Chapter 8 business ownership & entrepreneurship Section 8.1 Page 184 TYPES OF BUSINESS OWNERSHIP

HAVE YOU EVER THOUGHT OF OPENING YOUR OWN BUSINESS HAVE YOU EVER THOUGHT OF OPENING YOUR OWN BUSINESS? woULD YOU KNOW HOW TO COMPLY WITH LEGAL REQUIREMENTS?

Let’s examine several types of business ownership SOLE PROPRIETORSHIP – Is a type of business ownership in which one person owns the business 80% of all businesses in the US consist of Sole Proprietorships Advantages: Be your own boss. Relatively easy to start form Limited paperwork Fewer regulations All profits get taxed personally Disadvantages: Unlimited liability Business owner fully responsible Owners personal assets liable

Partnership – a type of business ownership in which 2 or more people own the business Partners share the risks and rewards Advantages: Each partner can bring different skills More capital to expand with 2 or more partners Disadvantages: Breaking up the partnership can be difficult. Each partner is liable for the debts and injuries caused by the business Unlimited liability

Corporation- a TYPE OF BUSINESS OWNERSHIP IN WHICH MANY PEOPLE, WHOM THE LAW TREATS AS ONE PERSON, OWN THE BUSINESS Closely held = owned by a small group of people Publicly held – sells shares on the stock market Corporation pays taxes on profits Ownership if based on amount of shares owned Each corporation must have a set of officers or board of directors that meet at least once a year.

ADVANTAGES VS DISADVANTAGES OF A CORPORATION Limited liability Stockholders can buy more shares or sell shares. Stocks can be issued in order to collect capital to expand DISADVANTAGES: Costly to start up Require a lot of paperwork Double taxation Dividend tax to owners

SUBCHAPTER S CORP – is a corporation that is taxed like a partnership SUBCHAPTER S CORP – is a corporation that is taxed like a partnership. It is not a taxpaying entity like a corporation, however it has some of the benefits of a corporation. LLC – limited liability company – is a company whose owners and managers enjoy limited liability and some tax benefits. MNC – multinational corporations – is an organization that operates in more than one country. Some examples include Nestle’, Exxon, Ford, IBM, Honda, Hyundai, and Toyota. BUSINESS TYPES VIDEOS https://www.youtube.com/watch?v=KGI1jfax9cc

Mode of entry- IS THE METHOD A COMPANY USES TO SELL PRODUCTS IN ANOTHER COUNTRY. Indirect Exporting – managed by independent companies that handle exported goods for other countries. Direct Exporting – company exports its own goods and services. Turnkey Projects – A company builds, designs, and starts up a business in another country, then sells the plant to a local company. Take a look and J&J example on pg. 189 Licensing- A company transfers the rights and grants permission to produce and sell it’s products overseas to a foreign firm. As a payment the licensing company receives a fee or royalty from the firm. Video : https://www.youtube.com/watch?v=C1mNY9IYZp0

ModeS of entry CONTINUED Franchising – A company (franchisor) sells a franchise, the purchaser (franchisee) agrees to use the brand name and to follow the standards and rules set up by the parent company. https://www.youtube.com/watch?v=7KXQrv1rcYI Joint Ventures – An agreement between 2 or more companies to work on a business venture. Example: GM + Toyota work together to make smaller more economical cars. Strategic Alliances – cooperative agreement between competitors or potential competitors from different countries. Video: https://www.youtube.com/watch?v=rACNp6VumDs

Create your own strategic alliance Think of a few companies that you are familiar with and create a model strategic alliance between them. 1.) What will the alliance accomplish? 2.) What makes them the perfect pair? 3.) What does each company bring to the table as a skill or benefit? 4.) What will be the outcome or goal of the alliance? Write down your responses.

SECTION 8.2 ENTREPRENEURSHIP PAGE 193 Let’s begin with a common misconception: Entrepreneurship is the process of starting a new business Entrepreneur is a person who starts a new business Intrapreneurship – starting a business that is spun off from an existing business. Example: NBC created CNBC and MSNBC Lets name a few notable ones………………………………….. Complete your sheets with the Advantages vs. Disadvantages

Advantages Innovation Self direction Self reliance Flexibility Profit potential Be your own boss Fullfillment

Disadvantages Long hours Consuming your personal life Responsibility Financial risk Start up funds

Global entrepreneurship The process of selling new products, starting a new operating division, or starting up a new company in another country. Ability to Compete: Country Level Industry Level Company Level Product Level

Benefits of going global Enter new markets Reach a new audience Seasonal sales such as swimwear Increase sales Dump older products

RISKS OF GOING GLOBAL Political Risk Economic Risk Time Risk Product Risk Financial Risk

Video links https://www.youtube.com/watch?v=sOjeQV5pHh4