of age) Asian-, Hispanic-, African-American groups Women

BUSINESS AND THE ECONOMY Size of U.S. businesses 21.7 million businesses with no employees 5.8 million with less than 20 employees 526,000+ with 20–99 employees 109,000 with 100 or more employees, 981 of these with more than 10,000 employees

PERCENT OF BUSINESSES BY EMPLOYMENT SIZE

ROLES OF BUSINESS Make and distribute products for consumers, government, and other businesses Provide employment for people

IMPACT ON A COMMUNITY Money introduced to a community Taxes for the community to support community services More jobs More income

BUSINESS ACTIVITIES Generating ideas Raising capital Employing and training personnel Buying goods and services Marketing goods and services Maintaining business records

Checkpoint  What are the six basic activities completed by all businesses? Generating ideas Raising capital Employing and training personnel Buying goods and services Marketing goods and services Maintaining business records

TYPES OF BUSINESSES Producers Intermediaries Service businesses Extractors Farmers Manufacturers Intermediaries Service businesses

Checkpoint  How does a manufacturer differ from an extractor? An extractor takes natural resources, such as oil or timber, for direct consumption or for use in developing other products. A manufacturer takes resources supplied by others and converts them into useable products.

5.2 Forms of Business Ownership Learning Outcomes 5.2.1 Understand the three major forms of business ownership. 5.2.2 Determine when each form of business ownership is most appropriate. 5.2.3 Recognize other specialized business ownership forms.

KEY TERMS proprietorship partnership corporation partnership agreement articles of incorporation franchise

BUSINESS OWNERSHIP Proprietorship Partnership Corporation Business owned and run by just one person Partnership Business owned and controlled by two or more people Corporation Separate legal entity formed by documents filed with a state

Checkpoint  What are the differences between the three main forms of business ownership? Business forms differ in the ways in which decision making and investments are made and to whom liabilities are distributed.

CHOOSING A FORM OF BUSINESS OWNERSHIP Choosing a proprietorship Choosing a partnership Partnership agreement is a written agreement among all owners. Choosing a corporation Articles of incorporation is a written legal document that defines ownership and operating procedures and conditions for the business.

Checkpoint  Which form of business ownership is the most complex and difficult to form? The corporation is more complex to begin than other business forms. Forming a corporation requires much more bureaucracy, is more subject to government regulations, requires the organization of a board, and necessitates the establishment of clearly defined bylaws.

OTHER FORMS OF OWNERSHIP Specialized partnerships and corporations Limited liability partnership Joint venture S corporation Limited liability company Nonprofit corporation Cooperatives and franchises

Checkpoint  What are the other specialized forms of business ownership? Limited liability partnership Joint venture S corporation Limited liability company Nonprofit corporation

5.3 Organizational Structure for Businesses Learning Outcomes 5.3.1 Understand important principles in designing an effective organization. 5.3.2 Compare alternative organizational structures for businesses.

KEY TERMS mission statement goal policies procedures organization chart

DESIGNING AN EFFECTIVE BUSINESS ORGANIZATION Setting direction Mission statement Goals Policies and procedures Principles of effective organization Responsibility, authority, and accountability Unity of command Span of control

Checkpoint  What is the difference between a mission statement and a goal? A mission statement communicates the purpose of existence for a business and what it hopes to achieve. A goal is a more specific statement of what a business expects to achieve and may be used to measure a business’ success.

TYPES OF ORGANIZATIONAL STRUCTURES Functional organization structure Work is arranged within main business functions such as production, operations, marketing, and human resources. Matrix organizational structure Work is structured around specific projects, products, or customer groups.

Business Organization Chart

Checkpoint  What problems can result from the use of a functional organizational structure? Employees in a functional organizational structure may tend to lose sight of overall corporate goals. Workers tend to be limited to specific duties and may not see their relationship to the organization as a whole. This can result in lack of interest and motivation over time.