1 Business Organizations SECTION 1: Sole Proprietorships SECTION 2: Partnerships SECTION 3:...
-
Upload
rafe-norton -
Category
Documents
-
view
221 -
download
1
Transcript of 1 Business Organizations SECTION 1: Sole Proprietorships SECTION 2: Partnerships SECTION 3:...
1
Business OrganizationsBusiness OrganizationsSECTION 1: Sole Proprietorships
SECTION 2: Partnerships
SECTION 3: Corporations
SECTION 4: Other Forms of Organizations
CHAPTER 7
2
Objectives:Objectives:What are the advantages of establishing a
sole proprietorship?What are the disadvantages of establishing a
sole proprietorship?
Sole ProprietorshipsSole ProprietorshipsSECTION 1
3
Advantages to a sole proprietorship:Advantages to a sole proprietorship:easy to start up full control of the business by the owner exclusive rights to profits by the owner
Sole ProprietorshipsSole ProprietorshipsSECTION 1
4
Disadvantages to a sole Disadvantages to a sole proprietorship:proprietorship:unlimited liability by the owner sole responsibility of the owner to operate
the business limited growth potential for the business lack of longevity of the firm
Sole ProprietorshipsSole ProprietorshipsSECTION 1
5
Objectives:Objectives:How do general partnerships and limited
partnerships differ?What are the advantages of organizing a
partnership?What are the disadvantages of organizing a
partnership?
PartnershipsPartnershipsSECTION 2
6
Differences between general Differences between general partnerships and limited partnerships:partnerships and limited partnerships:General partnerships:
Partners have equal decision-making authority. Each partner has unlimited liability.
Limited partnerships: Partners join as investors. Partners have in inactive role in decision making. Partners have limited liability.
PartnershipsPartnershipsSECTION 2
7
Advantages of a partnership:Advantages of a partnership:easy to formallow specialization lets partners share decision making shares business losses between partners
PartnershipsPartnershipsSECTION 2
8
Disadvantages of a partnership:Disadvantages of a partnership:unlimited liability by partnerspotential for conflict among partners lack of business longevity
PartnershipsPartnershipsSECTION 2
9
Objectives:Objectives:How is a corporation formed, and what are
the characteristics of a corporation?How is a corporation organized?How do stocks and bonds differ?What are the advantages and disadvantages
of organizing a corporation?
CorporationsCorporationsSECTION 3
10
To form a corporation:To form a corporation:Submit an application for the articles of
incorporation and obtain a corporate charter.
CorporationsCorporationsSECTION 3
11
Information required by the articles Information required by the articles of incorporation:of incorporation: the name and purpose of the proposed corporation the address of the corporate headquarters the method of fundraising to be used by the
corporation the amount of money the corporation expects to raise the names and addresses of the major corporate
officers the intended life of the corporation
CorporationsCorporationsSECTION 3
12
Characteristics of a corporation:Characteristics of a corporation: legally distinct from its owners treated as an individual—can own property,
hire workers, pay taxes, sue and be sued, and make and sell products
CorporationsCorporationsSECTION 3
13
Corporate structure:Corporate structure: sometimes owned by shareholders headed by a board of directors to make decisions run by corporate officers—CEO, president, vice
presidents, etc.—who carry out decisions made by the board
made up of department heads and other employees to perform day-to-day tasks
CorporationsCorporationsSECTION 3
14
Differences between stocks and bonds:Differences between stocks and bonds:Stocks:
represent ownership of the firms issued as shares
Bonds: used to raise money issued as a certificate in exchange for money
borrowed from an investor
CorporationsCorporationsSECTION 3
15
Advantages of organizing a Advantages of organizing a corporation: corporation: limited liability separation of ownership from managementease of raising capital longevity
CorporationsCorporationsSECTION 3
16
Disadvantages of organizing a Disadvantages of organizing a corporation: corporation: costly and difficult to obtain a corporate
charternumber of government regulations to follow slow decision-making process
CorporationsCorporationsSECTION 3
17
Objectives:Objectives:How do vertical combinations differ from
horizontal and conglomerate combinations?Why might a business owner decide to open a
franchise?What is the customer’s role in a cooperative?How does a nonprofit organization differ
from other types of business organizations?
Other Forms of OrganizationsOther Forms of Organizations
SECTION 4
18
Difference between vertical combinations and Difference between vertical combinations and horizontal and conglomerate combinations:horizontal and conglomerate combinations:Vertical combinations—two or more
companies involved in different production phases of the same good or service
Horizontal combinations—two or more companies produce the same good or service
Conglomerate combinations—two or more companies produce unrelated products
Other Forms of OrganizationsOther Forms of Organizations
SECTION 4
19
Benefits of opening a franchise to a Benefits of opening a franchise to a business owner:business owner:A business owner can reduce the overall costs
associated with starting a business because: employee training is often provided by parent
company advertising is sometimes paid for by parent
company it can use the parent company’s name
Other Forms of OrganizationsOther Forms of Organizations
SECTION 4
20
The customer’s role in a cooperative:The customer’s role in a cooperative:owns a share in the business shares the expense of running the business
Other Forms of OrganizationsOther Forms of Organizations
SECTION 4
21
Differences between a nonprofit Differences between a nonprofit organization and other types of organization and other types of business organizations:business organizations:not focused on financial gain income not taxed by the government
Other Forms of OrganizationsOther Forms of Organizations
SECTION 4
22
1.1. Why is a sole proprietorship the easiest type of business to establish?
2.2. How does forming a partnership solve many of the problems that are associated with sole proprietorships?
3.3. Compare stocks and corporate bonds. How do corporations raise money through stocks and bonds?
4.4. Legally, how is a corporation treated as an individual?
Wrap-UpWrap-Up
CHAPTER 7