Presentation on theme: "Business Ownership and Operations"— Presentation transcript:
1 Business Ownership and Operations Intro To BusinessChapter 6
2 Learning Targets Section 6.1 – Types of Business Ownership Describe the advantages and disadvantages of the three major forms of business organizationsDescribe how cooperatives and nonprofits are like and unlike corporations and franchises
3 Types of Business Ownership Sole ProprietorshipA business owned by one person. Three-quarters of all businesses in the U. S. take this form of organizationAdvantages:Easy to do (licenses/permits)In charge of their businessCan make all of the decisionsCan keep all of the profitsUsually have lower taxes (taxed once)6-1
4 Types of Business Ownership Disadvantages:Unlimited liabilityThe owner is responsible for the company’s debt’s. If the owner has more debt than they receive, the owner has to make up the difference.
5 Types of Business Ownership PartnershipA business owned by two or more people who share its risks and rewards.Advantages:Easy to startEasier to obtain capitalBanks are often more willing to lend moneyTaxed only onceEach partner brings specific skills and talents
6 Types of Business Ownership DisadvantagesAll of the partners share the riskProblems with partners getting alongUnlimited LiabilityCorporationCompany that is registered by a state and operates apart from its ownersTo raise money, the owners can sell stock or shares of the company
7 Types of Business Ownership AdvantagesLimited LiabilityHolds a firms owners responsible for no more than the capital that they have invested in it.Ability to raise money by selling stockCompany does not end if an owner diesDisadvantagesDouble taxesExtra governmental restrictionsMore difficult and costly to start
8 Types of Business Ownership Other ways to Organize a BusinessCooperativeAn organization that is owned and operated by its membersWhen a group of businesses pool their resourcesPurpose – to save money on the purchase of certain goods and services Ex. Ocean SprayNonprofit OrganizationType of organization that focuses on a providing a service, but not to make a profit.Must register with the government. Because they do not make a profit they do not pay taxes. Ex. ChurchesFranchiseA contractual agreement to use the name and sell the products or services of a company in a designated areaEx. McDonalds, Tim Horton’sYou have to invest money and pay franchise fees or share the profits.6-1
9 Questions/Reflection What is the difference between a sole proprietorship and a partnership?If a partner makes a bad decision, what responsibility do the other partners have?Why are cooperatives formed?Compare limited liability and unlimited liability.6-1
10 Learning Targets Section 6.2 – Types and Functions of Businesses Differentiate the six types of businessesDescribe the five functions of businessDiscuss how the five functions of business relate to each other
11 Types and Functions of Businesses Types of BusinessProducersBusiness that gathers raw goodsAgriculture, mining, fishing, and forestryProcessorsChanges raw materials into more finished productsMade from raw goods that require further processingCrude oil to gasoline, iron ore into steelManufacturersMakes finished products out of processed goodsCars, CD’s, Computers6-2
12 Types and Functions of Businesses Intermediaries and WholesalersIntermediary – A business that moves goods from one business to anotherBuys goods, stores them and resells themWholesaler – Distributes goodsRetailers and Service BusinessesRetailer – Purchases goods from wholesaler and sells them to consumerRecord stores and auto dealers
13 Types and Functions of Businesses Production and ProcurementProduction – Process of creating, expanding, manufacturing or improving goods and servicesProcurement – The buying and reselling of goods that have already been produced.MarketingProcess of planning, pricing, promoting, selling and distributing ideas, goods, and servicesGetting consumers to buy the product
14 Types and Functions of Businesses ManagementThe process of achieving company goals by planning, organizing, directing, controlling and evaluating the effective use of resources.Finance and AccountingFinance – The business or art of money managementRequires analyzing financial statements to make future decisionsAccounting – Maintaining and checking records, handling bills and preparing financial reports for a business.
15 Questions What is the difference between a producer and a processor? Identify the five functions of business.Give an example of how the accounting and finance functions can affect a business’s marketing and production processes.