1. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 6 - 1 Forms of Business Ownership and Business Combinations

2. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 6 - 2 Forms of Business Ownership Sole proprietorship Partnership Corporation

3. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 6 - 3 Popularity of Business Ownership Forms Sole proprietorships 73% Corporations 20% Partnerships 7%

4. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 6 - 4 Sole Proprietorship Advantages  Ease of establishment  Self-satisfaction  Privacy  Tax advantages Disadvantages  Unlimited liability  Personal pressure  Difficult to get funding  Limited life

5. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 6 - 5 Business Partnerships General partnerships –Share ownership –Unlimited liability Limited partnerships –Passive investors –Limited liability

6. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 6 - 6 Advantages of Partnerships Easy to establish Tax advantages Strength in numbers Diversity of skills Increased capital Extended life

7. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 6 - 7 Disadvantages of Partnerships Unlimited liability –Debts –Law suits Interpersonal problems –Managing partner –Unproductive partners

8. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 6 - 8 Partnership Agreement Division of profits Decision-making authority Expected contributions Dispute resolution

9. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 6 - 9 Corporations Enter into contracts Own and sell property Sue and be sued Enjoy limited liability

10. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 6 - 10 Corporations Advantages  Access to capital  Limited liability  Increased liquidity  Unlimited life span Disadvantages  Excess paperwork  Burdensome costs  Double taxation  Disclosure requirements

11. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 6 - 11 Types of Corporations Subchapter S Limited liability Subsidiary

12. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 6 - 12 Types of Corporations Alien Foreign Domestic

13. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 6 - 13 Corporate Governance Common shareholders Board of directors Corporate officers Employees of the company

14. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 6 - 14 Shareholder’s Rights Common stock Preferred stock –Voting privileges –Dividends –Return on investment –Investment risk

15. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 6 - 15 Shareholder’s Power Public –Many stockholders –Publicly traded Private –Few stockholders –Not publicly traded

16. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 6 - 16 Public Stock Ownership Advantages –Increased liquidity –Enhanced visibility –Independent market value –Flexibility

17. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 6 - 17 Public Stock Ownership Disadvantages –Cost of going public –SEC filing requirements –Increased public exposure –Loss of control

18. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 6 - 18 Responsibilities of the Board of Directors Declaring dividends Guiding corporate affairs Reviewing long-term plans Selecting corporate officers Overseeing financial performance

19. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 6 - 19 The Topic of Board Reform Independence Compensation Duties Integrity

20. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 6 - 20 Business Combinations Mergers Consolidations Acquisitions Leveraged buyouts

21. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 6 - 21 Mergers, Consolidations, and Acquisitions AdvantagesDisadvantages Economies of Scale Efficiencies Synergies High-Risk Corporate Debt Management Distractions Culture Clashes

22. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 6 - 22 Current Corporate Trends Shed unprofitable acquisitions Focus on core business –Economic slowdown –Political uncertainty –Global market saturation –Shareholders –Wall Street

23. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 6 - 23 Hostile Takeovers Types –Tender offer –Proxy fight Defenses –Poison pill –Golden parachute –Shark repellent –White knight

24. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 6 - 24 Alternative Business Forms Strategic Alliance Joint Venture Expand Market ShareExpand Market Share Access TechnologyAccess Technology Diversity OfferingsDiversity Offerings Share Best PracticesShare Best Practices Attain Specific GoalsAttain Specific Goals Share StrengthsShare Strengths Spread CostSpread Cost Minimize RiskMinimize Risk