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ADDITIONAL BUSINESSES

ADDITIONAL BUSINESSES. S CORPORATION. Hybrid small corporations            Limited liability to share holders            Profits distributed to share holders taxed as personal income only. FRANCHISES. License to operate a store individually (appears to be part of a chain) 

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ADDITIONAL BUSINESSES

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  1. ADDITIONAL BUSINESSES

  2. S CORPORATION • Hybrid small corporations            • Limited liability to share holders            • Profits distributed to share holders taxed as personal income only

  3. FRANCHISES • License to operate a store individually (appears to be part of a chain)  • Offers training • Examples: McDonalds, Auntie Anne’s Pretzels, Subway                      

  4. GOVERNMENT-OWNED CORPORATIONS • Owned and operated by governments (federal, state, local)            • Supplies a need not adequately met by the free market            • Examples: Tennessee Valley Authority, U.S. Postal Service, Federal Deposit Insurance Corporation, Memphis Light, Gas, & Water

  5. Nonprofit Organizations • Works in a businesslike way to promote the collective interests of its members rather than seek financial gain for its owners • They often rely on volunteers for much of its work. • They perform useful services with minimal expense and without regard to earning a profit. • Example – American Red Cross

  6. Community Organizations • Includes schools, churches, hospitals, welfare groups, and adoption agencies • They are legally incorporated to take advantage of unlimited life and limited liability. • Do not issue stock, pay dividends, or pay income taxes. Surpluses are used to further their work.

  7. Cooperatives • A type of nonprofit; voluntary association formed to carry on some kind of economic activity that will benefit its members • Consumer co-ops – voluntary; buys bulk amounts of goods such as food or clothing on behalf of its members; members volunteer work to keep costs down (often done with food to help keep costs down; REI is nation’s largest; not Sam’s Club/Costco)

  8. Cooperatives (continued) • Service co-ops – provide services such as insurance, credit, or child care to its members, rather than goods (example – credit unions) • Producer co-ops - help members promote or sell their products (most deal with farming; Ocean Spray cranberry co-op is an example; Farmers’ Alliance)

  9. One more thing • We mentioned there were 2 types of stock. • Common Stock – gives the stockholder a percentage of profits (fluctuates year to year) and gives voting rights at the stockholder’s meeting • Preferred stock – gives stockholders a guaranteed dividend/return every year (maximizes profits) and access to assets of business if it ever fails Companies issue an initial public offering as a way gain access to more money or pay off debts.

  10. Mergers • When 2 firms merge one business gives up its separate legal identity. • Reasons for merging • Grow faster • Improve efficiency • Acquire new/different products • Eliminate a rival • Change its image

  11. Mergers • Horizontal mergers - The merger of 2 businesses selling the same thing • Vertical mergers – the merger of 2 different businesses or stage of manufacturing • Conglomerate – firm with 4+ businesses making unrelated products • Multinational – corporation producing and selling without regard to national boundaries

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