1 Essential Question: Describe each type of merger and the reasons why corporations pursue them, define the term Franchise and identify the benefits for this form of B.O; describe what a cooperative is and how it differs from regular businesses, explain the purpose of a non-profit business. Other Forms of Organizations SECTION 4

2 Mergers (combinations): Mergers- When two companies join to form a larger company. Usually the larger company buys the other (Buys a controlling number of shares in the company) More resources Can reduce competition depending on type of merger Other Forms of Organizations SECTION 4

3 Vertical Combinations/Horizontal Combinatio: Vertical combinations—two or more companies involved in different production phases of the same good or service Why? To lower costs or ensure supply Other Forms of Organizations SECTION 4

4 Horizontal Combination: Horizontal combinations—two or more companies produce the same good or service and one purchases the other. Why? Increases the larger company’s market size, gets rid of a potential competitor Horizontal Combinations are most closely regulated by government since they reduce competition Other Forms of Organizations SECTION 4

5 Conglomerate Combinations: Conglomerate combinations—two or more companies that produce unrelated products. Why: Even though the companies are unrelated, they make profit (the motive behind all corporate decisions) Other Forms of Organizations SECTION 4

6 Franchise: A franchise is a business that uses the original companies name to sell goods and services. The parent company supports the franchise with a turn key business (resources, location, protocols to operate, etc.) Strict set of rules that franchisee must follow- products/pricing/etc. Other Forms of Organizations SECTION 4

7 Benefits of Franchise: A business owner can reduce the overall costs associated with starting a business because: employee training is often provided by parent company (lower costs) advertising is sometimes paid for by parent company (lower costs) it can use the parent company’s name (generates business from the start) Other Forms of Organizations SECTION 4

8 Cooperative : Cooperative are owned by a group of members who cooperate without profit being the sole motive for doing business. Cooperatives put the specific needs of the members ahead of things like profit Specific products (green, vegetarian, bulk) Provide services (healthcare, travel, savings) Other Forms of Organizations SECTION 4

9 Differences between a nonprofit organization and other types of business organizations: not focused on financial gain income not taxed by the government Other Forms of Organizations SECTION 4