Presentation on theme: "What are the different types of Businesses?. SOLE PROPRIETORSHIP PARTNERSHIP CORPORATION Monopoly Oligopoly Franchises."— Presentation transcript:
What are the different types of Businesses?
SOLE PROPRIETORSHIP PARTNERSHIP CORPORATION Monopoly Oligopoly Franchises
Why is it beneficial to start a business by yourself? SOLE PROPRIETORSHIP: business owned by one person.
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
PARTNERSHIP StrengthsWeaknesses 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
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
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
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
Corporation StrengthsWeaknesses__________ 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
WHAT HAPPENS WHEN COMPETITION IS ELIMINATED?
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
Monopoly: a market situation with only one seller of a particular economic product that has no close substitute.
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.
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.
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
Oligopoly: a market situation in which a few very large sellers of a product dominate.
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.
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
Top 10 Franchises for Subway 2. McDonald'sSubwayMcDonald's 3. Liberty Tax ServiceLiberty Tax Service 4. Sonic Drive In RestaurantsSonic Drive In Restaurants 5. InterContinental Hotels GroupInterContinental Hotels Group 6. Ace Hardware Corp.Ace Hardware Corp. 7. Pizza HutPizza Hut 8. UPS Store, The/Mail Boxes Etc.UPS Store, The/Mail Boxes Etc. 9. Circle K 10. Papa John's Int'l. Inc.Circle KPapa John's Int'l. Inc.
Should You Incorporate Your Small Business? a.about.com/cs/sta rtup/a/incorporata dv.htm a.about.com/cs/sta rtup/a/incorporata dv.htm com/incorporatingy ou.html com/incorporatingy ou.html
AdvantageDisadvantage 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
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.
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.
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.
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.