1. Introduction to Business © Thomson South-Western ChapterChapter Business Organization 5

2. Introduction to Business © Thomson South-Western Chapter 5 Slide 2 THE CHANGING U.S. JOB MARKET Employment data Amount of people working Baby Boomers have dominated since the 60s 75% of the workforce was white workers, but that number has dropped to 70% since 2012 Pressures on employees Downsizing causing employees to take on more tasks and more hours

3. Introduction to Business © Thomson South-Western Chapter 5 Slide 3 BUSINESS AND THE ECONOMY Size of businesses Most are small businesses Roles of business Employ people, pay taxes, and provide goods and services (most important role) Impact on a community More jobs, more income, and a thriving economy

4. Introduction to Business © Thomson South-Western Chapter 5 Slide 4 NUMBER OF EMPLOYEES IN U.S. BUSINESSES 78% have no other employees other than the owner

5. Introduction to Business © Thomson South-Western Chapter 5 Slide 5 BUSINESS ACTIVITIES Generating ideas Raising capital Employing and training personnel Buying goods and services Marketing goods and services Maintaining business records

6. Introduction to Business © Thomson South-Western Chapter 5 Slide 6 TYPES OF BUSINESSES Producers Create the product and services used by individuals and businesses (extractors, manufacturers, and farmers) Ex: An automobile factory Intermediaries Retailers and wholesalers- they are the businesses that sell the goods and services of producers to people or other businesses Ex: A grocery store Service businesses Offers services for sale instead of products Lowest paying in the US economy

7. Introduction to Business © Thomson South-Western 6-2 Terms Proprietorship Partnership Corporation Partnership Agreement Articles of Incorporation Franchise Chapter 5 Slide 7

8. Introduction to Business © Thomson South-Western Chapter 6 Slide 8 Types of Ownership Sole Proprietorship Partnership Corporation

9. Introduction to Business © Thomson South-Western Chapter 6 Slide 9 Sole Proprietorship Owned, financed and managed by one individual who assumes all risk of loss and receives all profits Can employ other staff Common in local building firms, small shops, restaurants, butchers, etc.

10. Introduction to Business © Thomson South-Western Chapter 6 Slide 10 Partnerships Owned, financed and controlled by upwards of 2 partners who assume all risk of loss and receive all profit Terms of Partnership agreed through contract Common in professions – lawyers, accountants, architects, surveyors, estate agents, vets, etc.

11. Introduction to Business © Thomson South-Western Chapter 6 Slide 11 Corporations Form of business organization that is created by law, functions as a separate legal entity, and is owned by two or more individuals called stockholders. Stockholders are at risk only for the amount of their financial investment.

12. Introduction to Business © Thomson South-Western Chapter 5 Slide 12 FORMS OF OWNERSHIP

13. Introduction to Business © Thomson South-Western Choosing a Form of Business Ownership Choosing a proprietorship Freedom to work for themselves and have total control Easy to set up There are tax advantages for owning your own business, but if the business fails you are also responsible Chapter 5 Slide 13

14. Introduction to Business © Thomson South-Western Choosing a Partnershp Best to have a partnership agreement, another name for a contract Two or more people can invest their money and bring their expertise Good for people who want to share their ideas Chapter 5 Slide 14

15. Introduction to Business © Thomson South-Western Choosing a Corporation They are subject to many laws and are more difficult to form Must file articles of corporation, a written legal document that defines ownership and operating procedures and conditions for the business Must create corporate bylaws, operating procedures for the corporation Must name a board of directors, people who will make major policy and financial decisions Liability is limited for the owner Decisions are shared among board of directors and shareholders Chapter 5 Slide 15

16. Introduction to Business © Thomson South-Western Other Forms of Ownership Specialized Partnerships and Corporations Limited Liability Partnership Joint Venture S-corporation Limited Liability Company Nonprofit Corporation Chapter 5 Slide 16

17. Introduction to Business © Thomson South-Western Other Forms of Ownership cont. Cooperatives Franchises Chapter 5 Slide 17

18. Introduction to Business © Thomson South-Western Chapter 5 Slide 18 DESIGNING AN EFFECTIVE BUSINESS ORGANIZATION Setting direction Principles of effective organization Responsibility, authority, and accountability Unity of command- there is a clear command chain Span of control- number of employees assigned to a task or manager

19. Introduction to Business © Thomson South-Western 6-3 Terms Mission statement Goal Policies Procedures Organization chart Chapter 5 Slide 19

20. Introduction to Business © Thomson South-Western Designing an Effective Business Organization Setting Direction Mission Statement-short, specific written statement of the reason a business exists and what it wants to achieve Goals Policies Procedures Chapter 5 Slide 20

21. Introduction to Business © Thomson South-Western Designing an Effective Business Organization cont. Principles of Effective Organization Responsibility, Authority, and Accountability Unity of Command Span of Control Chapter 5 Slide 21

22. Introduction to Business © Thomson South-Western Chapter 5 Slide 22 TYPES OF ORGANIZATIONAL STRUCTURES Functional organization structure Employees report to the managers responsible for their task Matrix organizational structure Employees with varying backgrounds are assigned to work together because their expertise is required for the project.

23. Introduction to Business © Thomson South-Western Chapter 5 Slide 23 BUSINESS ORGANIZATION CHART