1. Business Ownership and Operations
Chapter 6 pp
Introduction to Business

2. Introduction to Business
Learning Objectives
Name the three forms of business ownership.
Compare the types of ownership.
Describe alternative ways to do business.
Identify the different types of businesses.
continued
Introduction to Business

3. Introduction to Business
Why it’s Important
You need to understand business ownerships and operations before starting a business .
Introduction to Business

4. Types of Business Ownership
1. The three different ways you can own a business are:
Sole proprietorship
Partnership
Incorporation
Introduction to Business

5. Introduction to Business
Sole Proprietorship
Sole proprietorship
2. A ____________________ is a business owned by only ________person.
one
Introduction to Business

6. Sole Proprietorship Advantages
3. The advantages to having your own business are:
It’s easy to start
You get to be your own boss
You get to keep all the profits
The taxes are usually low
Introduction to Business

7. Sole Proprietorship Disadvantages
4. The disadvantages to having your own business are:
You have to pay for _______________
You might have to use your __________________ or ____________
from the bank
You might lack _____________________
Everything yourself
Personal savings
Borrow money
Business skills
Introduction to Business

8. Sole Proprietorship Disadvantages
5. A serious disadvantage to owning a sole proprietorship is that you have ____________________, or ____________________________
________________.
Unlimited liability
Full responsibility for your company’s debts
Introduction to Business

9. Introduction to Business
Partnership
partnership
6. A _____________ is a business owned by ____________________ who share the risks and rewards.
7. To start a partnership you need to draw up a _______________________, which is a ____________________________
Two or more persons
Partnership agreement
Contract that outlines the rights and responsibilities of each partner
Introduction to Business

10. Partnership Advantages
8. The advantages to partnership are:
You might need only a __________ to start and have to ______________ only on your ___________________.
Each of your partners _______________ ____________ to start the business.
license
pay taxes
personal profits.
can contribute
money
continued
Introduction to Business

11. Partnership Advantages
Banks are often more willing to lend money to _______________________________.
Your partners can _________________ to the business .
partnerships than sole proprietorships
bring difference skills
Introduction to Business

12. Partnership Disadvantages
9. The disadvantages to partnership are:
You not only _______________ with your partners, you also______________________
You might not ______________ with your partners.
You share ____________________________ with your partners.
Share the risks
Share the profits
get along
Unlimited legal and financial liability
Introduction to Business

13. Graphic Organizer Similarities and Differences Between
Partnerships and Sole Proprietorships
Partnerships
Both
Sole Proprietorships
Quicker decision making
Owner keeps all profits
Owner is own boss
Relatively easy to get credit
Shared decision making
Pride in owning and running business
Easy to set up
Low taxes
Unlimited liability for debts
Huge time demands
Increased diversity of experience
Shared losses
Combined funds
Introduction to Business

14. Introduction to Business
Corporation
corporation
10. A _________________ is a business owned by many people but treated by __________________________.
law as one person
Introduction to Business

15. Introduction to Business
Corporation
11. To form a corporation, you need to get ______________________a from the _______________ your headquarters is in.
corporate charter
state
Introduction to Business

16. Introduction to Business
Corporation
12. To raise money, you can sell ____________, or ___________________________________.
13. For each share of common stock, the stockholder gets a __________________ and __________ on how the business is run.
14. You also must have a ________________ who control the corporation.
stock
shares of ownership in your corporation
share of the profits
a vote
board of directors
Introduction to Business

17. Corporation Advantages
15. A major advantage of a corporation is its _________________________.
16. If your company loses money, the ________________________________
Another advantage is that the corporation
__________________________________
limited liability
stockholders lose only what they invested
doesn’t end if the owners sell their shares
Introduction to Business

18. Corporation Disadvantage
18. A disadvantage of a corporation is that you often have to ________________.
19. The _________________________ corporations.
20. It is __________________________ than a sole proprietorship or a partnership and running a corporation can be much more complicated.
pay more taxes
Government closely regulates
more difficult to start a corporation
Introduction to Business

19. Introduction to Business
Figure
6.1
GENERATIONS OF FAMILY-OWNED BUSINESSES
Family-owned businesses are sometimes kept in the family for more than one generation.
What percentage of families have had their family-owned businesses for two or more generations?
Introduction to Business

20. Introduction to Business
Fast Review
What are some of the advantages of a sole proprietorship?
2. What is the difference between a sole proprietorship and a partnership?
Easy to start, you can be your own boss, you keep all the profits, and you pay taxes only once on the income from the business
sole proprietorship is owned by one person and a partnership is owned by two or more people
Introduction to Business

21. Introduction to Business
Fast Review
If a partner makes a bad business decision, what responsibility do the other partners have?
4. What are the disadvantages of a corporation?
All other partners share responsibility of a bad decision
It’s more complex to start, it’s more closely regulated by the government, it’s more complicated to run, and you pay more taxes.
Introduction to Business

22. Alternative Ways to Do Business
21. Franchises, cooperatives, and nonprofit organizations offer you ____________________ to do business.
other ways
Introduction to Business

23. Introduction to Business
Franchise
A ____________________________ ________________________________
___________________________in a designated geographic area.
franchise is a contractual
agreement to sell a company’s
products or services
Introduction to Business

24. Introduction to Business
Franchise
23. To run a franchise you have to _______________________________________ or __________________________
24. In return, the franchisor offers a __________________________________.
25. You can ________________________ yourself, as a sole proprietor, as a partnership with someone else, or even as a corporation.
Invest money and pay the franchisor an annual fee
a share of the profits
well-known name and a business plan
can operate a franchise
Introduction to Business

25. Introduction to Business
Franchise Advantage
26. An advantage of opening a franchise is that it’s ___________________.
27. The __________________________ can be a _________________ for customers.
easy to start
name of the parent company
big draw
Introduction to Business

26. Franchise Disadvantage
28. The disadvantage of running a franchise is that the franchisor is often ________________________________.
very strict about how the business is run
Introduction to Business

27. Nonprofit Organization
29. A ________________________ is a type of business that focuses on providing a service rather than making a profit.
Like a corporation, a nonprofit organization has to _______________
___________________ and might be run by a board of directors.
nonprofit organization
register with
the government
Introduction to Business

28. Nonprofit Organization
31. Because it doesn’t make a profit, a nonprofit organization _____________
______________________
32. Donors ___________ receive dividends like investors, but they can _______________________________
doesn’t have to
pay taxes
don’t
deduct their donations from their taxes
Introduction to Business

29. Introduction to Business
Cooperative
33. A ________________ is an organization ________________________________ for the purpose of saving money on the purchase of certain goods and services.
cooperative
owned and operated by its members
Introduction to Business

30. Introduction to Business
Cooperative
A cooperative is like a corporation in that it ________________________ from the individual businesses.
35. A ___________________________ and choose a board of directors to run it.
exists as a separate entity
cooperative can sell stock
Introduction to Business

31. Introduction to Business
Cooperative
Cooperatives can save money by _______________________________
__________________________.
37. Cooperatives ___________________ than regular corporations do.
buying insurance, supplies and advertising as a group
pay less taxes
Introduction to Business

32. Introduction to Business
Fast Review
What are some examples of franchise businesses?
What types of assistance does the franchisor give a franchisee?
Fast-Food (McDonald’s, Rita’s), photocopy services (Mailboxes etc.)
Management training, advertising, and a system of operations
Introduction to Business

33. Introduction to Business
Fast Review
How is a nonprofit organization like and unlike a corporation?
What are some advantages of a cooperative?
They are alike because both needs to register with the government and might be run by a board of directors. Unlike in that it doesn’t pay taxes and gets money through grants and donations
pool resources and save money as group
Introduction to Business

34. Introduction to Business
Types of Businesses
38. One way to classify businesses is to group them by the kind of products they provide:
Producing raw goods
Processing raw goods
Manufacturing goods from raw or processed goods
Distributing goods
Providing services
continued
Introduction to Business

35. Introduction to Business
Producers
39. A ___________________is a business that gathers __________________ in their natural state.
40. ___________________ are materials gathered in their original state from _____________________ such as land and water.
producer
raw products
Raw materials
natural resources
Introduction to Business

36. Introduction to Business
Processors
Processors
41. ______________ change raw materials into ____________________.
42. Processed goods :
more finished products
are made from raw goods and may require further processing.
Introduction to Business

37. Introduction to Business
Manufacturers
Manufacturers
43. _____________________ are businesses that make _______________ out of processed goods.
44. The finished products ________________________________
_________________________________.
finished products
need no further processing and are ready for market.
Introduction to Business

38. Introduction to Business
Intermediaries
intermediary
45. An _________________is a business that moves goods from one business to another.
46. It buys goods, ___________________
__________________________________
stores them, and then resells them
Introduction to Business

39. Introduction to Business
Intermediaries
47. A _________________ also known as a distributor, distributes goods. This is one type of intermediary
48. Wholesalers ___________________________ and resell them in _______________ to their customers, usually other companies.
wholesaler
buy goods from manufacturers in huge quantities
smaller quantities
Introduction to Business

40. Introduction to Business
Retailer
49. A _______________ purchases goods from a wholesaler and resells them to the ________________________________
________________________.
retailer
consumer, or the final buyer of the goods
Introduction to Business

41. Introduction to Business
Service Businesses
50. Service businesses _________________ rather than goods.
51. Services _____________________
___________________, such as hairstyling and car repair.
provide services
are the products of a skill or an activity
Introduction to Business

42. Introduction to Business
Service Businesses
52. Some service businesses ________________, such as medical clinics and law firms.
53. Some _________________________, such as taxi companies and copy shops.
meet needs
provide conveniences
Introduction to Business

43. Introduction to Business
Fast Review
What is the difference between a producer and a processor?
2. Describe the activities performed by businesses.
producer – gathers or create raw products. processor – changes raw products into more finished products.
Activities include producing, processing, manufacturing, and distributing goods and providing services.
Introduction to Business

44. Introduction to Business
Fast Review
What does an intermediary do?
4. Give examples of service businesses.
moves products between businesses and the public
hairstylists, car repair shops, law firms, newspapers, internet services
Introduction to Business

45. Introduction to Business
What’s the aim of joining forces and
starting an organization?
What’s the benefit of going into business for yourself?
continued
Introduction to Business

46. Introduction to Business
Can a business have a contractual agreement with its customers?
Introduction to Business

47. Business Ownership and Operations
End of
Chapter 6
Business Ownership and Operations pp

48. Introduction to Business
Key Words
sole proprietorship
unlimited liability
partnership
corporation
stock
limited liability
franchise
continued
Introduction to Business

49. Introduction to Business
Key Words
nonprofit organization
cooperative
producer
processors
manufacturers
intermediary
continued
Introduction to Business

50. Introduction to Business
Key Words
wholesaler
retailer
Introduction to Business

51. Introduction to Business
Making an Ethical Decision
What are the advantages and disadvantages of “going solo” in a business venture?
How can having a partner help launch and grow a business? Are there any drawbacks?
continued
Introduction to Business

52. Introduction to Business
Making an Ethical Decision
Are you obligated to invite a person into a partnership if that person was involved in inventing a product you want to sell? What if that person decided to start the business without you?
Introduction to Business

53. Introduction to Business
Manufacturing Products
Compaq Computers and Cisco Systems don’t build their own products anymore. These companies rely on Flextronics, a company that specializes in manufacturing electronics, to build their equipment.
continued
Introduction to Business

54. Introduction to Business
Manufacturing Products
This allows Compaq and Cisco to focus on creating new products. Flextronics has grown into a global contractor that produces $10.5 billion a year in electronic gizmos.
continued
Introduction to Business

55. Introduction to Business
Analyze
What do Compaq Computers and Cisco Systems give up when they rely on an outside manufacturer?
Introduction to Business