The Scope of Business Today Chapter 3

Business Size

Definition of Small Business Larger, more developed countries (U.S.) – Any company with 500 or fewer employees Larger, more developed countries (U.S.) – Any company with 500 or fewer employees Smaller, less developed countries – Any company with 100 or fewer employees Smaller, less developed countries – Any company with 100 or fewer employees

Largest Business

Top 10 Most Valuable Companies Fortune 500 List:

Why do Businesses get Large? Diversification – when a business is involved in more than one type of business activity Diversification – when a business is involved in more than one type of business activity Merger – occurs whenever two companies join to form a combined company Merger – occurs whenever two companies join to form a combined company Acquisition – occurs whenever one company buys another company Acquisition – occurs whenever one company buys another company

General Electric’s Businesses

Size of some US Corporations GDP (Gross Domestic Product) is defined as the total value of goods and services produced within a territory during a specified period regardless of ownership

Importance of Small Business Small businesses employee most of the US workforce Small businesses employee most of the US workforce In Hawai’i, chances are you will work in a small business In Hawai’i, chances are you will work in a small business Small businesses are responsible for most of the new innovations Small businesses are responsible for most of the new innovations

Entrepreneurship Each year in the US, 600,000 people start their own businesses Each year in the US, 600,000 people start their own businesses –Purchase of an existing small business –Development of a new small business –Purchase of a franchise –Family business Entrepreneurship is the act of starting, buying, or expanding a business Entrepreneurship is the act of starting, buying, or expanding a business

Forms of Business Ownership Sole Proprietorship – business owned by a single person Sole Proprietorship – business owned by a single person Partnership – business owned by two or more individuals Partnership – business owned by two or more individuals Corporation – a separate business entity owned by stockholders Corporation – a separate business entity owned by stockholders

Sole Proprietorship

Partnership Issues: Issues: –Working partners –Silent partners –Partnership agreement

Partnership

Corporation

Corporate Ownership Privately held corporation – a business that has a few stockholders and the stock is not open for public sale Privately held corporation – a business that has a few stockholders and the stock is not open for public sale Publicly held corporation – a business with stock that is open for public sale Publicly held corporation – a business with stock that is open for public sale *Stockholder – any person who owns at least one share in a corporation

Employee Ownership ESOP – employee stock ownership plan ESOP – employee stock ownership plan –Powerful motivator

Another form of Ownership One business owns another One business owns another Best Buy owns Musicland and Sam Goody Best Buy owns Musicland and Sam Goody Best Buy is the parent company and Sam Goody is a subsidiary Best Buy is the parent company and Sam Goody is a subsidiary