1. Chapter 6 Corporate Forms of Business Ownership
©2008 Thomson/South-Western

2. Partnership agreements
Chapter 6 Corporate Forms of Business Ownership

3. Partnership agreement answers
Chapter 6 Corporate Forms of Business Ownership

4. Chapter 6 Corporate Forms of Business Ownership
Lesson 6.1 Corporations
Goals
Explain the basic structure of a corporation.
Describe how a corporation is formed and organized.
Chapter 6 Corporate Forms of Business Ownership

5. Chapter 6 Corporate Forms of Business Ownership
Corporations
Corporation — business owned by a group of people and authorized by the state in which it is located to act as though it were a single person, separate from its owners
Chapter 6 Corporate Forms of Business Ownership

6. Size of Corporations sales vs.
17 X Greater
16 X Greater
Chapter 6 Corporate Forms of Business Ownership

7. Basic Features of a Corporation
New Jersey Approved Corporation
Business Class, Inc.
Charter (certificate of incorporation) — official document through which a state grants the power to operate as a corporation
Stockholders — owners of the corporation
Shares — equal parts of ownership
Dividends — profits distributed to stockholders on a per-share basis
Chapter 6 Corporate Forms of Business Ownership

8. Basic Features of a Corporation
Board of directors — ruling body of the corporation – ELECTED by Stockholders to plan and lead.
Officers — top executives hired by Board to manage the business, president, secretary, treasurer, CEO, CFO
Chapter 6 Corporate Forms of Business Ownership

9. Formation of a Corporation
Prepare the certificate of incorporation
Name the business
State the purpose of the business
Invest in the business
Pay incorporation costs
Operate the new corporation
Get organized Balance sheet, stock not money
Handle voting rights 1 stock = 1 vote
Chapter 6 Corporate Forms of Business Ownership

10. Chapter 6 Corporate Forms of Business Ownership
Right of Stockholders
Chapter 6 Corporate Forms of Business Ownership

11. Corporation advantages
Chapter 6 Corporate Forms of Business Ownership

12. Corporate Disadvantages
Chapter 6 Corporate Forms of Business Ownership

13. Chapter 6 Corporate Forms of Business Ownership
Stock voting example
Chapter 6 Corporate Forms of Business Ownership

14. Lesson 6.2 Close and Open Corporations
Goals
Distinguish between close and open corporations.
Explain the major advantages of the corporate form of business.
Explain the major disadvantages of the corporate form of business.
Chapter 6 Corporate Forms of Business Ownership

15. Close and Open Corporations
Close corporation
Also called closely held corporation
Does not offer shares of stock for public sale
Owned by just a few stockholders
Open corporation
Also called publicly owned corporation
Offers shares of stock for public sale
Has large number of stockholders
Chapter 6 Corporate Forms of Business Ownership

16. Advantages and Disadvantages of Corporations
Available sources of capital
Limited liability of stockholders
Permanency of existence
Ease in transferring ownership
Disadvantages
Taxation
Government regulations and reports
Stockholders’ records
Charter restrictions
Chapter 6 Corporate Forms of Business Ownership

17. What types of Businesses are suited to being Corporations?
Businesses that require a large amount of Capital i.e. hotels, Auto manufacturers etc.
Businesses with uncertain futures i.e. new magazine, amusement parks because of the risk involved
Chapter 6 Corporate Forms of Business Ownership

18. Board of Directors of Nike
Mark G. Parker President and Chief Executive Officer of NIKE, Inc.
John G. Connors Partner in a venture capital firm.
Timothy D. Cook Chief Operating Officer of Apple Computer
Jill K. Conway, Visiting scholar from MIT in science,
technology and society.
Ralph D. DeNuzion, age 72, President of an investment firm
Alan B. Graf Executive Vice President and Chief Financial Officer of FedEx.
Douglas G. Houser Partner in the Portland, Oregon law firm
Jeanne P. Jackson Founder and chief executive officer of MSP Capital, a private investment company. Ms. Jackson was chief executive officer of Walmart.com from March 2000 to January She was with Gap, Inc., as president and chief executive officer of Banana Republic. She has held various retail management positions with Victoria’s Secret, The Walt Disney Company, Saks Fifth Avenue and Federated Department Stores. Ms. Jackson is a trustee of the United States Ski and Snowboard Team and serves on the board of advisors of the Harvard Graduate School of Business. She is also a director of McDonald’s, Nordstrom and Williams-Sonoma.
Chapter 6 Corporate Forms of Business Ownership

19. Chapter 6 Corporate Forms of Business Ownership
Questions
A corporation that does not offer its stock to the public for sale is a(n)
Close Corporation
Open Corporation
Private Corporation
None of the above.
Chapter 6 Corporate Forms of Business Ownership

20. Chapter 6 Corporate Forms of Business Ownership
Questions
The advantages of a corporate form of ownership include all of the following except
Double taxation
Available sources of capital
Limited liability
Permanency of existence
Chapter 6 Corporate Forms of Business Ownership

21. Lesson 6.3 Specialized Types of Organizations
Goals
Describe organizations that are specialized alliances between companies or individuals.
Describe specialized forms of corporations formed for tax or nonprofit reasons.
Chapter 6 Corporate Forms of Business Ownership

22. Organizational Alliances
Joint venture — agreement among two or more businesses to work together to provide a good or service.
Example: NUMMI AutoAlliance Ford and Mazda
Sony-Ericsson, Baseball Network (ABC, NBC and Major League Baseball)
Verizon Wireless (Verizon and Vodafone)
XFL – NBC and World Wresting Entertainment
Chapter 6 Corporate Forms of Business Ownership

23. Organizational Alliances
Virtual corporation — network of companies that form alliances among themselves as needed to take advantage of fast-changing market conditions
Chapter 6 Corporate Forms of Business Ownership

24. Chapter 6 Corporate Forms of Business Ownership
Virtual Corporation
A. Wants to sell a specialized computer.
B. Has some parts needed
C. Has some additional parts needed.
D. Knows people who could use the computer.
Chapter 6 Corporate Forms of Business Ownership

25. Chapter 6 Corporate Forms of Business Ownership
Cooperatives
Cooperative — business owned and operated by user-members for the purpose of supplying themselves with goods and services
Chapter 6 Corporate Forms of Business Ownership

26. Other Limited Liability Corporations
Limited liability company (LLC) or Subchapter S corporation — special type of corporation allowed that is taxed as if it were a sole proprietorship or partnership
_ Less than 100 stockholders
Domestic company and no Non-resident aliens as stockholders
Only one class of stock, NO DOUBLE TAXATION
Chapter 6 Corporate Forms of Business Ownership

27. Other Limited Liability Corporations
Nonprofit corporation — organization that does not pay taxes and does not exist to make a profit ELKS, Masons, Local Hospitals, Girl Scouts.
Quasi-public corporation — business that is important to society, lacks profit potential, and is often run by local, state, or federal government Turnpike, water and sewer
Chapter 6 Corporate Forms of Business Ownership