Presentation on theme: "Business Organization"— Presentation transcript:
1 Business Organization C H A P T E R5Business Organization5-1 Business in the U.S. Economy5-2 Forms of Business Ownership5-3 Organizational Structure for Business
2 5-1 Business in U.S. Economy GoalsDescribe the changing status of U.S. employmentDiscuss the role of business in the U.S. economyDescribe 3 major types of businesses
3 The Changing U.S. Job Market The first decade of the 21st Century has seen periods of growth and decline in overall employmentCareers shifting from traditionally important jobs in manufacturing and agriculture to service jobsPeriods of job decline due to recessions
4 Employment Data From 2003 – 2008 total employment grew by 6% In 2008, 138 million people held non-farm jobsIn 2009 resulted in a loss of more than 775,000 jobsIn 2011 the first wave of Baby Boomers started to retireCurrently white non-hispanic make up 68% of the labor force.
5 Pressures on Employees Economic stress has led to downsizing of the number of people employed by many companies.Businesses required employees to take on new tasks and work extra hoursEconomic stress also resulted in the increased use of contingent worker.One who has no explicit or implicit contract for long- term employment.They can not find permanent employmentThey like the flexibility it offers
6 Checkpoint #1List several groups that will increase as a percentage of the total U.S. workforce in the next decade.Younger workers (16–24 years of age)Asian-, Hispanic-, African-American groupsWomen
7 Business and the Economy In 2009, all businesses worldwide produced more than $70 trillion of goods and services.U.S. businesses were responsible for 20% of that production25 million full and part time businesses produce those goods and services
8 Size of U.S. Businesses Most U.S. businesses are quite small 19.5 million businesses, have no employees other than the owner
9 Roles of BusinessBusiness plays several key roles in the U.S. Economy:To make and distribute products and services needed by consumers, government, and other businessesProvide employment for millions of peopleBusinesses pay taxes to federal, state, and local governments
10 Impact on a CommunityWhen a new business opens, it pays wages to its workersIt also buys goods and services from other businesses in the area.The money spent may result in the need for more employees in the communityWhen a large business opens in an area, other businesses will often locate there to support.
11 Business ActivitiesAlthough there are many types and sizes of businesses, all firms perform 6 basic activities:Generating IdeasA business begins with a new ideaContinue to improve and develop ideas in order to remain successfulRaising CapitalBusinesses need financial resources to operate
12 Business Activities Employing and Training Personnel Businesses need human resourcesBusinesses have procedures for recruiting, hiring, and training employees.Buying Goods and ServicesBusinesses use many of the purchases for their own operationsMarketing Goods and Services
13 Business Activities Marketing Goods and Services Marketing refers to the activities directed at providing the goods and services wanted by business’s customersMaintaining Business RecordsOwners and mangers need records to keep track performance and make decisions
14 Checkpoint #2What are the basic activities completed by all businesses?Generating ideasRaising capitalEmploying and training personnelBuying goods and servicesMarketing goods and servicesMaintaining business records
15 Types of Businesses Producers Create products and services used by individuals and other businesses.A business that takes resources from nature for direct consumption or for the use in developing other products is an extractorFarmers cultivate land and use other natural resources to grow crops and raise livestock for consumptionManufacturers get supplies from other producers and convert them into products
16 Types of Businesses Intermediaries Service Businesses Businesses involved in selling the goods and services of producers to consumers and other businesses.Retailors and wholesalersService BusinessesCarries out activities that are consumed by its customersDentists, physicians, lawyers
17 Checkpoint #3 How does a manufacturer differ from an extractor? An extractor takes natural resources, such as oil or timber, for direct consumption or for use in developing other products.A manufacturer takes resources supplied by others and converts them into useable products.
18 5-2 Forms of Business Ownership GoalsUnderstand the 3 major forms of business ownershipDetermine when each form of business ownership is most appropriateRecognize other specialized business ownership forms
19 Business OwnershipProprietorship – A business owned and run by just one person.There a very few legal requirements regarding the business ownership or capital needs that must be met.Sole control over all business decisionsOwner receives all profitsResponsible for all debts
20 Business OwnershipPartnership – A business owned and controlled by two or more people who have entered into an agreementThe owners are both responsible for key business decisions and functions.Partners share both investments and profits based on the terms of the partnership agreementEach partner is liable for all debts of the business
21 Business OwnershipCorporation – a separate legal entity formed by documents filed with a state.Owned by one or more shareholders and managed by a board of directors.Meet more legal requirementsNot all owners have direct involvement in decision-making about business functionsCorporations protect the liability of stockholders to only the amount of money they have invested
23 Checkpoint #4What are the differences between the three main forms of business ownership?Business forms differ in the ways in which decision-making and investments are made and to whom liabilities are distributed.
24 Choosing a form of Business Ownership Choosing a ProprietorshipMost businesses begin as a proprietorshipJust have to begin buying and selling as a businessAccount for income and expenses and pay taxes on the profits of the businessProvides a tax advantage for the ownerAll income is taxed as part of your personal income
25 Choosing a form of Business Ownership Choosing a PartnershipPartnership Agreement – a written agreement among all ownersIdentifies the business name, the investments, and other contributions of each partner.Two or more people can contribute to the investment needed to start the business as well as the expertise required to run a business.There is no protection for the personal assets of any partner
26 Choosing a form of Business Ownership Choosing a CorporationMost popular form of ownership for large businessesSubjected to many more laws and more difficult to form than other forms of ownershipArticles of Incorporation – a written legal document that defines ownership and operating procedures and conditions for the businessCorporate bylaws – operating procedures for the corporationBoard of Directors – people who will make major policy and financial decisions for the business
27 Checkpoint #5Which form of business ownership is the most complex and difficult to form?The corporation is more complex to begin than other business forms.Forming a corporation requires much more bureaucracy, is more subject to government regulations, requires the organization of a board, and must have clearly defined bylaws.
28 Other Forms of Ownership Specialized Partnerships and CorporationsLimited Liability Partnership identifies some investors who cannot lose more than the amount of their investment, but they are not allowed to participate in the day to day management of the business.Joint Venture is a unique business organized by two or more other business to operate for a limited time and for a specific project.S Corporation offers the limited liability of a corporationLimited Liability Companies provide liability protection for owners
29 Other Forms of Ownership Nonprofit Organization is a group of people who join to do some activity that benefits the publicCooperatives and FranchisesCooperative is owned by members, serves their needs, and is managed in their interest.Franchise - is a written contract granting permission to operate a business to sell products and services in a set way.FranchiserFranchisee
30 Checkpoint #6What are the other specialized forms of business ownership?Limited liability partnershipJoint ventureS corporationLimited liability company (LLC)Nonprofit corporation
31 5-3 Organizational Structure for Businesses GoalsUnderstand important principles in designing an effective organizationCompare alternative organizational structures for businesses
32 Designing an Effective Business Organization Setting DirectionMission Statement – a short, specific written statement of the reason a business exists and what it wants to achieve.“To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.”Goal – a precise statement of results the business expects to achieve.Used to define what needs to be accomplished and to determine if the business is successful.
33 Designing an Effective Business Organization Finally, the business sets policies and procedures for the organization.Policies – guidelines used in making consistent decisionsProcedures – descriptions of the way work is to be doneProvides guidance and direction to people working in the organization
34 Designing an Effective Business Organization Principles of Effective OrganizationResponsibility, Authority, and AccountabilityThe obligation to complete specific workThe right to make decisions about how responsibilities should be accomplishedTaking responsibility for the results achievedUnity of CommandThere is a clear reporting relationship for all staff of a business
35 Designing an Effective Business Organization Principles of Effective OrganizationSpan of ControlThe Number of employees who are assigned to a particular work task and manager.A balance of supervision and freedom to do their for employees
36 Checkpoint #7What is the difference between a mission statement and a goal?A mission statement states the purpose of existence for a business and what it hopes to achieve.A goal is a more specific statement of what a business expects to achieve and may be used to measure a business’ success.
37 Types of Organization Structure Organization Chart – a diagram that shows the structure of an organization, classifications of works and jobs, and the relationships among those classifications.
39 Types of Organization Structure Functional Organization StructureWork is arranged within main business functions such as production, operations, marketing, and human resource.Matrix Organizational StructureWork is structured around specific projects, products, or customer groups.
40 Checkpoint #8What problems can result from the use of a functional organizational structure?Employees in a functional organizational structure may tend to lose sight of overall corporate goals.Workers tend to be limited to specific duties and may not see their relationship to the organization as a whole.This can result in lack of interest and motivation over time.