1. What are the different types of Businesses?

2. SOLE PROPRIETORSHIP
PARTNERSHIP
CORPORATION
Monopoly
Oligopoly
Franchises

3. Why is it beneficial to start a business by yourself?
SOLE PROPRIETORSHIP: business owned by one person.

4. SOLE PROPRIETORSHIP Strengths Weaknesses
easy to start - unlimited liability responsible for all loses and debts
easy to manage - difficult to raise financial capital
make all profits - size and efficiency
no business income tax - owners may lack “business sense”
personal freedom
of self employment - hard to find qualified employees
- limited life

7. PARTNERSHIP Strengths Weaknesses
Easy to establish - responsible for acts of partners
Easy to manage - limited life
Lack of business - conflicts between
taxes partners
Easier to get funds
More efficient
Attract talented employees

8. Why is it beneficial to go into business with a partner?
PARTNERSHIP: business jointly owned by two or more people.
General partnership: all partners are responsible
Limited partnership: one partner is not active in daily management but contributes funds ($)
Limited liability: only responsible for your share of the investment
Articles of partnership: contract between partners

9. CORPORATION: 90% of business organized as separate legal entities
right to buy and sell property
enter legal contract
sue and be sued
need permission from the national gov’t – charter

10. Corporation Stock: partial ownership of the firm
Dividends: earnings or profit
Bonds: “loan” to the company
Common Stock: “coach”
Preferred Stock: “first class” extra benefits

11. Corporation Strengths Weaknesses__________
easy to get financial capital - charter is difficult to get
hire the best management - shareholders have little voice
limited liability - must pay taxes on
(sucks for stockholders) business
easy to transfer - unlimited life subject to gov’t regulations

12. WHAT HAPPENS WHEN COMPETITION IS ELIMINATED?

13. In some industries, there are no substitutes and there is no competition. In a market that has only one or few suppliers of a good or service, the producer(s) can control price, meaning that a consumer does not have choice

14. Monopoly:
a market situation with only one seller of a particular economic product that has no close substitute.

15. Monopoly:
A. Natural Monopoly: a market structure in which there is only one producer/seller for a product.
1. Franchise: Gives a company the exclusive right to do business in a certain area without competition.
a. example: water or gas companies
B. Geographic Monopoly: no other business in the immediate area offers any competition.

16. Monopoly:
C. Technology Monopoly: special privileges are given to those who invent a new product or process lead to another kind of monopoly.
1. Patent: an exclusive right to manufacture, use or sell any new and useful product. (Plants also included)
2. Copyright: gives an author or artist the exclusive right to publish, sell, or reproduce their work for a lifetime.
D. Government Monopoly: a business the government owns and operates.

17. Utility and plant patents are granted for a term which begins with the date of the grant and usually ends 20 years later.
a design patent lasts for 14 years

19. Oligopoly:
a market situation in which a few very large sellers of a product dominate.

20. Oligopoly:
A. Price fixing: agreeing to charge the same or similar prices for a product.
B. Price War: a series of price cuts by all producers that may lead to unusually low prices in the industry.

21. Example of Oligopoly
As an example, consider the market for cellular phones in the United States.
There are four major players that account for approximately 90% of the total national cellular phone market.
These companies are:
Sprint-Nextel
T-Mobile
Verizon
AT&T

22. Franchises

23. Top 10 Franchises for 2009 1. Subway 2. McDonald's
3. Liberty Tax Service
4. Sonic Drive In Restaurants
5. InterContinental Hotels Group
6. Ace Hardware Corp.
7. Pizza Hut
8. UPS Store, The/Mail Boxes Etc.
9. Circle K Papa John's Int'l. Inc.

24. McDonalds

25. Franchise:
© License to conduct a business under another person’s name © Grant a franchisee permission to market its product

26. Franchisee: Examples of the top U.S. franchisers:
® can be a sole proprietorship, partnership, or corporation and pay Franchiser fees
Examples of the top U.S. franchisers:

27. Franchise opportunities

28. Should You Incorporate Your Small Business?

29. Advantage
Disadvantage
1 Standardized quality
1 Limited Production line
2 National Advertising
2 Strict operating standards and purchasing restrictions
3 Financial assistance
3 High Franchising fees and royalties
4 Centralized buying power
5 Management training and support

30. Legality:
Franchising falls under the jurisdiction of a number of state and federal laws.
There is no federal registry of franchising or any federal filing requirements for information,
Franchisors are required by the Federal Trade Commission to have a Uniform Franchise Offering Circular to disclose potential franchisees about their purchase.

31. Major Sports
In sport, a franchise is a club given permanent rights to play in a specific league.
Major League Baseball ("MLB") is a legal cartel
The only way for new entrant to participate is to buy an existing club and this is known as "buying the franchise“
Also, all major sports teams franchise their name and logos to be used in all kinds of merchandise.

32. Pure Competition:
There are two extreme forms of market structure: monopoly and, its opposite, perfect competition.
Perfect competition is characterized by many buyers and sellers, many products that are similar in nature and, as a result, many substitutes.
In a perfectly competitive market, should a single firm decide to increase its selling price of a good, the consumers can just turn to the nearest competitor for a better price.

33. Five Conditions of a Purely Competitive Market.
1. Large amount of buyers and sellers must exist.
2. Buyers and sellers deal in identical products.
3. Each buyer and seller acts independently
4. Buyers and sellers are reasonably well informed
5. Buyers and sellers are free to enter into, conduct, or get out of business.