1. Business Organizations
Chapter Eight:
Business Organizations

2. Section One:
Sole Proprietorship

3. Types of Business Organizations

4. Sole Proprietorship
A Sole Proprietorship is a business owned and operated by one person.

5. Name one company that is an example of a sole proprietorship

6. Advantages of Sole Proprietorship
Easy Start-Up- Cost and Legal Considerations Are Small
Full Control- One Person Is Responsible For The Business
Exclusive Right To Profit- The Profits Go To The Business Owner
Relatively Few Regulations – Sole proprietorships are the least regulated form of business organization

7. Disadvantages of Sole Proprietorship
Unlimited Liability- Owner Is Financially and Legally Responsible For The Business.
Limited Growth Potential- One Owner May Not Be Able To Raise Enough Money To Grow The Business
Lack Of Longevity- Relying On One Person Limits The Ability Of A Business To Overcome Hardships.

8. Section Two:
Partnerships

9. Partnerships
Partnerships- A Business That Includes More Than One Persons That Share Equal Decision Making Authority.

10. Advantages of Partnerships
Ease Of Start-Up- Costs and Few Government Regulations Are Involved In Partnerships
Specialization- Each Partner Will Bring His/Her Own Unique Talents
Shared Business Losses- The Business Will Be Able To Face Adversity Better Than Sole A Proprietorship.

11. Disadvantages of Partnerships
Unlimited Liability- If One Partner Does Not Fill Responsibilities Then The Other Partners Will Have To Pick Up The Slack.
Lack Of Longevity- If One Partner Drops Out Then The Other Partners Will Have To Struggle For Survival
Potential for Conflict

12. I want Pizza!!!
I want Chinese!!!

13. The Three Types of Partnership
General Partnership
Limited Partnership
Limited Liability Partnership

14. General Partnership
All partners share equally in both responsibility and liability.

15. Limited Partnership
Only one partner is required to be a general partner

16. Limited Liability Partnerships (LLP)
All partners are limited partners

17. Corporations, Mergers, and Multinationals
Section Three:
Corporations, Mergers, and Multinationals

18. Corporations Corporations Are Legally Distinct From Their Owners
Corporations May Own Property, Hire Workers, Make Contracts, Pay Taxes, Make and Sell Products, Sue and Be Sued.

19. Total Profit Made In America

20. How do Corporations make 70% of Profit???

21. Closely Held Corporations Publicly Held Corporations
Types of Corporations
Closely Held Corporations
Publicly Held Corporations
Held by a few people such as family members.
The stock is very rarely traded.
Also known as a privately held corporation.
Has many shareholders who can buy and sell their stock on the open market.
Usually larger corporations.

22. Advantages of Corporations
Benefits For Stockholders:
If A Company Fails- The Loss To Stockholders Is Limited To The Amount They Invested
Stockholders May Take Back Part or all Of Their Investment By Selling Stock

23. Advantages of Corporations
Limited Liability For Corporation’s Founders- The Corporation Assumes Financial and Legal Responsibilities.
Management- Departments Are Formed To Efficiently Handle The Problems Of Running A Business
Easy To Raise Capital- Adding Share Holders Will Generate Revenue That Will Help The Business Grow

24. Disadvantages of Corporations
Strong Government Regulation- Business Practices Are Closely Watched By The Government.
Taxes- Corporations Pay A Higher Tax On The Profit They Earn.
Slow Decision Making Process- The Amount Of People Involved Makes Decision Making A Slow Process

26. Disadvantages of Corporations
Stockholders Are Removed From The Daily Operations Of The Business and Have Little Control.
(This May Be Both Good and Bad)

27. Corporate Combinations
Horizontal Mergers – Two or more companies that compete in the same market
Ex. Diamler- Chrysler

28. Corporate Combinations
Vertical Mergers – Joins two or more companies involved in different stages of production of one good or service.

29. Corporate Combinations
Conglomerate – Joins together three or more firms that produce unrelated products

30. Multination Corporations
Large corporations that produce and sell its goods throughout the world
Benefit consumers and workers by providing jobs and products around the world

31. Section Four:
Other Organizations

32. Other Organizations
Cooperatives- A Business Owned Collectively By A Group Of People
Example: An Apartment Complex
Nonprofit Organization- Provides Goods and Services Without The Expectation Of Earning A Profit

33. Business Franchise
Franchise- A Business That Allows The Original Name Of A Company To Be Used For Marketing Purposes

34. Structure of Corporations
Stocks- Represent Ownership Of The Corporation
Share- Ownership Of Stock

35. Structure of Corporations
Preferred Stock- No Voice In Decision Making. However, Guaranteed Dividends Before Any Common Stock Holder Is Paid.
Common Stock- Provides Shareholders a Voice The Daily Operations Of A Company

36. Bonds
A Certificate Issued By A Corporation In Exchange For Money Borrowed From An Investor
$10,000
Maturity- 10 Years
Rate Of Return-3%
Principle
Interest