© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 5 SLIDE Business in the U.S. Economy Forms of Business Ownership Organizational Structure for Businesses 5 C H A P T E R Economic Decisions and Systems

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 5 SLIDE 2 BUSINESS AND THE ECONOMY ●Size of U.S. businesses ●Roles of business ●Impact on a community

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 5 SLIDE 3 PERCENT OF BUSINESSES BY EMPLOYEE SIZE

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 5 SLIDE 4 BUSINESS ACTIVITIES ●Generating ideas ●Raising capital ●Employing and training personnel ●Buying goods and services ●Marketing goods and services ●Maintaining business records

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 5 SLIDE 5 TYPES OF BUSINESSES ●Producers ●Intermediaries ●Service businesses

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 5 SLIDE 6 Checkpoint ●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.

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 5 SLIDE 7 BUSINESS OWNERSHIP ●Proprietorship ●Partnership ●Corporation

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 5 SLIDE 8 Forms of Ownership U.S. Business Comparison by Form of Ownership Form of Ownership Number of Businesses (2006) Total Revenue (Thousands) Percent of All Businesses Percent of Total Revenue Proprietorship22,075,0001,278,000, %4.06% Corporation5,841,00026,070,000, %82.82% Partnership2,947,0004,131,000, %13.12% Total30,863,00031,479,000, %

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 5 SLIDE 9 CHOOSING A FORM OF BUSINESS OWNERSHIP ●Choosing a proprietorship ●Choosing a partnership ●Choosing a corporation

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 5 SLIDE 10 Checkpoint ●Which 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.

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 5 SLIDE 11 Checkpoint ●What are the other specialized forms of business ownership? ●Limited liability partnership ●Joint venture ●S corporation ●Limited liability company (LLC) ●Nonprofit corporation

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 5 SLIDE 12 DESIGNING AN EFFECTIVE BUSINESS ORGANIZATION ●Setting direction ●Principles of effective organization ●Responsibility, authority, and accountability ●Unity of command ●Span of control

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 5 SLIDE 13 Checkpoint ●What 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.

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 5 SLIDE 14 TYPES OF ORGANIZATIONAL STRUCTURES ●Functional organization structure ●Matrix organizational structure

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 5 SLIDE 15 BUSINESS ORGANIZATION CHART

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 5 SLIDE 16 Checkpoint ●What 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.