Presentation on theme: "SSEMI4 – Organization and Role of Business"— Presentation transcript:
1 SSEMI4 – Organization and Role of Business The student will explain the organization and the role of business and analyze the four types of market structures in the U.S. economy.
2 StandardsI can compare and contrast three forms of business organization-sole proprietorship, partnership, and corporation.I can explain the role of profit as an incentive for entrepreneurs.I can identify the basic characteristics of monopoly, oligopoly, monopolistic competition, and pure competition.
3 Sole ProprietorshipA business owned and run by one person.
4 Advantages Ease of start-up Ease of management Owner can enjoy all profitsOwner has full controlEasy to discontinueBusiness itself is exempt from tax on income
5 DisadvantagesUnlimited liability – owner is personally responsible for all losses and debts of businessDifficulty raising financial capitalAmount of work for one person may be overwhelmingLimited life
6 PartnershipA business jointly owned by two or more people.
7 Advantages Ease of start-up Each partner brings a unique skill to the partnershipLarger pool of capitalLack of special taxes on partnership itself
8 Disadvantages Each partner is fully responsible Unlimited liability for partnerships - except limited liability partnerships (LLP)Limited lifePotential for conflict with partners
9 CorporationA business organization that is owned by stockholders and recognized by law as a separate legal entity having all the rights as an individual.
10 AdvantagesEase of raising financial capital through the sale of stock or issuance of bondsLimited liability for ownersUnlimited lifeEase of transferring ownership
11 Disadvantages Difficult to start Owners/shareholders often have little say in how the business is runMany more legal requirements and regulationsDouble taxation
12 EntrepreneursWilling to risk their own resources in order to sell them for profits.Successful when they provide consumers with goods and services that consumers highly value.
13 Successful Entrepreneurs Willing to assume risk; high risk, high rewardsHave unique skills that help them develop:New productsNew cost-cutting production methodsNew ways to serve consumersDiscipline to work long hours to achieve their goals.
14 MonopolyA market structure in which there is a single supplier of a good or service for which there are no close substitutes
15 OligopolyA market structure in which a few, relatively large firms account for all or most of the production or sales of a good or service in a particular market.Barriers to new firms entering the market are high.Produce homogeneous productsProduce heterogeneous products
16 Monopolistic Competition A market structure in which slightly differentiated products are sold by a large number of relatively small producersBarriers to new firms entering the market are low.
17 Pure CompetitionA market structure in which a large number of relatively small firms produce and sell identical productsThere are no significant barriers to entry into or exit from the industry.Price takersWill earn only normal profits in the long run