Business in a Changing World

Obj. 1.03 Evaluate the role of different types of business and the

various forms of business ownership in the US.

Types of Ownership

• Sole Proprietorship• Partnership• Corporations• Franchises

Sole Proprietorship

Business owned and run by just one person.

Easiest form of business to start & end.Owner receives profits.

**Owner is responsible for all debts.

Partnership

• Business owned and controlled by two or more people who have entered into a written agreement.

• Owners are responsible for key business decisions & functions.

• Share profits & investments.

**Each owner is liable for all debts.

Corporations• Separate legal entity formed by

documents filed with the state.• Owned by one or more shareholders.• Managed by Board of Directors.

**More difficult to form.**Owners don’t have direct access to

profits or involvement in decision-making.

Franchise

Written contract granting permission to operate a business to sell products and services in a set way.

Example: Chick-Fil-A, McDonald’s

Types of Businesses

• Producers• Intermediaries/Distribution• Service Firms/Business

Producers

Producers create the products and services used by individuals and other businesses.

• Types of Producers:– Extractors– Processors– Manufacturers

Extractors

A business that grows products or takes raw materials from nature.

Example:• Farmer• Miner• Fisherman• Lumberjack

Processors

Businesses that change natural materials (raw goods) into a more finished form for manufacturers to process further.

Paper Mills Oil Refineries

Steel Mills Flour Mills

Manufacturers

Takes the extractor’s products or raw materials and changes them into a form that consumers can use.

Example: Snowmobile, frozen or packaged vegetables, sections of a building

**Some manufacturers are only a part of the total activity of producing goods from the extractor’s products.**

Types of Manufacturers

• Custom Manufacturing• Mass Production• Processing

Custom Manufacturing

Building a specific and unique product to meet the needs of one customer.

Example: golf course, dentures

Mass Production

A large number of identical products are assembled using a continuous, efficient procedure.

Example: automobiles, beverage bottling plants

Processing

Changes the form of materials so they can be consumed or used to manufacture other products.

Example: Film into pictures, flour into cereal

Intermediaries/Distribution/Marketers

Businesses involved in selling the goods and services of producers to consumers and other businesses.

Example: retailers, wholesalers

Service Firms/Businesses

Carries out activities that are consumed by its customers. It does not offer products for sale. Are the fastest growing part of our business world over the past several years.

Example: dentists, physicians, hair stylists