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
Pressures on employees

5. 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-, African-American groups
Women

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

7. PERCENT OF BUSINESSES BY EMPLOYEE SIZE

8. BUSINESS ACTIVITIES Generating ideas Raising capital
Employing and training personnel
Buying goods and services
Marketing goods and services
Maintaining business records

9. 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

10. TYPES OF BUSINESSES
Producers
Intermediaries
Service businesses

11. 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.

12. 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.

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

14. BUSINESS OWNERSHIP
Proprietorship
Partnership
Corporation

15. 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%

16. 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.

17. CHOOSING A FORM OF BUSINESS OWNERSHIP
Choosing a proprietorship
Choosing a partnership
Choosing a corporation

18. 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.

19. OTHER FORMS OF OWNERSHIP
Specialized partnerships and corporations
Cooperatives and franchises

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

21. 5-3 Organizational Structure for Businesses
Goal 1 Understand important principles in designing an effective organization.
Goal 2 Compare alternative organizational structures for businesses.

22. KEY TERMS mission statement goal policies procedures
organization chart

23. DESIGNING AN EFFECTIVE BUSINESS ORGANIZATION
Setting direction
Principles of effective organization
Responsibility, authority, and accountability
Unity of command
Span of control

24. 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.

25. TYPES OF ORGANIZATIONAL STRUCTURES
Functional organization structure
Matrix organizational structure

26. BUSINESS ORGANIZATION CHART

27. 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.