Presentation on theme: "Corporation: business owned by stockholders These shareholders have limited liability for the companys debts and losses They acquire ownership through."— Presentation transcript:
Corporation: business owned by stockholders These shareholders have limited liability for the companys debts and losses They acquire ownership through the purchase of stockshares of ownership in the corporation
If a company does well and earns a profit, stockholders may receive dividendspart of the profit paid to stockholders
Corporations make up 20% of all businesses in the U.S. Public corporation: a corporation that issues stock that can be freely bought and sold
Private corporation: corporation that retains control over who can buy and sell the stock
Access to resources: Easy to raise money through the sale of stocks and bonds Bonds: a contract issued by a corporation that promises to repay borrowed money plus interest, on a fixed schedule
Professional managers: CEOs, etc. are in charge of the corporation Limited liability for debts/losses
Unlimited life: they continue to exist even after a change in ownership
Start-up cost and effort: expensive and lots of paperwork Heavy regulations: stockholders meetings and annual reports
Double taxation: must pay taxes on profits and on dividendsthe corporate profits paid to stockholders Loss of control: some control may be lost to the board of directors
Horizontal merger: when 2 companies that produce the same product merge Example: car companies
Vertical merger: when 2 companies involved in different steps of marketing/producing a specific product merge
Conglomerate: the merger of companies that produce unrelated products
Multinational corporation: a large corporation with branches in several countries Example: General Electric
Franchise: business made up of semi-independent businesses that offer the same products or services Example: McDonalds
Proven/well-known product Training in how to run the business is given Franchiser pays for advertising
Start-up costs Sharing profits with franchiser Must follow franchisers rules
Cooperative: business operated for the shared benefit of its owner, who are also its customers Examples: credit unions, producers co-ops, etc.
Nonprofit organization: institution that acts like a business organization but its purpose is to benefit society not to make a profit Example: Habitat for Humanity
1. What are the benefits of forming a conglomerate?
2. In what ways might a vertical merger in the oil industry influence gas prices?
3. What would be the outcome of raising the fees and requiring more paperwork in order to start a corporation?
4. How is a franchise an almost independent business?