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Business Organization Intro to Business Chapter 5.

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1 Business Organization Intro to Business Chapter 5

2 Changing U.S. Job Market 2002 – 144 million people held jobs in the U.S – projected 165 million people employed (increase of 15%) Baby Boomers – people born between 1946 – Have dominated the work force since the early 1960s and will begin retirment after 2010.

3 Job Market (cont.) The average U.S. worker will be over 40 in Minority workers will continue to grow as a percentage of the work force. This includes racial groups as well as women. Also, ages 16 – 24 will grow faster than th eoverall growth in the workforce.

4 Pressure on employees Technology has had the opposite effect than expected on work loads for employees. Some employees forced to work longer/harder. Others had hours reduced or jobs cut. Wages were decreased. Many jobs sent overseas.

5 Pressures on employees (cont.) Parents feel they dont spend enough time with children/family. Children will form career ideas based on examples set by parents. Contingent worker – one who has no explicit or implicit contract for long term employment. 10% of work force will be contingent by 2012.

6 Business and the Economy In 2002 U.S businesses were responsible for 1/3 of entire world production of goods and services. Most U.S businesses are small Out of 23 million U.S. businesses 18 million have no employees 18 million have no employees 5 million have less than 20 employees 5 million have less than 20 employees 500,000 employ 20 – 100 people 500,000 employ 20 – 100 people 103,000 employ 100+; 930 over 10, ,000 employ 100+; 930 over 10,000.

7 Roles of Business Provide Employment Pay Taxes Make and distribute goods and services Impacts Community by both producing and using goods & Services; create wealth in employees to purchase homes, etc.; create the need for other businesses in the community.

8 Business Activities Generating Ideas – new ideas maintain success Raising Capital – need resources to operate Employee Training and Personnel – recruit and train the workforce Buying Goods and Services Marketing Goods & Services Maintain Business Records

9 Types of Businesses Producers – create products and services used by individuals and other businesses. Intermediaries – selling the goods and services of producers to consumers and other businesses. Service Businesses – carries out activities that are consumed by its customers.

10 Business Ownership Proprietorship – a business owned and run by one person. Owner receives all profits and is responsible for all debts and obligations. Partnership – business owned and controlled by 2 or more people. Owners split profits. Each partner is 100% responsible for obligations of partnership.

11 Business Ownership (cont.) Corporation – a separate legal entity formed by filing documents with your state. Most have several owners Most have several owners Not all owners have direct involvement Not all owners have direct involvement More difficult to form than other businesses More difficult to form than other businesses No access to profits without approval of board of directors. No access to profits without approval of board of directors. Protects the liability of stockholders to amount of money they have invested. Protects the liability of stockholders to amount of money they have invested.

12 Choosing a Proprietorship Freedom to make all business decisions Last only for the life of the owner Easy to start and dissolve Dont need a business name All income is taxed as personal income Personal assets may be used to pay debts Provides the least amount of protection.

13 Choosing a Partnership More complex than proprietorship Should be formed by a written agreement. Two or more people contribute to the business. Each partner individually responsible for all partner decisions. Good form of business for people who share an idea.

14 Choosing a Corporation Subject to many more laws than others Articles of incorporation – legal document defines all aspects of business operation. Must have bylaws Protects personal assets of owners Allows investment without participation (passive) Decision-making can be more difficult.

15 Other Forms of Ownership Specialized Partnerships and Corporations: Limited Liability Partnership Limited Liability Partnership S-Corporation S-Corporation Limited Liability Company (LLC) Limited Liability Company (LLC) Non Profit Corporation Non Profit Corporation Cooperatives and Franchises: Costco – McDonalds

16 Effective Business Organization Mission Statement – short, specific written statement of the reason a business exists and what it wants to achieve. Goals – a precise statement of results the business expects to achieve. Policies – guidelines used in making consistent decisions Procedures – descriptions of the way work is to be done.

17 Principles of Effective Organization Responsibility, Authority, & Accountability: It is imperative that these three things be spelled out for every employee. Unity of Command: a clear reporting relationship for all staff of a business. Span of Control: number of employees who are assigned to a particular work task and manager.

18 Types of Organizational Structure Organization Chart – a diagram that shows the structure of an organization, classification of work jobs, and the relationship of those classifications. Functional Structure – work is arranged within main business functions. Matrix Structure – work is structured around specific projects, products or customer groups.

19 Functional Organization Chart Flower-Sprecher Veterinary Library April 2003


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