WAYS TO ORGANIZE A BUSINESS Types of Businesses SOLE PROPRIETORSHIPS PARTNERSHIPS CORPORATIONS PERCENTAGE OF FIRMS 75% 7% 18%

PERCENTAGE OF SALES SOLE PROPRIETORSHIPS PARTNERSHIPS CORPORATIONS 6% 4% 90%

Sole Proprietorships Advantages Easy to form Keep all the profit Own boss Pride of ownership Disadvantages Unlimited liability Limited life Bear all the costs Limited growth potential

Partnerships Advantages Access to more financial capital Specialization Share costs Share the work Disadvantages Limited life Unlimited liability (not always) Disagreements Different goals Share profits

Corporations Advantages Access to lots of capital Limited liability Unlimited life Money earning money Disadvantages Double taxation No sense of ownership Management is separate from ownership

Corporation The house the Marlboro Man built, Altria Group (formerly Philip Morris Companies), is the world's largest tobacco firm. Altria operates its cigarette business through subsidiaries Philip Morris USA and Philip Morris International, which sell Marlboro -- the world's best- selling cigarette brand since 1972.businessPhilip Morris USAPhilip Morris International The company controls about half of the US tobacco market. However, tobacco is only part of its portfolio. It owns 85% of Kraft Foods, the world's #2 food company (after Nestlé), which makes Jell-O, Kool-Aid, Maxwell House, Oscar Mayer, and Post.Kraft FoodsNestlé The tobacco giant bought Nabisco in late 2000, folding it into Kraft. Altria owns 33.9% of SABMiller plc.SABMiller plc

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List of billionaires (2008) - Wikipedia, the free encyclopediaList of billionaires (2008) - Wikipedia, the free encyclopedia

Advantage or Disadvantage? Which Business Type?  Limited Liability  Easy to transfer ownership Limited Life Unlimited Liability More difficult and costly to organize Share expenses Easiest to organize Faced with double taxation Management is separate from ownership Unlimited Life Potential loss of ownership by the founders Advantage of corporation Advantage of corp Disadvantage of Sole and Part Disadvantage of Corp Advantage of Part Advantage of Sole Disadvantage of Corp Advantage of Corp Disadvantage of Corp

OTHER BUSINESS ORGANS (organizations) Businesses that provide a good or service without seeking a profit A business contract in which a company agrees to let another person establish an enterprise using its name Non-Profit Organization Franchise

DQ Grill & Chill® Restaurant Initial franchise fee is $35,000. (fees include training program and opening and support services) Franchise fee for additional store development is $25,000 Royalties are 4% of sales Sales promotion fees 5% - 6% of sales Franchise Agreement is 20 years Basic requirements for new franchisees –review of your background –review of work history –prior retail or foodservice ownership or management experience –a proposed management plan –financial resources necessary to develop and operate the unit

A business that is owned by the people who use its services A company that retains its corporate identity after being bought by another company Cooperative (co-op) ex. Credit union Subsidiary

YUM! Brands, Inc. operates as a quick service restaurant company. It develops, operates, franchises, and licenses a system of restaurants, which prepare, package, and sell various priced food items. The company operates various restaurant brands, including KFC, Pizza Hut, Taco Bell, Long John Silver's, and A&W All-American Food Restaurants. Its restaurants specialize in chicken, pizza, Mexican-style food, and quick-service seafood categories. As of December 31, 2006, it operated approximately 34,000 restaurants in 100 countries and territories. The company was founded in It was formerly known as TRICON Global Restaurants, Inc. and changed its name to YUM! Brands, Inc. in YUM! Brands, Inc. is headquartered in Louisville, Kentucky. EX: Horizontal Merger

MERGER MANIA HORIZONTAL: 2 or more firms in the same market with the same good or service VERTICAL: 2 or more in different stages of producing the same good or service CONGLOMERATE: firms buy other companies that produce totally unrelated goods or services

EXAMPLES McDonalds buys Burger King McDonalds buys a cow farm Steel company buys an iron ore mine Steel company buys a shipping line Tobacco company buys a cereal company Cingular buys AT&T Horizontal Vertical Conglomerate Horizontal