1

Corporations

“are legally distinct from their owners and are treated as if they

were individuals”

2

Corporations…

• …can own property, hire workers, make contracts, pay taxes, sue and be sued, and make and sell products.

3

Forming a corporation

• Article of incorporation• application that includes:

• name & purpose• address• method of fundraising• amount expected to raise• name of officers• length of existence

• Corporate charter• License granted to

operate by state

4

Two types

• Private Corporations• Owned by individual

or group• DO NOT offer

ownership for purchase by general public

• ESOP

• Public Corporation• Owned by large

numbers of investors• Ownership shares or

“stock” offered to general public

• Shares purchased through broker or trader at stock exchange

5

Corporate Structure

Vice PresidentManufacturing

WORKERS

Vice PresidentOperations

Vice PresidentMarketing

Chief Executive OfficerCEO/President

Board of Directors

STOCKHOLDERS

6

Corporate Finances

• Stocks• Why do people buy?

• gain profit• become an owner of a

corporation• limit risk on investment

• Corp. financial strength is measured in profits and losses

• Profit and loss swing DIRECTLY affects the stock market

7

• Bull Market-market is on the rise

• Bear Market-market is on the decline

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Image courtesy of: PFHLai at http://www.wikipedia.com:

8

Corporate Combinations

To expand, a corporation either grows from within by building new facilities or legally combines with

another business.

9

Merger

• Most common method of combining business

• One company joins with another company

10

Horizontal Merger

• A merger between two or more companies producing the same good or service.

11

Vertical Merger

• A merger between two or more companies involved in different production phases of the same good or service.

12

Conglomerate

• A company involved in the production or distribution of at least four unrelated products or services.