1. Types of Business Organization
Sole Proprietorship
Partnerships (Limited/Gen)
Corporations
Non-profits
Types of Business Organization

2. Sole Proprietorship- 72% of businesses

3. SOLE PROPRIETORSHIPS Advantages Economic Weaknesses
Ease of start up
Ease of Management
You keep all profits
You do not have to pay any business taxes
Psychological advantages
Ease of exit
Economic Weaknesses
Unlimited Liability: you have total responsibility for all debts and liabilities of the company
Difficulty in raising financial capital
Limited size and efficiency
Limited managerial experience
Limited Life

4. Stop and Think If you started your own business what would it be?
What are some of the 4 Factors of production you would need.
2 examples for each
Land
Labor
Entrepreneur
Capital

5. Partnerships (9% of businesses)
2 major types of partnerships:
General Partnership: (most common type) all partners are responsible for management and the financial responsibilities of the partnership.
Limited Partnership: at least one partner is not active in the day to day running of the business. They have limited liability.
Articles of Partnership: contract between partners spelling out the rules of partnership.
Dividing profit
Dividing responsibility
Admitting new partners
Buying out partners

6. Partnerships Advantages Disadvantages Ease of establishment
Ease of Management: each partner has different things to offer
No special business taxes
Easier to raise financial capital
Larger than sole proprietorship
Easier to attract qualified workers
Disadvantages
Limited partner is only responsible for his initial investment. He has limited liability.
Unlimited liability
Limited Life
Conflict between partners

7. What fits best with each business??? Tell me Why!!!

8. Corporations- 20% of BusinessES 74%-profits

9. Corporation- Set up Incorporate: to form a corporation.
Charter: a document granted by the state giving a corporation the right to do business
Stock: shares of ownership in the corporation
Stockholders (shareholders): owners of stock.
Video: What is Stock?
Reasons to own stock:
Dividends: share of profits paid to stockholders
Speculation: buy in hope that price of stock will increase.

10. Corporations Advantages of a Corporation:
Ease of raising financial capital (main advantage)
Selling stock to investors
Selling bonds: a written promise to repay a loan on a specific date
Principal: the amount borrowed
Interest: the price paid for the use of another’s money
Borrowing money from banks.
Ability to hire
Limited liability
Unlimited life
Ease of transferring ownership:. Buying and selling stock is easy and is done millions of times a day.

11. Corporation- Ownership
Board of Directors
Duty to direct the corporations business by setting board policies and goals
Elected by common stockholders
Hires a professional management team to run day to day activities. (CEO, CFO)

12. Corporation- Ownership
Preferred Stock vs Common Stock
Common Stock
a basic share of ownership in a corporation
Have voting rights in the management of the company
In reality they turn over voting rights to someone else with a…
proxy: giving someone else the right to vote your share of stock.
Preferred Stock:
Non voting shares of ownership
Guaranteed dividend
Liquidation benefit: If corporation goes out of business they are ahead of common stockholders in getting back money.

13. Corporations Disadvantages of a Corporation:
Start up expenses are high.
Stockholders (owners) have a limited
Profits are taxed
Corporations are subject to more government regulations than sole proprietors or partners

14. Advantages
Disadvantages
Sole Proprietorship
Keep al Profits
Make All Decisions
Easy to Start
Unlimited liability
Limited life
Limited access to funds
Difficult to attract and keep top talent
Partnership
Can benefit from Specialization
More access to startup money and other resources
Great potential for conflict
Division of profits
Corporation
Access to lots of money for expansion
Scale – can grow large and offer advancement
Limited Liability
Unlimited Life
Double taxation
Original owner(s) can lose control of company
Greater government oversight
More complicated incorporation process.

15. Dare to Compare Sole Proprietorship Partnership Corporation
# of Owners
one
Two or more
Everyone that owns company stock
Liability
Unlimited
Limited
(value of Shares)
Lifespan
Decision-Making
Owner
Owners
Board of Directors, Professional Managers, Employees
Taxation
Single
Double
(Individual and Corporate)

16. Non-Profits: We don’t want to make a profit, we just want to make you

17. Non-Profits Community and Civic organizations Cooperatives- REI
Consumer Sam’s Club
Labor, Professional and Business Organizations 
Labor Unions- organization of workers formed to represent its member’s interests in varying employment matters. Collective bargaining
Professional Associations- a group of people in a specialized field that work to improve their working conditions.
Business Associations
Chamber of Commerce- promote economic growth of community
Better Business Bureau- monitors business ethics/service

19. Mergers and Acquisitions
5 Reasons to merge- Make money faster, Increase efficiency, Acquire new product lines, Catch up or eliminate rivals, Lose a company identity.
Horizontal Merger- when two or more companies that product the same kind of product join forces.
Vertical merger- when two or more firms that are at different steps of manufacturing process join together.
Conglomerates- is a firm that has at least four businesses, each making unrelated products.

20. Why would companies ever want to merge????
Mergers
Why would companies ever want to merge????
With a neighbor develop 2 examples of each type of merger
Vertical Integration
Horizontal Integration
Conglomerate

21. With a partner: Summary
Use two real organizations and design the following:
A vertical merger
A horizontal merger
Conglomerate