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Chapter 8 - Business Organizations

Activator – Chapter 8 Write down three occupations that you’re considering for your future. Categorize each of your choices based on who your employer might be for each job. Chapter 8 - Business Organizations .

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Chapter 8 - Business Organizations

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  1. Activator – Chapter 8Write down three occupations that you’re considering for your future. Categorize each of your choices based on who your employer might be for each job.

  2. Chapter 8 - Business Organizations • Business organization (firm) –establishment formed to carry on a commercial enterprise. • 3 types - Sole proprietorship, partnership, corporation • Each has different levels of liability (responsibility) • Liability – legal obligation to pay debts incurred by the business

  3. Sole Proprietor • Sole proprietorship – a business owned and managed by a single individual • Most common type of business organization • 75% of all businesses are sole proprietorships in the U.S. http://www.arete-basketball.com/

  4. Partnership • Partnership – a business organization owned by two or more persons who agree on a specific division of responsibilities and profits • Account for about 5 % of all businesses • General Partnership – partners share equal liability and responsibility • Doctor’s lawyers, accountants, small family businesses • Limited Liability Partnership – all partners are limited from personal liability, in the case of another partners mistakes. • Legal buffer from personal liability • Articles of Partnership – outline the agreements between partners.

  5. Corporation • Corporation – is a separate legal entity, or legal being, owned by individual stockholders, each of whom faces no liability for the firm’s debt • Stock – a certificate of ownership in a corporation • Partial owner , i.e. 1000 shares, purchase 1, 1/1000th owner of the company • Corporation has a separate legal identity, an entity separate from its owners • Account for 20% of all businesses, but 90% of all products sold

  6. Figure 3.3Ownership, Control, and Organization of a Typical Corporation

  7. Corporation • Closely held – privately held corporations, that do not trade stock on the public exchange • Publicly held – sells stock on the market to investors in order to grow the business

  8. Mergers • Merger – combine with another company to become one entity • Horizontal merger – firms in the same market with a similar good or service merge • Vertical merger –firms involved in producing different goods or services merge • Conglomerates – business mergers with more three or more businesses • Multinationals – large corporation that produces and sells its goods and services throughout the world

  9. Other Organizations • Business Franchise – semi-independent business that pays fees and royalties to a parent company • Business is granted right to sell using the name, product and brand of the company • Zaxbys, McDonalds, Subway, etc. • Cooperative – Co-0ps, business organization owned and operated by a group of individuals for their shared benefit

  10. Other Organizations • Consumer cooperative –consumers sell merchandise to members at reduced prices • Book clubs, health food stores • Service cooperative—provide a service rather than a good • Credit union, banking services, health care, legal help • Producer cooperative—agricultural marketing that help members sell their products

  11. Other Organizations • Nonprofit Organizations – business that gears towards benefiting society (philanthropy) • Professional Organizations—work to improve the image, working, conditions, and skill of workers • National Education Association, American Veterinary Medical Association, American Bar Associations of Lawyers, etc. • Business Organization—promote the collective business interests of a city, state, nation, or a group of similar businesses • Better Business Bureau

  12. Other Organizations • Trade Associations—nonprofits that promote the interests of particular industries • Labor Unions – organized group of workers whose aim is to improve working conditions, hours, wages and fringe benefits for its members.

  13. Study Guide Chapter 7 + 8 • Perfect/Pure competition • Many buyers and sellers, identical products, buyers + sellers are well informed, no barrier to entry. • Barrier to entry • Monopoly • Natural • Prices are not competitive, dictated by monopolist. • Patent • Government • Price discrimination • Market power • Monopolistic • Many firms, product differentiation, low barrier to entry, little control over price • Running shoes, pens, cars, etc., gas station near highway, publix, designer t-shirt

  14. 23. Partnership 24. Sole proprietorship 25. Partnership 26. Corporation 27. Horizontal 28. Vertical 29. Conglomerate 30. Franchise Study Guide Chapter 7 + 8 14. Oligopoly • Collusion, price fixing • Antitrust • Microsoft • Sole proprietor • Partnership • Corporation • Sole proprietorship • Corporation

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