1. Business Organization
C H A P T E R 5
Business Organization
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
Learning Outcomes
Describe the changing status of U.S. employment.
Discuss the role of business in the U.S. economy.
Describe three major types of businesses.

3. KEY TERMS
contingent worker
intermediaries
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
21.7 million businesses with no employees
5.8 million with less than 20 employees
526,000+ with 20–99 employees
109,000 with 100 or more employees, 981 of these with more than 10,000 employees

7. PERCENT OF BUSINESSES BY EMPLOYMENT SIZE

8. ROLES OF BUSINESS
Make and distribute products for consumers, government, and other businesses
Provide employment for people

9. IMPACT ON A COMMUNITY Money introduced to a community
Taxes for the community to support community services
More jobs
More income

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

11. Checkpoint 
What are the six 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

12. TYPES OF BUSINESSES Producers Intermediaries Service businesses
Extractors
Farmers
Manufacturers
Intermediaries
Service businesses

13. 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.

14. 5.2 Forms of Business Ownership
Learning Outcomes
5.2.1 Understand the three major forms of business ownership.
5.2.2 Determine when each form of business ownership is most appropriate.
5.2.3 Recognize other specialized business ownership forms.

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

16. BUSINESS OWNERSHIP Proprietorship Partnership Corporation
Business owned and run by just one person
Partnership
Business owned and controlled by two or more people
Corporation
Separate legal entity formed by documents filed with a state

17. 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.

18. CHOOSING A FORM OF BUSINESS OWNERSHIP
Choosing a proprietorship
Choosing a partnership
Partnership agreement is a written agreement among all owners.
Choosing a corporation
Articles of incorporation is a written legal document that defines ownership and operating procedures and conditions for the business.

19. 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 necessitates the establishment of clearly defined bylaws.

20. OTHER FORMS OF OWNERSHIP
Specialized partnerships and corporations
Limited liability partnership
Joint venture
S corporation
Limited liability company
Nonprofit corporation
Cooperatives and franchises

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

22. 5.3 Organizational Structure for Businesses
Learning Outcomes
5.3.1 Understand important principles in designing an effective organization.
5.3.2 Compare alternative organizational structures for businesses.

23. KEY TERMS mission statement goal policies procedures
organization chart

24. DESIGNING AN EFFECTIVE BUSINESS ORGANIZATION
Setting direction
Mission statement
Goals
Policies and procedures
Principles of effective organization
Responsibility, authority, and accountability
Unity of command
Span of control

25. Checkpoint 
What is the difference between a mission statement and a goal?
A mission statement communicates 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.

26. TYPES OF ORGANIZATIONAL STRUCTURES
Functional organization structure
Work is arranged within main business functions such as production, operations, marketing, and human resources.
Matrix organizational structure
Work is structured around specific projects, products, or customer groups.

27. Business Organization Chart

28. 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.