Business Organizations and Competition Microeconomics Business Organizations and Competition Purpose: Discuss the various forms of businesses.

I. Goals Identify the advantages and disadvantages of corporations and franchises. Describe the three types of corporate mergers. Provide examples of corporations and franchises.

II. Corporations Advantages Disadvantages Limited liability for owners Ownership is transferrable Ability to attract new capital (i.e. selling stocks and bonds) Disadvantages Most complex form of business organization Expensive to start up Subject to double taxation Larger amount of government regulation

II. Corporations Horizontal Merge Vertical Merge Conglomerate Combining of separate companies that make similar or same products Ex.: AT&T merging with Cingular Vertical Merge Combining of separate companies that are at different stages of production Ex.: AOL and Time Warner Conglomerate Companies that make unrelated products come together under one company title Ex.: General Electric Why next wasn’t a failure for Steve Jobs: https://www.youtube.com/watch?v=LN6pZqbyLQs

III. Business Franchises

Business Activity As a small group, brainstorm an idea for a business and answer the following questions. How can you describe the business…in only one paragraph please? Supply What is your product, or service? Where should you locate the business? What is your competition? How much should you charge for the products or service? How will you split the profits? Who is responsible for the losses? Demand Who will buy it? How can you attract customers?