1. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE1 CHAPTER 5 5-1 5-1Business in the U.S. Economy 5-2 5-2Forms of Business Ownership 5-3 5-3Organizational Structure for Businesses Business Organization

2. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE2 Business in the U.S. Economy Goals Describe the changing status of U.S. employment. Discuss the role of business in the U.S. economy. Describe three major types of businesses. 5-1

3. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE What do you think? “The most important role of businesses is to make and distribute products and services needed by consumers, government, and other businesses.” Chapter 5 3

4. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 5 4 Key Terms-handout contingent worker producer intermediary service business

5. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 5 5 THE CHANGING U.S. JOB MARKET Employment data National Unemployment rate 7.9% 2012 CT 8.9% 2012 12 million people 155 million in labor workforce Pressures on employees

6. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Research Go to bls.gov/emp Scroll down to database search Search by occupation, occupation or industry Select two jobs and find the following: 2010 & 2020 employment figures Job openings due to growth etc… Salary Chapter 5 6

7. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 5 7 Checkpoint >> List several groups that will increase as a percentage of the total U.S. workforce in the next decade. Answer Younger workers (16–24 years of age) Asian-, Hispanic-, African-American groups Women

8. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 5 8 BUSINESS AND THE ECONOMY Size of businesses Roles of business Impact on a community

9. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 5 9 Source: U.S. Census Bureau Percent of Businesses by Employee Size

10. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 5 10 6 BUSINESS ACTIVITIES Starts with an idea Raising capital-can borrow or issue stock Employing and training personnel Buying goods and services-to run business & to make product Marketing goods and services Maintaining business records

11. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 5 11 Checkpoint >> What are the basic activities completed by all businesses? Answer are generating ideas raising capital employing and training personnel buying goods and services marketing goods and services maintaining business records

12. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 5 12 TYPES OF BUSINESSES Producers-create products/services; use resources Intermediaries-sell producer products/services Service businesses-intangibles; no products Fastest growing in economy more than 60%

13. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 5 13 Checkpoint >> How does a manufacturer differ from an extractor? Answer 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. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE14 Forms of Business Ownership Goals Understand the three major forms of business ownership. Determine when each form of business ownership is most appropriate. Recognize other specialized business ownership forms. 5-2

15. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 5 15 Types of Businesses Proprietorship One person Easy to start Makes all decisions Responsible for all debts No personal protection from creditors

16. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 5 16 Partnership Two or more people Similar to proprietorship Easy to start Both owners responsible for profits and debts

17. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 5 17 Corporation Separate legal entity Owned by one or more shareholders Have several owners More difficult to form than proprietorships & partnerships Not all owners have direct involvement

18. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 5 18 BUSINESS OWNERSHIP Partnership Agreement-written agreement among all owners Articles of Incorporation-written legal document that defines ownership and operating procedures for business.Varies by state.Bylaws and Board of Directors Franchise-writen contract granting permission to operate a business to sell products/services

19. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 5 19 Forms of Ownership Source: Internal Revenue Service

20. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 5 20 Checkpoint >> What are the differences between the three main forms of business ownership? Answer Business forms differ in the ways in which decision-making and investments are made and to whom liabilities are distributed.

21. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 5 21 CHOOSING A FORM OF BUSINESS OWNERSHIP Choosing a proprietorship Choosing a partnership Choosing a corporation

22. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 5 22 Checkpoint >> Which form of business ownership is the most complex and difficult to form? Answer 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 must have clearly defined bylaws.

23. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 5 23 OTHER FORMS OF OWNERSHIP Specialized partnerships and corporations Cooperatives and franchises

24. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 5 24 Checkpoint >> What are the other specialized forms of business ownership? Answer limited liability partnership joint venture S-corporation limited liability companies (LLC) nonprofit corporations.

25. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE25 Organizational Structure for Businesses Goals Understand important principles in designing an effective organization. Compare alternative organizational structures for businesses. 5-3

26. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 5 26 Key Terms mission statement goal policies procedures organization chart

27. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 5 27 DESIGNING AN EFFECTIVE BUSINESS ORGANIZATION Setting direction Principles of effective organization Responsibility, authority, and accountability Unity of command Span of control

28. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 5 28 Checkpoint >> What is the difference between a mission statement and a goal? Answer A mission statement states 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.

29. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 5 29 TYPES OF ORGANIZATIONAL STRUCTURES Functional organization structure Matrix organizational structure

30. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 5 30 Business Organization Chart

31. Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 5 31 Checkpoint >> What problems can result from the use of a functional organizational structure? Answer Employees in a functional organizational structure may tend to loose 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.