1. Business Organizations
Unit 3: Microeconomics

3. Types of Businesses
Sole Proprietorship
Partnership
Corporation

4. Sole Proprietorships
Sole proprietorship: A business owned and run by one person
Easy to start
Just need to pay business licenses and fees
Ex: Opening up your own restaurant

5. Sole Proprietorship: Advantages
Easy to start and manage
Easy to leave business
Don’t have to share profits
No separate taxes
Personal satisfaction

6. Sole Proprietorship: Disadvantages
Unlimited liability
Hard to get funding
Difficult to be efficient and profitable
Hard to find talented employees
Limited lifetime of business

7. Partnerships

8. Partnerships
Partnership: A business jointly owned by two or more persons
Types of partnerships
General partnership
Limited partnership
Easy to start
Partners decide how to divide losses and profits

9. Partnerships: Advantages
Easy to start
Partners bring in different skills
No separate taxes
Easier to get funding/ loans
Easier to be run efficiently

10. Partnerships: Disadvantages
Responsible for all partners’ actions
Conflicts between partners
Liability if company fails
Limited life of business

11. Corporations

12. Corporations
Corporation: A business organization recognized by law as a separate entity having the rights of an individual
To form a corporation:
Government Charter
Stocks
Investors

13. Corporations: Advantages
Easier to get a loan
Professional managers can run it
Limited liability for owner(s)
Unlimited life of the business

14. Corporations: Disadvantages
Hard to get charter
Owners don’t have full control on day-to- day operations
Double taxation
Government regulations

15. Business Growth & Expansion
Reinvestment
Growth Through Mergers
Types of Mergers:
Horizontal mergers
Vertical mergers
Conglomerates
Multinational

16. Horizontal Mergers
Two or more businesses that produce the same kind of product join together

17. Vertical Mergers
When businesses involved in different steps of manufacturing or marketing join together

18. Conglomerates
A business that has at least four businesses all making different products

19. Multinational
A corporation that has manufacturing or service operations in a number of different countries