1. Introduction to Business © Thomson South-Western ChapterChapter Business Organization 5-1 5-1Business in the U.S. Economy 5-2 5-2Forms of Business Ownership 5-3 5-3Organizational Structure for Businesses 5

2. Introduction to Business © Thomson South-Western Chapter 5 Slide 2 LESSON 5-1 LESSON 5-1 Business in the U.S. Economy Goals Describe the changing status of U.S. employment. Discuss the role of business in the U.S. economy. Describe three major types of businesses.

3. Introduction to Business © Thomson South-Western Chapter 5 Slide 3 Key Terms contingent worker producer intermediary service business

4. Introduction to Business © Thomson South-Western Chapter 5 Slide 4 THE CHANGING U.S. JOB MARKET Employment data (see notes) Pressures on employees (see notes) Contingent workers: one who has no explicit or implicit contract for long-term employment

5. Introduction to Business © Thomson South-Western Chapter 5 Slide 5 >> C H E C K P O I N T List several groups that will increase as a percentage of the total U.S. workforce in the next decade.

6. Introduction to Business © Thomson South-Western Chapter 5 Slide 6 BUSINESS AND THE ECONOMY Size of businesses (see notes) Roles of business (see next slide) Impact on a community (see next slide)

7. Introduction to Business © Thomson South-Western Chapter 5 Slide 7 Roles of Business Provides employment for millions of people Wages are used to purchase goods and services Profits compensate owners and investors Most businesses pay taxes to government Make and distribute products and services needed by consumers, government, and other businesses

8. Introduction to Business © Thomson South-Western Chapter 5 Slide 8 Impact on a Community Pays wages to workers Buys goods and services from other businesses Money spent may result in the need for more employees in the community

9. Introduction to Business © Thomson South-Western Chapter 5 Slide 9 NUMBER OF EMPLOYEES IN U.S. BUSINESSES

10. Introduction to Business © Thomson South-Western Chapter 5 Slide 10 BUSINESS ACTIVITIES Generating ideas Raising capital Employing and training personnel Buying goods and services Marketing goods and services Maintaining business records

11. Introduction to Business © Thomson South-Western Chapter 5 Slide 11 >> C H E C K P O I N T What are the six basic activities completed by all businesses?

12. Introduction to Business © Thomson South-Western Chapter 5 Slide 12 TYPES OF BUSINESSES Producers- create the products used by individuals Extractor: takes resources from nature for direct consumption or for use in developing other products Manufacturer: uses supplies from other producers to convert into products

13. Introduction to Business © Thomson South-Western Chapter 5 Slide 13 TYPES OF BUSINESSES Intermediaries- business involved in selling the goods and services of producers to consumers Service businesses- intangible activities consumed by people or business

14. Introduction to Business © Thomson South-Western Chapter 5 Slide 14 >> C H E C K P O I N T How does a manufacturer differ from an extractor?

15. Introduction to Business © Thomson South-Western Chapter 5 Slide 15 LESSON 5-2 LESSON 5-2 Forms of Business Ownership Goals Understand the three major forms of business ownership. Determine when each form of business ownership is most appropriate. Recognize other specialized business ownership forms.

16. Introduction to Business © Thomson South-Western Chapter 5 Slide 16 Key Terms proprietorship partnership corporation partnership agreement articles of incorporation franchise

17. Introduction to Business © Thomson South-Western Chapter 5 Slide 17 BUSINESS OWNERSHIP Proprietorship Partnership Corporation

18. Introduction to Business © Thomson South-Western Chapter 5 Slide 18 Proprietorship Owned and run by one person Easiest form to start Owner has sole control over business decisions Owner receives all profits Owner determines how profits are used Owner is responsible for all debts No shelter from creditors

19. Introduction to Business © Thomson South-Western Chapter 5 Slide 19 Partnership Owned and controlled by two or more people Easy to start Owners both responsible for key business decisions Share profits Each partner is liable for debts

20. Introduction to Business © Thomson South-Western Chapter 5 Slide 20 Corporation A separate legal entity Owned by shareholders Managed by board of directors Difficult to start Not all owners have direct involvement in operation Do not have access to profits unless approved by board of directors Liability only to amount of investment

21. Introduction to Business © Thomson South-Western Chapter 5 Slide 21 FORMS OF OWNERSHIP

22. Introduction to Business © Thomson South-Western Chapter 5 Slide 22 >> C H E C K P O I N T What are the differences between the three main forms of business ownership?

23. Introduction to Business © Thomson South-Western Chapter 5 Slide 23 Choosing a proprietorship For people who want total independence Want to be in control of all business decisions Willing to take on entire risk Do not want to be exposed to significant government regulation

24. Introduction to Business © Thomson South-Western Chapter 5 Slide 24 Choosing a partnership For people who share an idea for a business Want to cooperate in managing and investing in the business Easiest for people who work well together Great for sharing risks and rewards Presents problems if it needs to be dissolved

25. Introduction to Business © Thomson South-Western Chapter 5 Slide 25 Choosing a corporation Articles of Corporation (see notes) Corporate by-laws: the operating procedures for the corporation Board of directors: makes major policy and financial decisions Issue shares of stock to investors

26. Introduction to Business © Thomson South-Western Chapter 5 Slide 26 >> C H E C K P O I N T Which form of business ownership is the most complex and difficult to form?

27. Introduction to Business © Thomson South-Western Chapter 5 Slide 27 OTHER FORMS OF OWNERSHIP Specialized partnerships and corporations Cooperatives and franchises

28. Introduction to Business © Thomson South-Western Chapter 5 Slide 28 >> C H E C K P O I N T What are the other specialized forms of business ownership?

29. Introduction to Business © Thomson South-Western Chapter 5 Slide 29 LESSON 5-3 LESSON 5-3 Organizational Structure for Businesses Goals Understand important principles in designing an effective organization. Compare alternative organizational structures for businesses.

30. Introduction to Business © Thomson South-Western Chapter 5 Slide 30 Key Terms mission statement goal policies procedures organization chart

31. Introduction to Business © Thomson South-Western Chapter 5 Slide 31 DESIGNING AN EFFECTIVE BUSINESS ORGANIZATION Setting direction Mission statement: a short specific written statement of the reason a business exists and what it wants to achieve Goal: precise statement of results the business expects to achieve Policies: guidelines used in making consistent decisions Procedures: descriptions of the way work is to be done

32. Introduction to Business © Thomson South-Western Chapter 5 Slide 32 DESIGNING AN EFFECTIVE BUSINESS ORGANIZATION Establish principles for an effective organization Responsibility, authority, and accountability Responsibility: the obligation to complete specific work Authority: the right to make decisions about how responsibilities should be accomplished Accountability: taking responsibility for the results achieved Unity of Command: there is a clear reporting relationship for all staff Span of Control: the number of employees who are assigned to a particular work task and mngr.

33. Introduction to Business © Thomson South-Western Chapter 5 Slide 33 >> C H E C K P O I N T What is the difference between a mission statement and a goal?

34. Introduction to Business © Thomson South-Western Chapter 5 Slide 34 TYPES OF ORGANIZATIONAL STRUCTURES Organization chart: a diagram that shows the structure of an organization, classifications of work and jobs, and the relationships among those classifications Functional organization: work is arranged within main business functions such as production, operations, marketing, and human resources Matrix organizational structure: work is structured around specific projects, products, or customer groups

35. Introduction to Business © Thomson South-Western Chapter 5 Slide 35 BUSINESS ORGANIZATION CHART

36. Introduction to Business © Thomson South-Western Chapter 5 Slide 36 >> C H E C K P O I N T What problems can result from the use of a functional organizational structure?