1. Business Growth and Expansion
Chapter 3 Sec 2
Business Growth and Expansion

2. Terms Income Statement: Net income:
A report showing a business’s sales, expenses, and profits for a certain period to- illustrate the process.
Net income:
Subtracting all of its expenses, including taxes from its revenue.

3. Depreciation: Cash Flow:
A non-cash charge the firm takes for the general wear and tear on its capital goods.
Cash Flow:
The sum of net income and non-cash charges. Represents the total amount of new funds the business generates from operations.

4. Mergers
When firms merge, one gives up its separate legal identity. Ex: Delta and Northwest Airlines merged and is now called Delta Airlines. Delta dropped any legal identity for Northwest Airlines.
Reasons: Survival, efficiency, product lines, acquire rivals ( RCL and Celebrity Cruise Lines in doubled in size)

5. Types of Mergers
Horizontal Mergers: which takes place when two or more firms that produce the same kind of product merge. RCL and CCL.
Vertical Merger: when firms involved in different steps of manufacturing or marketing join. US Automaker buy tire company.

6. Conglomerates
Is a firm that has at least 4 businesses, each making unrelated products none of which responsible for majority of sales.
Ex: Time Warner, Clear Channel Communications.

7. Multinationals
A company that has manufacturing or service operations in a number of different countries. Ex: General Motors, BP, Royal Dutch Shell.
Important because they move goods and services and financial capital across borders.
Brings new technology

8. Chapter 3 Sec 3
Non-profit organization: operates like a businesslike way to promote the collective interest of its members rather than seek money from its owners.
Ex: schools, churches, hospitals
Provides goods and services to their members while they pursue other rewards other than money.

9. Cooperative
Co-Op- is a voluntary association of people formed to carry on some kind of economic activity that will benefits its members.
3 kinds
Consumer, Service, Producer

10. Consumer
Buys bulk goods like food or clothing for its members. Members help keep the cost down by devoting several hours a week or month to the operation. If successful, can keep prices low.

11. Services
Credit Unions- makes loans and accepts deposits from its members.

12. Producer
Farmers: this kind of co-op helps the farmer sell directly to the central markets or to companies that uses the member products.
Ocean’s Spray, Lakeville, MA

13. Labor, Pro, and Business Organizations
Labor Unions- formed to support the members interests and employment matters.
AFL-CIO
American Federation of Labor-Congress of Industrial Organizations
Specific Industry EX: NEA-National Education Association -Teachers,
RN (Registered Nurses)
Electricians

14. Pro
AMA
ABA
NFLPA
MLBPA
Police
Fire

15. Business
BBB-Better Business Bureau
Chamber of Commerce

16. Role of Government Direct Role: Government supplies a good or service
TVA, FDIC, US Postal Service
Indirect Role: Public Utilities- investor owned or community operated companies that provide services to the public, such as water, or electricity.