1. Economics: Unit 2 Business Organizations, Labor and Institutions

2. Chapter 3: Business Organizations ?

3.  Sole proprietorships are the most common form of business organization.  Most sole proprietorships are small. All together, sole proprietorships generate only about 6 percent of all United States sales. Chapter 8, Section 1 A sole proprietorship is a business owned and managed by a single individual. A. Proprietorships

4. Proprietorships  biz. owned by single person  PROS Easy to Start Full Control All profits to Owner  CONS Large liability Limited Resources Lack of permanence

5. Under $25,000 $25,000 – $49,999 $50,000 – $99,999 $100,000 – $499,999 $500,000 – $999,999 $1,000,000 or more By Size of Receipts 0.4%0.9% 70% 12% 8% 9% Mining Construction Manufacturing Transportation Wholesale trade Retail trade Finance, insurance, real estate By Type 1%3% 13% Agriculture, forestry, fishing services Services 3% 5% 16% 8% 2% 49% Proprietorships

6. B. Partnerships  business owned by two or more people  Started out as partnerships…

7. Partnerships  PROS Easy to Start Specialization Larger pool of $  CONS Unlimited liability Conflict

8. C. Corporations Chapter 8, Section 3  A corporation is a legal entity, or being, owned by individual stockholders.  Stocks, or shares, represent a stockholder’s portion of ownership of a corporation.

9. Corporations  biz. owned by stockholders  PROS Huge pool of $ Limited Liability No skills needed to be stockholder  CONS Difficult and expensive to start Complex Double taxes on ind. & bus. Little Control STOCK

10. Corporate Organization

11. Corporate Combinations  Horizontal mergers combine two or more firms competing in the same market with the same good or service.  Vertical mergers combine two or more firms involved in different stages of producing the same good or service.  A conglomerate is a business combination merging more than three businesses that make unrelated products. Chapter 8, Section 3 Oil Co. AOil Co. BOil Co. DOil Co. C Parent Oil Co. Steel plant Utilities Mines Railroad

12. PROCTER and GAMBLE  Ace is a brand of laundry detergent/liquid available in numerous forms and scents. Acelaundry detergent/liquid  Always is a brand of feminine care products. Always  Ariel is a brand of laundry detergent/liquid available in numerous forms and scents. Ariellaundry detergent/liquid  Bold is a brand of laundry detergent/liquid. Boldlaundry detergent/liquid  Bounce is a brand of laundry products sold in the United States and Canada. Bounce  Bounty is a brand of paper towel sold in the United States and Canada. Bountypaper towel  Braun is a small-appliances manufacturer specializing in electric shavers, epilators, hair care appliances and blenders. Braun  Cascade is a brand of dishwashing products. Cascade  CoverGirl is a brand of women's cosmetics. CoverGirl  Crest/Oral B is a brand of toothpaste and teeth whitening products. Crest/Oral Btoothpaste  Dash is a brand of laundry detergent/liquid. Dashlaundry detergent/liquid  Dawn/Fairy is a brand of dishwashing detergent. [17] Dawn/Fairydetergent [17]  Dolce & Gabanna is a brand of fine fragrances. Dolce & Gabanna  Downy/Lenor is a brand of fabric softener. Downy/Lenorfabric softener  Duracell is a brand of batteries and flashlights. Duracell  Eukanuba is a brand of pet food. Eukanuba  Febreze/Ambi Pur is a brand of air fresheners. Febreze/Ambi Pur  Fixodent is a brand of air denture adhesives. Fixodent  Fusion is a brand of men's wet shave razors and is the quickest P&G brand to have reached $1 billion in annual sales. Fusion  Gain is a brand of laundry detergent, fabric softeners and liquid dish soap. Gain  Gillette is a brand of safety razor and male grooming products. Gillettesafety razor  Head & Shoulders is a brand of anti-dandruff shampoo and conditioners. Head & Shouldersdandruffshampoo  Herbal Essences is a brand of shampoo and conditioners. Herbal Essencesshampoo  Hugo Boss is a brand of fine fragrances. Hugo Boss  Iams is a brand of pet food. Iams  Luvs is a brand of baby diapers. Luvs  Mach3 is a brand of safety razor and male grooming products. Mach3safety razor  Max Factor is a brand of women's cosmetics. Max Factor  Mister Clean is a brand of multi-purpose cleaner, and spray sold in the United States and Great Britain. Mister Clean  Olay is a brand of women's skin care products. Olayskin care  Old Spice is a brand of men's grooming products. Old Spice  Oral-B is a brand of toothbrush, and oral care products. Oral-B  Pampers is a brand of disposable diaper and other baby care products. Pampersdiaper  Pantene is a brand of hair care products (conditioners/styling aids). Pantenehair care  Prestobarba/Blue is a brand of safety razor and male grooming products. Prestobarba/Bluesafety razor  Prilosec is an over the counter drug. Prilosec  Puffs is a brand of tissues. Puffs  Rejoice/Pert is a brand of hair care products (conditioners/styling aids). Rejoice/Perthair care  Safeguard is a brand of soaps. Safeguard  Secret is a female anti-perspirant brand. Secret  SK-II is a brand of women's skin care products. SK-IIskin care  Swiffer is a brand of house-cleaning products. Swiffer  Tampax is a brand of feminine care products. Tampax  Tide is a brand of laundry detergent. Tide  Venus is a brand female hair removal products. Venus  Vicks is an over the counter medication. Vicks  Wella is a brand name of hair care products (shampoo, conditioner, styling, and hair color). Wella

13. PROCTER and GAMBLE  Febreze/Ambi Pur is a brand of air fresheners. Febreze/Ambi Pur  Fixodent is a brand of air denture adhesives. Fixodent  Fusion is a brand of men's wet shave razors and is the quickest P&G brand to have reached $1 billion in annual sales. Fusion  Gain is a brand of laundry detergent, fabric softeners and liquid dish soap. Gain  Gillette is a brand of safety razor and male grooming products. Gillettesafety razor  Head & Shoulders is a brand of anti-dandruff shampoo and conditioners. Head & Shouldersdandruffshampoo  Herbal Essences is a brand of shampoo and conditioners. Herbal Essencesshampoo  Hugo Boss is a brand of fine fragrances. Hugo Boss  Iams is a brand of pet food. Iams  Luvs is a brand of baby diapers. Luvs  Mach3 is a brand of safety razor and male grooming products. Mach3safety razor  Max Factor is a brand of women's cosmetics. Max Factor  Mister Clean is a brand of multi-purpose cleaner, and spray sold in the United States and Great Britain. Mister Clean  Olay is a brand of women's skin care products. Olayskin care  Old Spice is a brand of men's grooming products. Old Spice  Oral-B is a brand of toothbrush, and oral care products. Oral-B  Pampers is a brand of disposable diaper and other baby care products. Pampersdiaper  Pantene is a brand of hair care products (conditioners/styling aids). Pantenehair care  Prestobarba/Blue is a brand of safety razor and male grooming products. Prestobarba/Bluesafety razor  Prilosec is an over the counter drug. Prilosec  Puffs is a brand of tissues. Puffs  Rejoice/Pert is a brand of hair care products (conditioners/styling aids). Rejoice/Perthair care  Safeguard is a brand of soaps. Safeguard  Secret is a female anti-perspirant brand. Secret  SK-II is a brand of women's skin care products. SK-IIskin care  Swiffer is a brand of house-cleaning products. Swiffer  Tampax is a brand of feminine care products. Tampax  Tide is a brand of laundry detergent. Tide  Venus is a brand female hair removal products. Venus  Vicks is an over the counter medication. Vicks  Wella is a brand name of hair care products (shampoo, conditioner, styling, and hair color). Wella

14. PROCTER and GAMBLE  Oral-B is a brand of toothbrush, and oral care products. Oral-B  Pampers is a brand of disposable diaper and other baby care products. Pampersdiaper  Pantene is a brand of hair care products (conditioners/styling aids). Pantenehair care  Prestobarba/Blue is a brand of safety razor and male grooming products. Prestobarba/Bluesafety razor  Prilosec is an over the counter drug. Prilosec  Puffs is a brand of tissues. Puffs  Rejoice/Pert is a brand of hair care products (conditioners/styling aids). Rejoice/Perthair care  Safeguard is a brand of soaps. Safeguard  Secret is a female anti-perspirant brand. Secret  SK-II is a brand of women's skin care products. SK-IIskin care  Swiffer is a brand of house-cleaning products. Swiffer  Tampax is a brand of feminine care products. Tampax  Tide is a brand of laundry detergent. Tide  Venus is a brand female hair removal products. Venus  Vicks is an over the counter medication. Vicks  Wella is a brand name of hair care products (shampoo, conditioner, styling, and hair color). Wella

15. Corporations Chapter 8, Section 3 PROFITS 90% 10% TOTAL NUMBER OF BUSINESS 20% 80%

16. D. Multinationals Chapter 8, Section 3 Multinational corporations (MNCs) are large corporations headquartered in one country that have subsidiaries throughout the world. Advantages: MNCs benefit consumers by offering products and jobs worldwide. They also spread new technologies, wealth and production methods across the globe.

17. STARTER: (Review) What are the benefits and drawbacks of each type of business?

19. MNCS: PROMOTING GLOBALIZATION OR AMERICANIZATION?

20. Disadvantages of MNCs  Critics complain that MNCS: Degrade cultures Offer low paying jobs Export wealth to shareholders Provide harmful working conditions Promote a “race to the bottom”

31. Organized Labor (or Unions)

32. What Is a Labor Union? A labor union is an organization of workers that tries to improve working conditions, wages, and benefits for its members. Chapter 9, Section 1

33. Declines in Union Membership: Why? “Right to Work” Laws The Taft-Hartley Act (1947) allowed states to pass right-to-work laws. These laws ban mandatory union membership at the workplace. Economic Trends Unions have traditionally been strongest in the manufacturing sector, representing blue-collar workers, or workers who have industrial jobs. Blue-collar jobs have been declining in number as the American economy becomes more service-oriented. Fulfillment of Union Goals With the government setting standards for workplace safety, and with more benefits being provided by both private and government sources, some claim that the union membership has decreased simply because their goals have been fulfilled. Chapter 9, Section 1

34. Collective Bargaining Chapter 9, Section 1 Collective bargaining is the process in which union and company representatives meet to negotiate a new labor contract dealing with: Wages and Benefits Working Conditions Job Security UAW Collective Bargainers

35. Labor Conflict Options: Mediation: is a settlement technique in which a neutral mediator meets with both sides to try and find an acceptable solution for both sides. Arbitration: a settlement technique in which a third party reviews the case and imposes a decision that is legally binding for both sides. Strikes: is an organized work stoppage intended to force an employer to address union demands. Strikes can be harmful to both the union members and the firm.

36. 1959 Steelworkers Strike 2007-8 Writers Guild Strike 1987 NFL Players Strike

40. IKEA: Outsourcing to the USA 1. What are the complaints of Ikea’s US workers? 2. How is organized labor in the US and Sweden different? 3. What would be the advantages and disadvantages of a unionized workforce at the Danville plant?

41. You are a fast food cook and your boss has just informed you that you will be receiving a $5 an hour raise. This means your pay is now $13 an hour (more than any other local fast food restaurant). How can this end up hurting you?

42. Supply and Demand in the Labor Market: or how can wage increases be a bad thing? Labor Demand  The higher the wage rate, the smaller the quantity of labor demanded by firms and government. Labor Supply  As wages increase, the quantity of labor supplied also increases. Equilibrium Wage  The wage rate that produces neither an excess supply of workers nor an excess demand for workers in the labor market is called the equilibrium wage. Chapter 9, Section 2 Effects of Wage Increases A new restaurant opens in town, offering higher wages for cooks. Other restaurants must raise wages for cooks in order to compete for scarce labor. Restaurants increase the price of meals to cover their increased labor costs. When the price of meals increases, consumer demand decreases. As business decreases, restaurants’ demand for cooks decreases.

43. LABOR WAGES (price): Supply and Demand

44. Trends A Changing Economy  The economy of the United States has transformed from a mainly agricultural economy in the 1800s, to an industrial giant in the 1900s.  The computer chip has revolutionized the economy since its introduction in the later 1900s. Fewer Goods, More Services  Overall, the United States is shifting from a manufacturing economy to a service economy.  As service jobs increase, the nation is losing manufacturing jobs.  Demand for skilled labor is rising, and the supply of skilled workers is increasing to meet the demand. Chapter 9, Section 3

45. Trends: Education and Earnings Potential earnings increase with increased educational attainment. Chapter 9, Section 3

46. Trends in Wages and Benefits Cost of Benefits Rises  Benefits now make up about 28 percent of total compensation in the economy.  For employers, rising benefits costs raise the cost of doing business and decrease profits. Many firms are turning to contingent employment to curb benefits costs.

47. Recent Labor Conflicts 1.What was the issue? 2.How long did the strike last? 3.How was it resolved? Who “won”? 4.Why is this woman so happy?  Be Prepared to Present!

48. Use economic reasoning and terms to explain the difference? $290 Million $7 a hour

49. $290 Million Superstars! $60 Million $90 Million

50. $110 $75 Million $300 Million $48 Million

51. Economics for Leaders $647 Million

52. Economics for Leaders Working Poor! $5.15 $5.85 $6.55 $7.25

53. Economics for Leaders Why superstars?

54. Why Not Us? Environment? Discrimination?

55. Economics for Leaders Or is it.... Poor schools? Ability?

56. Economics for Leaders Demand Ultimately, what we are paid depends on the market for our services Supply

57. Economics for Leaders It starts with demand: Willingness to pay  There are two elements: How much do workers produce? What value do consumers put on it?

58. Economics for Leaders It continues with supply: Willingness to accept  What affects workers’ willingness to accept? 1. Alternatives 2. Working conditions  Safety Surface vs. underground mining  “Non-pecuniary” Prestige, co-workers, location, etc.