1. Businesses and Organizations

2. Standards
SSEMI4a: The student will explain the organization and role of business.
SSEMI4a: The student will compare and contrast three forms of business organization—sole proprietorship, partnership, and corporation.

3. Barriers to Entry Obstacles for new firms to enter market.
Start-up costs—upfront expenses
Usually before 1st product reaches consumers
Technology—Required by some markets
Include know-how/ actual tech

4. Economies of Scale
Economies of scale—When avg. cost/unit ⬇ as output ⬆
i.e. shoes
Mass-produced = purchased < $20.00
Hand-made Italian shoes = cost $1,000s…
difference = the scale of production.

5. Sole Proprietorship business owned/operated by one person.
Oldest, simplest, most common type of B.O.

6. Sole Proprietorship Advantages
easiest to start-up
full control
exclusive rights to profits.

7. Sole Proprietorship Disadvantages
unlimited liability and sole responsibility
limited growth potential
lack of longevity.

8. Partnership Two or more ppl own and control
Usually seen in professional fields
Accountants
Doctor’s offices
Lawyer’s firms

9. Partnership Advantages— easy start-up;
specialization (different duties);
shared decision making
shared losses.

10. Partnership Disadvantages— unlimited liability;
potential for conflict;
lack of longevity.

11. Corporations A business owned by stockholders Stockholders
a group of owners
share in the profits and losses.

12. Corporations Advantages— limited liability;
management separate from ownership
easy to raise money
longevity.

13. Corporations Disadvantages heavily regulated by government
slow decision making
double taxation (profits and dividends).

14. Other Types of Organizations
Franchises—
Owned separate from cooperate
Pay a fee to use the name
i.e.—McDonald’s.
Cooperative (co-op)—
owned collectively by members.
Non-profit organization—
goals ≠ profits
i.e.—the Red Cross