1. Types of Business Organization
Sole Proprietorship
Partnerships (Limited/Gen)
Corporations
Non-profits
Types of Business Organization

2. Sole Proprietorship- 72% of businesses

3. Advantages of sole proprietorships
Ease of start up
Ease of Management
You keep all profits
You do not have to pay any business taxes
Psychological advantages
Ease of exit
Economic Weakness of sole proprietorship:
Unlimited Liability: you have total responsibility for all debts and liabilities of the company
Difficulty in raising financial capital
Limited size and efficiency
Limited managerial experience
Limited Life

4. Stop and Think If you started your own business what would it be?
What are some of the 4 Factors of production you would need.
2 examples for each
Land
Labor
Entrepreneur
Capital

5. 9% of businesses

6. Partnerships Two major types of partnerships:
General Partnership: (most common type) all partners are responsible for management and the financial responsibilities of the partnership.
Limited Partnership: at least one partner is not active in the day to day running of the business. They have limited liability.
Articles of Partnership: contract between partners spelling out the rules of partnership.
Dividing profit
Dividing responsibility
Admitting new partners
Buying out partners

7. Partnerships Advantages of Partnerships: Ease of establishment
Ease of Management: each partner has different things to offer
No special business taxes
Easier to raise financial capital
Larger than sole proprietorship
Easier to attract qualified workers
Disadvantages of Partnerships
Unlimited liability
Limited partner is only responsible for his initial investment. He has limited liability.
Limited Life
Conflict between partners

8. What fits best with each business??? Tell me Why!!!

9. Corporations- 20% of Business 74%-profits

10. Corporation- Set up Incorporate: to form a corporation.
Charter: a document granted by the state giving a corporation the right to do business
Stock: shares of ownership in the corporation
Stockholders (shareholders): owners of stock.
Reasons to own stock:
Dividends: share of corporate profits paid to stockholders
Speculation: buy in hope that price of stock will increase.

11. Stock

12. Corporation- Ownership
Common Stock is a basic share of ownership in a corporation
Have voting rights in the management of the company
In reality they turn over voting rights to someone else with a proxy: giving someone else the right to vote your share of stock.
Preferred Stock:
Non voting shares of ownership
Guaranteed dividend
Liquidation benefit: If corporation goes out of business they are ahead of common stockholders in getting back money.
Board of Directors: duty to direct the corporations business by setting board policies and goals
Elected by common stockholders
Hires a professional management team to run day to day activities. (CEO, CFO….)

13. Corporations Advantages of a corporation:
Ease of raising financial capital (main advantage)
Selling stock to investors
Selling bonds: a written promise to repay a loan on a specific date
Principal: the amount borrowed
Interest: the price paid for the use of another’s money
Borrowing money from banks.
Ability to hire
Limited liability
Unlimited life
Ease of transferring ownership:. Buying and selling stock is easy and is done millions of times a day
Disadvantages of a corporation:
Start up expenses are high.
Stockholders (owners) have a limited
Profits are taxed
Corporations are subject to more government regulations than sole proprietors or partners

14. Dare to Compare
Using the interwoven circles list the similarities and differences between Sole Proprietorships, Partnerships, and Corporations

15. Non-Profits: We don’t like $$$ we just want to make you

16. Who is here to help??? Community and Civic organizations
Cooperatives- REI
Consumer- Sam’s Club
Labor, Professional and Business Organizations 
Labor Unions- organization of workers formed to represent its member’s interests in varying employment matters. Collective bargaining
Professional Associations- a group of people in a specialized field that work to improve their working conditions.
Business associations
Chamber of Commerce- promote economic growth of the community
Better Business Bureau- cops for businesses

18. Mergers and Acquisitions
5 Reasons to merge- Make money faster, Increase efficiency, Acquire new product lines, Catch up or eliminate rivals, Lose a company identity.
Horizontal Merger- when two or more companies that product the same kind of product join forces.
Vertical merger- when two or more firms that are at different steps of manufacturing process join together.
Conglomerates- is a firm that has at least four businesses, each making unrelated products.

19. Be a thinker not a stinker
With a neighbor develop 2 examples of each type of merger
Vertical
Horizontal
Conglomerate
Why would companies ever want to merge???? 1 2 3 4 5

20. Summary With a partner:
Use two real organizations and design the following:
A vertical merger
A horizontal merger
Conglomerate