1. Chapter 8: Business Organizations
Section 3:
Corporations, Mergers and Multinationals

2. Corporations Most complicated form of business structure
Owned by individual stockholders
They have limited liability
They buy stock – a document that shows they have paid money to be a part-owner of the corporation
It is a legal entity (an individual)

3. Corporations It’s a legal identity??? It can make contracts It can sue
It can be sued
It pays its own taxes
It can make donations to political causes

4. Corporate Structure

5. Corporate Structure
Stockholders invest money into the company. (part owners) They get dividends (money) a vote for Board of Directors members

6. Corporate Structure
The Board of Directors selects the President also known as CEO (Chief Executive Officer) to run the business

7. Corporate Structure
The President selects corporate officers to help administer the company. They usually are Chief Operating Officer (COO) – day to day operations Chief Financial Officer (CFO) – financial matters Secretary – paperwork

8. Corporate Structure
The Corporate Officers oversee the workforce which does the everyday labor.

9. Corporate Structure

10. Types of Corporations Closely held Publicly held
All or almost all stocks are sold to family members
Family members pass stocks to other family members
Keeps it out of other people’s hands
Publicly held
Open to the public to buy and sell stock
Stock is sold on a “stock market” or “stock exchange”

11. Corporate Advantages Investors Limited liability
Investors (stockholders) can only lose amount of money they put into the company
Lawsuits paid by corporate funds, not invested funds
Flexibility
Easy to transfer stocks

12. Corporate Advantages To the Company Opportunity to grow Sell stocks
Sell bonds
Bonds are IOUs
No ownership involved
Has the funds to hire the BEST
Long life

13. Disadvantages Difficult to start up Double Taxation
A LOT of paperwork
Double Taxation
Corporate profits are taxed
Investor dividends are taxed
Capital gains from sales of stock are taxed
Original owners lose some degree of control
A LOT of government regulations

14. Corporate Combinations
Mergers
Horizontal Merger
Combine with another company
Both companies
supply the same
good or service

15. Corporate Combinations
Mergers
Vertical Merger
Combine with
another company
The companies deliver
different parts which
work together to
deliver a final good

16. Corporate Combinations
Conglomerations
Two or more companies join together
The products the companies make are
completely unrelated

17. Corporations Multinational Corporations
Companies (corporations) which exist in
Many (multi) different
Countries (national)