1. Types of Business Structures
International Business
Types of Business Structures
Presented By
Mrs. Bowden

2. List advantages and disadvantages of a sole proprietorship.
Today we will:
Describe and differentiate between the different legal entity structures
List advantages and disadvantages of a sole proprietorship.
List advantages and disadvantages of a partnership.
List advantages and disadvantages of a corporation.

3. Sole Proprietorship sole proprietorship
a business that is owned exclusively by one person

4. Advantages of a Sole Proprietorship
minimal government regulation
accurate tax records
certain employment laws
Sole proprietorship is the most common form of U.S. business ownership.

5. Disadvantages of a Sole Proprietorship
It can be difficult to raise money for the business.
You bear the burden of all the risks.
If the business fails, your personal assets can be jeopardized.

6. Question Time
Why do you think sole proprietorships are the most common types of business ownership?

7. Partnership partnership Advantages of a partnership include:
a business owned by two or more people
Advantages of a partnership include:
multiple sources of capital
risks are spread among partners
minimal government regulation

8. Disadvantages of a partnership include:
responsibilities and profits are shared
can be held liable for errors of partners

9. rights to audit accounting documents
profit distribution
salaries
length of partnership
conditions under which partnership can be dissolved
asset distribution upon dissolution of partnership

10. Partnership Agreements
outline the rights and responsibilities of each of the owners including
business name
names of partners
investment by each partner
delegation of management duties
accounting method used

11. Corporation corporation share of stock
a business that has the legal rights of a person but is independent of its owners
share of stock
a unit of ownership in a corporation
The individual or group that owns most shares maintains control of the company.

12. board of directors dividends
a group of people who meet several times a year to make important decisions affecting the company
in addition to strategic decisions, they also determine dividend payments
dividends
distributions of corporate profits to shareholders
The board of directors is not involved in the daily management of the company.

13. Advantages of Incorporation
In a corporation, personal liability is limited to the amount of money each shareholder invested in the company.
Personal assets of shareholders are protected.
Corporations can raise money by selling stock.

14. Disadvantages of a Corporation
The disadvantages of a corporation include:
A lawyer is required to establish a corporation because a corporation is complex.
costly

15. - Articles of incorporation need to be well written.
Corporations are subject to more government regulation that other types of businesses.
Income is taxed twice.
corporate income
individual income

16. S Corporation S corporation
a corporation organized under Subchapter S of the Internal Revenue Code
not taxed as a business
If the business looses money, owners can use the losses to offset other sources of personal income.
tax break

17. Limited Liability Company
Limited Liability Company (LLC)
offers the limited liability protections of a corporation to its owners
not subjected to the rules of an S corporation
provides the benefits of partnership taxation and limited personal liability
may be limited to a business life of 30 years

18. Question Time
What is the main advantage of opening as a corporation?

19. When to Get Legal Advice
Learning some basics about the laws affecting businesses will help you handle minor legal issues independently.
Sometimes you will need to hire a lawyer.

21. contract agreement consideration
a legally binding agreement between two or more persons or parties
agreement
one party offers or agrees to something and the other party accepts
consideration
what is exchanged for the promise

22. capacity
the parties are legally able to enter into a binding agreement
legality
a contract cannot have anything in it that is illegal or that would result in illegal activities

23. What are the three ways we can legally structure
Let’s Review
What are the three ways we can legally structure
our own business??

24. Which one sounds most appealing to you and why?
QUESTION TIME
Which one sounds most appealing to you and why?

25. Today we will:
Describe opportunities of traditional and non traditional business ventures

26. Introduction Cooperative strategy
A strategy in which firms work together to achieve a shared objective
One of 3 means firms use to grow and improve performance (mode)
Internal development, mergers and acquisitions, and cooperation

27. Primary Type of Cooperative Strategy: Strategic Alliances
A cooperative strategy in which firms combine some of their resources and capabilities to create a competitive advantage
Involve firms with some degree of exchange and sharing of resources and capabilities to co-develop, sell, and service goods or services
Major type of strategic alliance
Joint Venture
Two or more firms create a third legally independent company to share some of their resources and capabilities to develop a competitive advantage
Partners typically own equal percentages and contribute equally to the ventures operations

28. Reasons Firms Develop Strategic Alliances
Why firms develop strategic alliances
They allow partners to create value that they couldn’t develop by acting independently
They allow partners to enter markets more quickly and with greater market penetration possibilities
Most firms lack the full set of resources and capabilities needed to reach their objectives
They are a prime vehicle for firm growth – mode of entry into new product or geographic markets
Can account for 25% of sales revenue in large firms

29. Reasons Firms Develop Strategic Alliances
Strategic alliances can be used to
Reduce competition
Gain market power
Enhance a firm’s competitive capabilities
Gain access to resources and new (restricted) markets
Take advantage of opportunities
Build strategic flexibility
Help the firm innovate
Provide for a new source of revenue and for firm growth
Enhance organizational response times
Gain new knowledge and experiences
Overcome trade barriers
Establish better economies of scale and scope
Lower costs

30. Question Time
What is the main difference between a strategic alliance and a joint venture?