Download presentation
Presentation is loading. Please wait.
1
Business Organization
Economics 11/12
2
Let’s Review Primary Industry Secondary Industry Service Industry
3
Forms of Business Organization
Economic activity = firms Firms: Designed to achieve maximum profit by providing goods and services for which customers are willing/able to pay
4
Sole Proprietorship Business owned and operated by one person
Solely responsible for profits or debts Very common in Canadian economy Ie. Small local business
5
Advantages Own boss Confidentiality Any others?
6
Disadvantages Unlimited personal liability
- proprietor’s personal assets can be seized to pay outstanding debts No one else to rely on for funds/run business Difficult & expensive to obtain loans Progressive income tax ( income = tax)
7
The Partnership Owned by 2 or more Bound by a partnership agreement
no one set form outlines rights and responsibilities General Partnership All partners participate in management Unlimited personal liability for business losses
8
The Partnership Limited partnership limited partners
at least one general partner Not permitted to take part in management Personally liable for debts only up to their initial investment No additional personal assets can be seized Ie. Law firm, architects, accountants
9
Advantages Pooling of talent & capital
Personal motivation & satisfaction Attracts capital Obtaining credit is easier & interest rate
10
Disadvantages Progressive income tax
Not easy to sell shares (approval) Right to retire (no new partner) Investment funds only from within (personal savings/mortgages) Disputes Legally terminates due to death, mental incapacitation, financially insolvent, breach of partnership
11
Advantage or Disadvantage?
Unlimited personal liability Joint liability – all partners liable for debts Several liability – partner doesn’t pay? All other partners must pay debt
12
The Corporation Public (shares traded freely) or private (shares traded only with approval) Established ONLY with gov’t authorization Shares = corporate assets, equal Sold – stockbroker, stock market Owners – shareholder (few – 1000’s) = $$$ Oldest – Hudson’s Bay Company
13
The Corporation Common shares Shareholder has voting rights
Preferred shares Preferential position for profits and assets No voting rights Vote = in person or proxy
14
Advantages Profit distribution
Re-invest into firm = self financing = $ Dividends –$ not reinvested shareholders - per share basis, Preferred, Common Obligations responsibility of corp Limited personal liability (investment) investors = large scale Shares transfer Lower income tax
15
Disadvantages Gov’t fee much Closely regulated by gov’t
- books (all aspects), annual meetings, financial statements & tax returns Privacy? (competition) control
16
The Co-operative Enterprise
Equally owned Must have common goal Retail Cooperative – provide goods at reduced price Financial Cooperative – arrange savings & loans at better rates than banks Service Cooperatives – provides housing, medical insurance & equipment rentals Popular in Western and rural Eastern Canada
17
The Co-operative Enterprise contd.
Each member has a single vote & majority wins Board of Directors (annual) Roles are voluntarily Ie. Credit Unions
18
Advantages One vote = equal say
Obtain and sell goods at a better price Limited personal liability Patronage return – profit based upon amount of business transacted by each individual 1% of goods sold = 1% of profit
19
Disadvantages Decision making – equal say & different ideas
Unpaid positions discourage many Investment funds only from members = less capital when needed Business only with existing members = limited customers & business volume Serve members NOT profit
20
The Government Enterprise
Owned by federal, provincial or municipal Provide services that are costly Set up to standardize services & jobs Crown corporations – gov’t not person holds all/most shares Ie. Canada Post, the CBC, Via Rail, Hydro One (ON)
Similar presentations
© 2025 SlidePlayer.com. Inc.
All rights reserved.