2. © 2006 Pearson Education Canada Inc.Chapter 5-1 Chapter 5 Selecting the Proper Form of Business Ownership and Exploring Business Combination s

3. © 2006 Pearson Education Canada Inc.Chapter 5-2 Owning a Business The Three Most Common Forms Partnership SoleProprietorship Corporation

4. © 2006 Pearson Education Canada Inc.Chapter 5-3 Sole Proprietorship Advantages  Ease of establishment  Self-satisfaction  Privacy  Tax advantages Disadvantages  Unlimited liability  Personal pressure  Difficult to get funding  Limited life

5. © 2006 Pearson Education Canada Inc.Chapter 5-4 Business Partnerships General Partnerships Limited Partnerships UnlimitedLiabilityUnlimitedLiability EqualPartnersEqualPartners ShareOwnershipShareOwnershipLimitedLiabilityLimitedLiability UnequalPartnersUnequalPartners PassiveInvestorsPassiveInvestors

6. © 2006 Pearson Education Canada Inc.Chapter 5-5 Easy to Establish Tax Advantages Strength in Numbers Diversity of Skills Extended Life Increased Capital Advantages of Partnerships

7. © 2006 Pearson Education Canada Inc.Chapter 5-6 Disadvantages of Partnerships Unlimited Liability Unlimited Liability Interpersonal Problems Interpersonal Problems Unproductive Partners Unproductive Partners Managing Partner Managing Partner Law Suits Debts

8. © 2006 Pearson Education Canada Inc.Chapter 5-7 Partnership Agreement Decision-Making Authority Dispute Resolution Division of Profits Expected Contributions

9. © 2006 Pearson Education Canada Inc.Chapter 5-8 Corporations Enter Into Contracts Contracts Own and Sell Property Own and Sell Property Sue and Be Sued Sue and Be Sued Enjoy Limited Liability Liability

10. © 2006 Pearson Education Canada Inc.Chapter 5-9 Ownership of Corporations Shareholders Last Claim on Distributed Profits and Assets Cash or Stock Dividends Full Voting Rights Common Stock First Claim on Dividends and Assets Cash or Stock Dividends Minimal Voting Rights Preferred Stock

11. © 2006 Pearson Education Canada Inc.Chapter 5-10 Who Owns a Corporation? PublicOwnershipPublicOwnershipPrivateOwnershipPrivateOwnership Not Publicly Traded TradedFewShareholdersFewShareholdersPubliclyTradedPubliclyTradedManyShareholdersManyShareholders

12. © 2006 Pearson Education Canada Inc.Chapter 5-11 Corporations Advantages  Access to capital  Limited liability  Increased liquidity  Unlimited life span Disadvantages  Excess paperwork  Burdensome costs  Double taxation  Disclosure requirements

13. © 2006 Pearson Education Canada Inc.Chapter 5-12 Corporate Governance Common Shareholders Individuals Companies Non-profits Pensions Mutual Funds Board of Directors Dividends Corporate Affairs Strategic Plans Select Officers Finances Corporate Officers Chief Executive Chief Financial Chief Operations Employees of the Company Operations Finance Marketing Personnel Engineering ElectAppointHire

14. © 2006 Pearson Education Canada Inc.Chapter 5-13 Cooperatives: Another Model Organized and controlled by members who pool their resources to create benefits for themselves and their clients.

15. © 2006 Pearson Education Canada Inc.Chapter 5-14 Cooperatives: Another Model Advantages Strength in numbers Bargaining power Democratic structure Surplus earnings distribution Limited liability Disadvantages Longer decision making process Potential conflict among members Extensive record keeping

16. © 2006 Pearson Education Canada Inc.Chapter 5-15 BusinessCombinations Mergers ConsolidationsConsolidations Acquisitions LeveragedBuyouts

17. © 2006 Pearson Education Canada Inc.Chapter 5-16 Mergers and Acquisitions AdvantagesDisadvantages Economies of Scale Efficiencies Synergies High-Risk Corporate Debt ManagementDistractions Culture Clashes

18. © 2006 Pearson Education Canada Inc.Chapter 5-17 Hostile Takeovers Tender Offer Proxy Fight

19. © 2006 Pearson Education Canada Inc.Chapter 5-18 Defenses Against Hostile Takeovers Tender Offer Proxy Fight WhiteKnightWhiteKnightSharkRepellentSharkRepellentGoldenParachuteGoldenParachutePoisonPillPoisonPill

20. © 2006 Pearson Education Canada Inc.Chapter 5-19 Alternative Business Forms Strategic Alliance Joint Venture Expand Market Share Access Technology Diversity Offerings Share Best Practices Attain Specific Goals Share Strengths Spread Cost Minimize Risk