Business Growth and Expansion 3.2

Warm-Up 1. Hypothesis what qualities an individual needs to start a sole proprietorship. What quality do you think is the most important and why? 2. Some say a franchise is the best of both worlds, being your own boss (sole proprietorship), but having the backing of a corporation. Do you agree or disagree with this statement? Why?

Agenda 1. Warm- Up 2. Business Organizations Data Analysis 3. Discuss Business Growth and Expansion 4. Peer Edit DBQ Essays Students will analyze data and make judgements about businesses based on data Students will critically read and evaluate other student essays.

Growth Through Reinvestment Business revenue can be reinvested into factories, etc. Income statements indicator of health of a business Before reinvesting, business must know cash flow: – Total Sales (minus) – Expenses, taxes, depreciation – (Equals) Net income (profit)

Cash Flow Sum of net income for business & non cash charges Business owners decide what to do with cash flow T.I.P.S. What are some possible uses for cash flow?

Growth Through Mergers When firms merge one gives up its separate legal identity Companies merge for the following reasons: – Grow faster – Become more efficient – Acquire or deliver a better product – Eliminate a rival – Change its image

Types of Mergers Horizontal merger is joining of two firms that make the same product (Banks) Vertical merger is joining of firms involved in different steps of manufacturing or marketing (FedEx & Kinkos) Conglomerate is composed of four or more businesses who each make unrelated products.

Multinationals Corporation that has manufacturing and/or service in multiple countries (GM, Sony, British Petroleum) Transfer jobs and technologies across borders Produce tax revenue for multiple countries Accused of unfair labor practices, abuse of natural resources.