1. Bellwork 12/4/15 Ch.3 Business Organizations
You have 10 minutes to finish up vocabulary words….

2. Business Organizations
Chapter 3

3. Types of Business Organization

5. Sole Proprietorship- 72% of businesses
Owned and run by a single person

6. Sole Proprietorship Disadvantages of sole Proprietorship:
Advantages of Sole Proprietorships
Easy to start up
Management is relatively simple
You keep all profits
You do not have to pay any business taxes
Psychological satisfaction from “being your own boss”
Easy to get out of the business
Disadvantages of sole Proprietorship:
Unlimited Liability: you have total responsibility for all debts and liabilities of the company
Difficulty in raising financial capital
Limited size and efficiency
Limited managerial experience
Limited Life

7. Stop and Think…. If you started your own business what would it be?
What are some of the 4 Factors of production you would need.
2 examples for each
Labor
Land
Entrepreneur
Capital

8. Partnership--9% of businesses
Jointly owned by two or more persons
Examples: Law firms

9. Partnerships Two major types of partnerships:
General Partnership: (most common type) all partners are responsible for management and the financial responsibilities of the partnership.
Limited Partnership: at least one partner is not active in the day to day running of the business. They have limited liability.
Articles of Partnership: contract between partners spelling out the rules of partnership.
Dividing profit
Dividing responsibility
Admitting new partners
Buying out partners

10. Partnerships Advantages of Partnerships: Ease of establishment
Ease of Management: each partner has different things to offer
No special business taxes
Easier to raise financial capital
Larger than sole proprietorship
Easier to attract qualified workers
Disadvantages of Partnerships
Unlimited liability
Limited partner is only responsible for his initial investment. He has limited liability.
Limited Life
Conflict between partners

11. Corporations- 20% of Business 74%-profits
Business organization recognized by law as a separate legal entity with all the rights of an individual

12. Corporation- Set up Incorporate: to form a corporation.
Charter: a document granted by the state giving a corporation the right to do business
Stock: shares of ownership in the corporation
Stockholders (shareholders): owners of stock.
Reasons to own stock:
Dividends: share of corporate profits paid to stockholders
Speculation: buy in hope that price of stock will increase.

13. Corporation- Ownership
Common Stock is a basic share of ownership in a corporation
Have voting rights in the management of the company
In reality they turn over voting rights to someone else with a proxy: giving someone else the right to vote your share of stock.
Preferred Stock:
Non voting shares of ownership
Guaranteed dividend
Liquidation benefit: If corporation goes out of business they are ahead of common
stockholders in getting back money.
Board of Directors: duty to direct the corporations business by setting board policies and goals
Elected by common stockholders
Hires a professional management team to run day to day activities. (CEO, CFO….)

14. Corporations Advantages of a corporation:
Ease of raising financial capital (main advantage)
Selling stock to investors
Selling bonds: a written promise to repay a loan on a specific date
Principal: the amount borrowed
Interest: the price paid for the use of another’s money
Borrowing money from banks.
Ability to hire
Limited liability
Unlimited life
Ease of transferring ownership:. Buying and selling stock is easy and is done millions of times a day
Disadvantages of a corporation:
Start up expenses are high.
Stockholders (owners) have a limited
Profits are taxed
Corporations are subject to more government regulations than sole proprietors or partners

16. Dare to Compare
Using the Venn Diagram list the similarities and differences between Sole Proprietorships, Partnerships, and Corporations

18. Growth Through Mergers
5 Reasons to Merge
Make money faster/grow faster
Increase efficiency
To eliminate rivals
Acquire or deliver new/better products
To change its image
Growth Through Mergers
Mergers allow firms to grow quickly in size

19. Mergers and Acquisitions
Horizontal Merger- when two or more companies that product the same kind of product join forces.
Example: the merger of JPMorgan and Chase Manhattan to form JPMorgan Chase
Vertical merger- when two or more firms that are at different steps of manufacturing process join together.
Example: The US Steel Corporation
Conglomerates- is a firm that has at least four businesses, each making unrelated products.
Example: Samsung, GE (General Electric Company) It is the biggest conglomerate in the United States.

20. General Electric Company
Home appliance company · ge.com
General Electric is an American multinational conglomerate corporation incorporated in New York. As of 2015, the company operates through the following segments: Appliances, Power and Water, Oil and ...
Stock price: GE (NYSE) $30.00 +0.03 (+0.10%) Dec 3, 7:04 PM EST - Disclaimer
Headquarters: Fairfield, CT
CEO: Jeffrey R. Immelt
Founded: 1892, Schenectady, NY
Subsidiaries: GE Capital, GE Healthcare, NBCUniversal, More
Founders: Thomas Edison, Charles A. Coffin, Elihu Thomson, Edwin J. Houston
It is the biggest conglomerate in the United States.
It offers diversified technology and is also a credible financial services company.
With its wide and diverse variety of products of; aircraft engines, water processing, household appliances, power generation, industrial products, business and consumer financing.
It is present in more than 100 countries all over the world.
GE’s segments are Aviation, Energy Infrastructure, Transportation, Healthcare, GE Capital, and Home and Business Solutions. However, GE streamlined their segments into Aviation, Healthcare, and Transportation.

22. Firms produce the same kind of products
Firms involved in different stages of production

23. Think….. With a neighbor develop 2 examples of each type of merger
Vertical
Horizontal
Conglomerate
Why would companies ever want to merge???? 1 2 3 4 5

24. Non-Profits: We don’t like $$$ we just want to make you

25. Non Profit Organization
A nonprofit organization (NPO, also known as a non-business entity) is an organization that uses its surplus revenues to further achieve its purpose or mission, rather than distributing its surplus income to the organization's shareholders (or equivalents) as profit or dividends.
Some non profit organizations are
Museum of Modern Art
American Museum of Natural History
American Red Cross
Alzheimer's Association

26. Examples Of Non Profits