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Business Organizations
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Section 3 – Corporations, Mergers, and Multinationals
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Corporation- a legal entity owned by individual stockholders.
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Stocks (shares) - represent a portion of ownership of a corporation.
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Types of Corporations Closely Held Corporation
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2) Publicly Held Corporation
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Advantages of Incorporation
Advantages for the Stockholders No responsibility for corporations actions Stocks are transferable
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Advantages for the Corporation
Has great potential for growth. Bonds Can hire the best available capital. Corporations have long lives.
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Disadvantages of Incorporation
Difficult and expensive to start up – must have certificate of incorporation Loss of control Double taxation Must pay dividends Heavily regulated
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Corporate Combinations
Horizontal mergers Vertical mergers Conglomerate
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Multinationals (MNCs)
Large corporations headquartered in one country that have subsidiaries throughout the world.
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Multinational corporate structure:
Horizontally integrated multinational corporations
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Vertically integrated multinational corporations
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Diversified multinational corporations
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Advantages of MNCs Offer products worldwide.
spread new technologies and production methods across the globe.
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Disadvantages of MNCs Influence culture and politics
Critics are concerned about wages and working conditions
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