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Business Growth and Expansion
Chapter 3 Sec 2 Business Growth and Expansion
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Terms Income Statement: Net income:
A report showing a business’s sales, expenses, and profits for a certain period to- illustrate the process. Net income: Subtracting all of its expenses, including taxes from its revenue.
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Depreciation: Cash Flow:
A non-cash charge the firm takes for the general wear and tear on its capital goods. Cash Flow: The sum of net income and non-cash charges. Represents the total amount of new funds the business generates from operations.
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Mergers When firms merge, one gives up its separate legal identity. Ex: Delta and Northwest Airlines merged and is now called Delta Airlines. Delta dropped any legal identity for Northwest Airlines. Reasons: Survival, efficiency, product lines, acquire rivals ( RCL and Celebrity Cruise Lines in doubled in size)
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Types of Mergers Horizontal Mergers: which takes place when two or more firms that produce the same kind of product merge. RCL and CCL. Vertical Merger: when firms involved in different steps of manufacturing or marketing join. US Automaker buy tire company.
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Conglomerates Is a firm that has at least 4 businesses, each making unrelated products none of which responsible for majority of sales. Ex: Time Warner, Clear Channel Communications.
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Multinationals A company that has manufacturing or service operations in a number of different countries. Ex: General Motors, BP, Royal Dutch Shell. Important because they move goods and services and financial capital across borders. Brings new technology
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Chapter 3 Sec 3 Non-profit organization: operates like a businesslike way to promote the collective interest of its members rather than seek money from its owners. Ex: schools, churches, hospitals Provides goods and services to their members while they pursue other rewards other than money.
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Cooperative Co-Op- is a voluntary association of people formed to carry on some kind of economic activity that will benefits its members. 3 kinds Consumer, Service, Producer
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Consumer Buys bulk goods like food or clothing for its members. Members help keep the cost down by devoting several hours a week or month to the operation. If successful, can keep prices low.
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Services Credit Unions- makes loans and accepts deposits from its members.
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Producer Farmers: this kind of co-op helps the farmer sell directly to the central markets or to companies that uses the member products. Ocean’s Spray, Lakeville, MA
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Labor, Pro, and Business Organizations
Labor Unions- formed to support the members interests and employment matters. AFL-CIO American Federation of Labor-Congress of Industrial Organizations Specific Industry EX: NEA-National Education Association -Teachers, RN (Registered Nurses) Electricians
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Pro AMA ABA NFLPA MLBPA Police Fire
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Business BBB-Better Business Bureau Chamber of Commerce
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Role of Government Direct Role: Government supplies a good or service
TVA, FDIC, US Postal Service Indirect Role: Public Utilities- investor owned or community operated companies that provide services to the public, such as water, or electricity.
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