Business Organization Intro to Business Chapter 5
Contingent Workers One who has no explicit or implicit contract for long-term employment 5% of U.S. workforce (6 million) Either cannot find permanent employment or just like the flexible hours
Roles of Business Provide employment = wages to employees Earned profits are used to compensate owners and investors Pay taxes to government = used to provide services (i.e. water, police, schools…) Make and distribute products needed by consumers, government, and other businesses.
Impact on a Community Pays wages to its workers Buys goods and services from area businesses Increased area spending by employees New housing = taxes Sometimes other new businesses will open = more jobs
Business Activities Generating Ideas Must for maintaining competitiveness Raising Capital Employing and Training Personnel Buying Goods and Services Either for their own operation or for resale Marketing Goods and Services Maintain Business Records
PRODUCERS Create the products and services used by individuals and other businesses. Extractors – takes resources from nature (oil, coal, lumber) Farmers Manufacturers – use supplies from other producers to make products
INTERMEDIARIES Businesses involved in selling the goods and services of producers Retailers and wholesalers
SERVICE BUSINESSES Carries out activities that are consumed by its customers Offers intangibles Dentists, doctors, lawyers, movers, web designers Fastest growing part of economy (over 60%)
Proprietorships Business owned and run by one person Easiest form of business to start and end Sole control over all decisions Receives all profits, but responsible for all losses Tax advantage – all income is personal Limited government regulations
Partnerships Business owned and controlled by two or more people Relatively easy to start Share decisions, duties and profits Partnership agreement Increased investments
Corporations Separate legal entity formed by documents Owned by shareholders and managed by a Board of Directors Difficult to start May lose only invested amount Articles of incorporation
Other forms of ownership Limited liability partnership Some investors can only use a specified amount Joint venture 2 businesses work together for a project S-corporation Limited liability form of a corporation Limited liability company (LLC) Best of partnership and corporation Nonprofit corporation Cooperative Owned by members and serves their interests Franchise
Effective Organization Responsibility, Authority, Accountability Obligation to complete specific work Right to make decisions Taking responsibility for the results achieved Unity of Command Clear reporting relationship for all staff Span of Control Number of employees assigned to a task or manager
Organization Structures FUNCTIONAL Work is arranged within main business functions - production - marketing People work with others who have the same skills More focused on specific functions and not business success MATRIX Structured around specific projects Work with many different people Can be confusing without effective leadership