Other Forms of Organization 7.4 Other Forms of business organizations: Corporate Combinations Franchises Cooperatives Nonprofit organizations

Business Organizations 7.4 Corporate Combinations— Corporations try to get larger through efforts to expand their size. Merger—One company joins with or absorbs another. Horizontal Combination—Merger between two or more companies producing the same good or service.

Corporate Combinations 7.4 Vertical Combinations—Merger between two or more companies involved in different production phases of same good or service. Conglomerate Combinations—Merger of companies producing unrelated products. Subsidiaries—Divisions of a corp.

Advantages of Combinations Efficiency—Eliminate overlapping jobs and departments. (Saves $). 2. Potential for Lower Costs—Buying existing businesses is usually less than buying new plants, equipment, etc. 3. Easier to Acquire capital—Bigger means more capital, collateral, etc.

Disadvantages of Combinations Higher rates of unemployment 2. Reduced competition can lead to higher prices. Franchises: An enterprise that uses the original companies name to sell goods and services.

Business Combinations 7.4 Cooperatives (Co-ops)—Businesses that are owned collectively by their members. Ex. Sam’s Club, Price Club Nonprofit Organizations—Works in a business like way to provide goods and services while pursuing other goals. Red Cross, Salvation Army, Cancer Society