1. Business Organizations
Ch. 8

2. Overview Section 1: Sole Proprietorships Section 2: Partnerships
Section 3: Corporations, Mergers, & Multinationals
Section 4: Other Organizations

3. Sole Proprietorships Sec. 1
Key Vocabulary
Objectives:
Business organization
Describe characteristics of a Sole Proprietorship
Sole proprietorships
Analyze advantages & disadvantages of a Sole Proprietorship
Business license
Zoning law
Liability
Fringe benefits

4. Characteristic of a Sole Proprietorship
Business owned & managed by a single individual
That’s it…just one owner, thus the word “sole”
Nifty facts to know:
Most entrepreneurs started out as sole proprietors
75% of businesses in US
Only 6% of all US sales

5. Sole Proprietorship Advantages: Disadvantages: Easy to setup
Few regulations
Owner gets the profits after taxes
Owner has full control
Easy to discontinue
Disadvantages:
Unlimited Personal Responsibility
Limited access to resources
Lack of permanence

6. Section 2: Partnerships
Key Vocabulary
Partnership
General partnership
Limited partnership
Limited liability partnership (LLP)
Articles of partnership
assets
Objectives:
Describe characteristics of the three main types of partnerships
Analyze advantages & disadvantages of a partnership

7. Characteristics of a Partnership
Business organization owned by two or more persons
All agree on specific division of responsibilities and profits
Three types:
General
Limited
Limited liability
Nifty facts to know:
About 7% of all businesses in US
5% of all sales
10% of all income earned in US in a year

8. Partnerships Advantages: Disadvantages: Ease of setup Few regulations
Shared decision making and specialization
Larger pool of capital
No special taxes
Disadvantages:
Unlimited liability unless you’re an LLP
Potential for Conflict b/t partners

9. Section 3: Corporations, Mergers, & Multinationals
Key Vocabulary
Corporation
Stock
Closely held corporations
Publicly held corporations
Certificate of incorporation
Dividend
Horizontal merger
Vertical merger
Conglomerate
Multinational corporation
Objectives:
Describe characteristics of a corporation
Analyze advantages & disadvantages of incorporating
Compare & contrast types of corporate combinations
Describe role of multinational corporations

10. Characteristics of a Corporation
Legal entity, or being, owned by individual stockholders (or shareholders)
Like an individual, a corporation
pays taxes
can engage in business
can make contracts
can sue and be sued
Types of Corporations
Closely held: examples are Mars Candy, Rolex, LEGO, IKEA
Publicly held
Nifty facts to know:
20% of all businesses in US
90% of all sales
70% of all income earned

11. Typical Corporate Structure
Owners: people who buy stock
Board of Directors: elected by stockholders
Corporate Officers: appointed by Board
Managers: hired by Corporate officers
Employees: hired by managers

12. To incorporate or not to incorporate
Advantages of incorporating
Limited liability
Transferable ownership
Ability to attract capital
Owners don’t need special skills, just money
Long life
Disadvantages of incorporating
Expensive & difficult to start up
Double taxation
Loss of control
More regulations

13. Mergers Types of Mergers
Sometimes companies want to joint together or one wants to buy a competing company. Sometimes a company buys another company just to make more money.
Types of Mergers
Horizontal
Not many examples today b/c gov’ts fear monopolies
Vertical
Examples: American Apparel, ExxonMobil, Apple
Conglomerate
Examples: Boeing, Comcast, Dow Chemical, Procter & Gamble, Time Warner, Trump Organization, Viacom

14. A word about Multinationals
Companies that operate in more than one country
Typically the largest corporations
Why would a corporation want to operate in more than one country?
Are there any disadvantages to operating in more than one country?

15. A few famous multinationals, to name a few
Activision Blizzard
Johnson & Johnson
AMD
Krispy Kreme
Apple
L’Oreal
Aeropostale
McDonald’s
Baskin-Robbins
Mattel
Bic
Michelin
Billabong
Microsoft
Black & Decker
Motorola
Boeing
Nestle
Bridgestone
Nike
Capital One
PepsiCo
Caterpillar
Red Bull
Coca-Cola
Samsung
Costco
Sony
Dell
Southwest Airlines
Dunkin’ Donuts
Starbucks
Facebook
Toyota
Ford
Wal-Mart
Google