Types of Businesses Project By: Mihail Nakoff Niamh Radford Zoie Roberts Kianna Watson Hunter Hodges

Chapter 8 Section 3 STANDARDS CTE (ECN) 3.0 students will analyze the role of business in a free enterprise system CTE (ECN)3.1 connect concepts as they apply to the role of business in a free enterprise system CTE (ECN)3.2 analyze the types of business organizations CTE (ECN)3.4 analyze the effects of competition and monopoly on a free enterprise system CTE (ECN)3.8 Explain the phenomena in terms of the law of supply and demand CTE (ECN) 3.9 formulate and analyze knowledge/understanding of elasticity of demand OBJECTIVES 1.Be able to understand the advantages and disadvantages of an Incorporation. 2. Identify the types of business organizations. 3.Have a knowledge of Elastic and Inelastic Demand. Unit 1: Unit 1: Intro to Econ Set up your Notes. Write your EQ!

Key Terms Free enterprise: the economics system characterized by private or corporate ownership of capital goods Elasticity: refers to the degree of responsiveness in supply or demand in relation to changes in price. Elastic: it describes demands that is very sensitive to a change in price. Elasticity of demand a measure of how consumers respond to price changes Certificate of incorporation: license to form a corporation issued by a state government Dividend: the portion of corporate profits paid out to stock-holders Take Notes!

Key Terms conglomerate: a business combination merging more than three businesses that produce unrelated products or services Horizontal merger: a combination of two or more firms competing in the same market with the same good or service Limited liability corporation: a type of business with limited liability with the owner from not paying corporate income tax Take Notes!

Advantages of Incorporation Limited liability for owners Transferable ownership Ability to attract capital and long life Primary reason entrepreneurs choose to form corporations is to gain the benefit of limited liability Corporations usually provide owners with more flexibilities than other forms of ownership - Shares of stock are easily transferable; stock holders can easily sell to others and get money back in return Take Notes!

Continued.. Advantages for the Corporation They have more potential for growth than other business forms - By selling shares on the stock market raise large amounts of capital Corporations can also raise money by borrowing it, this happens by selling bonds. -Bonds are formal contracts issued by corporations or other entities that promise to repay the borrowed money with interest at fixed intervals Corporations also have the adv. Of long life meaning because the stock is transferable, corps are able to exist longer than simple proprietorships or even partnerships Take Notes!

Disadvantages of Incorporation Difficulty of start up Double taxation Potential loss of control More regulation Take Notes!

Corporations A corporation is a legal entity owned by individual stock holders. Stockholders own stock, which is a certificate of ownership of a fraction of the corporation. Stockholders have limited liability because the corporations identity is separate from its owner. Take Notes!

Corporations In the USA 20% of businesses are corporations 80% of sales are from corporations 60% net income is generated by corporations Take Notes!

Types of corporations Closely held corporations: corporations that issue stock to only a few people often family members. Publicly held corporations: corporations that sell stocks on the open market Take Notes!

Corporate structure Stockholders elect a board of directors to make decisions for the corporation. The board of directors appoints officers to run the corporation. The officers hire managers and employees to work in finance, sales, research, marketing, and production. Take Notes!

Corporate Combinations Horizontal mergers Joining two or more companies of the same type Horizontal mergers increase the size and stability of the corporation while eliminating competition. Take Notes!

Corporate Combinations Vertical mergers Combine companies involved in different stages of production of the same product. Vertical mergers make the corporation more efficient and eliminates some costs Vertical mergers do not decrease competition.

Corporate Combinations Conglomerates Joining three or more unrelated corporations Increases stability Does not decrease competition Take Notes!

Multinational corporations Multinational corporations are corporations that sell goods and services in multiple countries Advantages: provide jobs and products around the world often raising the standard of living in poorer countries Disadvantages: influence the culture and polotics of the countries they operate in. Take Notes!

Nike Products and Services Shoes Clothes Gear Accessories Take Notes!

Nike They control the demand Make money every year The supply is high. Take Notes! Supply and Demand

Nike Under Armor Adidas Wilson Easton Take Notes! Competitors