1. 5 Economic Decisions and Systems 5-1 Business in the U.S. Economy
C H A P T E R 5
Economic Decisions and Systems
5-1 Business in the U.S. Economy
5-2 Forms of Business Ownership
5-3 Organizational Structure for Businesses

2. 5-1 Business in the U.S. Economy
Goal 1 Describe the changing status of U.S. employment.
Goal 2 Discuss the role of business in the U.S. economy.
Goal 3 Describe three major types of businesses.

3. KEY TERMS
contingent worker
intermediary
service business

4. THE CHANGING U.S. JOB MARKET
Employment data
6% increase from 06-14, an 8.8 mil job loss
Baby boomers started retiring in 2011
Mini-boom of young workers  avg. working age will decrease
More non-whites in work force (currently 36%)
1960’s: 35% of women worked; doubled by 2000; now makeup almost half work force

5. THE CHANGING U.S. JOB MARKET
(continued)
Pressures on Employees
Downsizing  people work harder; more hours
People need second jobs
More education required (not typically a 4 year degree) tech jobs
Not enough time with family
People forced to take contingent work

6. Checkpoint 
List several groups that will increase as a percentage of the total U.S. workforce in the next decade.
Younger workers (16–24 years of age)
Asian-, Hispanic- groups
Women

7. BUSINESS AND THE ECONOMY
Size of U.S. businesses
Roles of business
Impact on a community

8. PERCENT OF BUSINESSES BY EMPLOYEE SIZE

9. ROLES OF BUSINESS Make and distribute products and services
Provide employment
Owners/investors profit
Pay taxes  money comes back to us in the form of government services

10. IMPACT ON COMMUNITY New businesses bring new money
Pay wages  employees spend $ in town
Buy goods/services  businesses spend $
Growing business attracts people from out of town
Increased housing, food, and other needs
Pay taxes to support community services
Larger businesses attract small businesses

11. BUSINESS ACTIVITIES Generating ideas Raising capital
Starting ideas, ideas for improvement
Research & development (R&D) departments
Raising capital
Starting capital, daily operation, expansion
Comes from loans, investors, and/or profits
Employing and training personnel
Hire and train new workers
Train for added procedures & responsibilities

12. BUSINESS ACTIVITIES Buying goods and services
Used in manufacturing, resold, operational
Services needed to operate (delivery, adv., etc.)
Marketing goods and services
“Activities directed at providing the goods…”
Not just trying to make the sale, but keeping customer happy after the sale
Maintaining business records
Track performance, tax records, order info, etc.

13. Checkpoint 
What are the basic activities completed by all businesses?
Generating ideas
Raising capital
Employing and training personnel
Buying goods and services
Marketing goods and services
Maintaining business records

14. TYPES OF BUSINESSES Producers Intermediaries Service businesses
Extractor: takes resources from nature
Farmer: cultivates land and raises livestock
Manufacturer: convert materials into products
Intermediaries
Wholesalers, retailers, specialized
Service businesses
Activities consumed immediately
Growing fast (60% of U.S. employment)

15. Checkpoint  How does a manufacturer differ from an extractor?
An extractor takes natural resources, such as oil or timber, for direct consumption or for use in developing other products.
A manufacturer takes resources supplied by others and converts them into useable products.

16. 5-2 Forms of Business Ownership
Goal 1 Understand the three major forms of business ownership.
Goal 2 Determine when each form of business ownership is most appropriate.
Goal 3 Recognize other specialized business ownership forms.

17. KEY TERMS proprietorship partnership corporation partnership agreement
articles of incorporation
franchise

18. BUSINESS OWNERSHIP Proprietorship – owned by one person
Partnership – two or more owners
Corporation – many owners, called stockholders

19. Forms of Ownership U.S. Business Comparison by Form of Ownership
Number of Businesses (2006)
Total Revenue (Thousands)
Percent of All Businesses
Percent of Total Revenue
Proprietorship
22,075,000
1,278,000,000
71.53%
4.06%
Corporation
5,841,000
26,070,000,000
18.93%
82.82%
Partnership
2,947,000
4,131,000,000
9.55%
13.12%
Total
30,863,000
31,479,000,000
100.00%

20. Checkpoint 
What are the differences between the three main forms of business ownership?
Business forms differ in the ways in which decision-making and investments are made and to whom liabilities are distributed.

21. CHOOSING A FORM OF BUSINESS OWNERSHIP
Choosing a proprietorship
Easiest to start and end
If fails, personal assets will be seized
Choosing a partnership
More capital to invest, more skills
Must have partnership agreement
Choosing a corporation

22. CORPORATE FACTOIDS Popular form of business for large companies
A corp. is treated like an individual
Need to submit articles of incorporation to state to become incorporated
Corporate bylaws dictate operating procedures
Board of directors makes major policy and financial decisions; issues stock

23. Checkpoint 
Which form of business ownership is the most complex and difficult to form?
The corporation is more complex to begin than other business forms.
Forming a corporation requires much more bureaucracy, is more subject to government regulations, requires the organization of a board, and must have clearly defined bylaws.

24. OTHER FORMS OF OWNERSHIP
Specialized partnerships and corporations
Limited liability partnership
Joint venture
S corporation
Limited liability company
Nonprofit corporation
Cooperatives: group of people combining for efficiency
Franchises: have permission to operate a business a certain way

25. Checkpoint 
What are the other specialized forms of business ownership?
Limited liability partnership
Joint venture
S corporation
Limited liability company (LLC)
Nonprofit corporation

26. 5-3 Organizational Structure for Businesses
Goal 1 Understand important principles in designing an effective organization.
Goal 2 Compare alternative organizational structures for businesses.

27. KEY TERMS mission statement goal policies procedures
organization chart

28. DESIGNING AN EFFECTIVE BUSINESS ORGANIZATION
Setting direction
Mission statement vs. goal
Policies vs. procedures
Principles of effective organization
Responsibility, authority, and accountability
Unity of command
Span of control

29. Checkpoint 
What is the difference between a mission statement and a goal?
A mission statement states the purpose of existence for a business and what it hopes to achieve.
A goal is a more specific statement of what a business expects to achieve and may be used to measure a business’ success.

30. TYPES OF ORGANIZATIONAL STRUCTURES
Functional organization structure
More traditional; top-down oriented
Focus on main business functions
Problems?
Matrix organizational structure
Newer type of structure; more horizontal
More collaborating to get specific projects done
Needs clear direction though

31. BUSINESS ORGANIZATION CHART

32. Checkpoint 
What problems can result from the use of a functional organizational structure?
Employees in a functional organizational structure may tend to lose sight of overall corporate goals.
Workers tend to be limited to specific duties and may not see their relationship to the organization as a whole.
This can result in lack of interest and motivation over time.