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BUSINESS ORGANIZATION: Objective 9.7
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A new business must be organized and managed in a way to produce goods and services effectively and efficiently How a business is organized depends on its size, its purpose and the number of owners.
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BUSINESS ORGANIZATION
sole proprietorship partnership corporation
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Entrepreneurs start businesses or create new products and ideas
Role of Entrepreneurs Entrepreneurs start businesses or create new products and ideas
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A business organization owned by one person
sole proprietorship A business organization owned by one person
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Examples of sole proprietorships
Beauty shops, small restaurants, boutiques, and other small stores serving a surrounding neighborhood
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sole proprietorship advantages
Own boss Set hours of operation Set rules for operation Receive all profits
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sole proprietorship advantages
Responsible for success of business
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sole proprietorship disadvantages
Supply all capital Supply capital goods Pay workers and taxes
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sole proprietorship disadvantages
Takes all the risk Responsible for failures
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partnership Businesses in which two or more people share cost, responsibilities, losses, and profits
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Examples of partnerships Lawyers, doctors, dentists, contractors
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partnership advantage
Great amount of capital Shared risks and responsibilities Greater chance of success
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partnership disadvantage
Sometimes, partners disagree and dissolve the business
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corporation definition
A business organization charted by a state gov’t. and given power to conduct business, sell stock, and receive protection of state laws
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Examples of corporations
Ford Motor Company, American Airlines, Farm Fresh, Shell Oil Co., and Taco Bell
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corporation advantage
Permanent organization Many people share responsibilities and risks Run by a Board of Directors
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corporation advantage
Owned by stockholders
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corporation disadvantage
Investors share the profits Board of directors made major decisions – shareholder has only a small voice
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