Business Organizations

3 Forms of Business Organizations Sole Proprietorships Partnerships Corporations

Assignment 1. Get in a group of Complete the following graphic organizers in your notebook 3.Use the links below to gather your information: business/choose-your-business-stru Feel free to use other resources as well 4. Be prepared to discuss findings with class

SOLE PROPRIETORSHIPS Definition Forming a Proprietorship Advantages Disadvantages

PARTNERSHIPS Definition Types of Partnerships Forming a Partnership Advantages Disadvantages

CORPORATIONS Definition Forming a Corporation Corporate Structure Advantage Disadvantages

Business Growth and Expansion Growth through Reinvestment Growth through Mergers

Growth through Reinvestment ●Businesses will use some of their revenue (profit) to invest in factories, machinery and new technology. ●Income Statement - a report showing a business’s sales, expenses, and profits for a certain period of time. Estimating Cash Flow 1.Record total sales for a period of time. 2.Find Net Income by subtracting expenses, taxes, from revenues. Expenses include cost of any good such as inventory, wages and salaries, interest payments, and depreciation. 3.Cash Flow - sum of net income and non cash charges such as depreciation is the bottom line or real measure of profits.

Reinvesting Cash Flow Business owner decides how to allocate (split up) cash flow. May be used to pay back to owners, or funds can be reinvested in the form of a new plant, equipment, better technology….etc.

Growth Through Mergers Reasons for Merger 1.Business is not growing fast enough - desire to get bigger faster. 2.Efficiency - condense leadership and lower cost by being able to buy resources in bulk 3.Acquire new product lines 4.Eliminate Rivals 5.Lose corporate identity

2 Types of Mergers 1.Horizontal Merger - when two or more firms that produce the same kind of product join forces. Example: Comcast & Time Warner 2.Vertical Merger - when two or more firms involved in different steps of manufacturing or marketing join together. Example: Google and Motorola Mobility

Horizontal or Vertical ? 1. to-buy-t-mobile-usa-for-39- billion/?_php=true&_type=blogs&_r=0http://dealbook.nytimes.com/2011/03/20/att- to-buy-t-mobile-usa-for-39- billion/?_php=true&_type=blogs&_r=0 2.Draw a diagram explaining both a horizontal and vertical merger.

Conglomerates Conglomerate - A firm that has at least four businesses, each making unrelated products, none of which is responsible for a majority of its sales.

Reasons for a Conglomerate Merger Diversification - belief of not putting “all eggs in one basket” so that overall sales and profits are protected

Multinationals A multinational is a corporation that has manufacturing or service operations in a number of different countries. Important b/c they have the ability to move resources, goods, services and financial capital across national borders. Multinationals can be conglomerates if they make a number of unrelated products.

Other Organizations Non Profit Organization - firm that operates in a businesslike way to promote the collective interests of its member rather than to seek financial gain for its owners. Example:

Other Organizations Community and Civic Organizations Cooperatives or Co-ops 1.Consumer cooperatives 2. Service cooperatives 3.Producer cooperatives

Other Organizations Labor, Professional, and Business organizations Labor Unions

Other Organizations Collective Bargaining - Professional Associations -

Other Organizations Business associations Chamber of Commerce Better Business Bureau

Government Direct role of Government Indirect role of Government Public Utilities