2. SOLE PROPRIETORSHIP A Sole Proprietorship is the most common form of business. It’s owned and controlled by ONE person. It makes up 40% of all businesses in the U.S.

3. Sole Proprietorship ADVANTAGESDISADVANTAGES Easy to get started Few regulations Doesn’t have to share any profits Doesn’t have to pay business income tax  Unlimited Liability  Difficulty to raise money  Limited life

4. A business jointly owned by two or more people.

5. Partnership ADVANTAGESDISADVANTAGES They bring in different ideas and different areas of expertise. Access resources Few regulations Easy to open and close  Each partner is responsible for each other and how well the company does.  Limited life  Potential conflict between partners

6. General Partnership- partnership where each partner is liable for all business debts and losses Limited Partnership- at least one partner is not involved in the day-to-day running of a business and is only liable for the funds he or she invested Limited Liability Partnership- partnership where all partners are limited partners and not responsible for the debts and other liabilities of the other partners

7.  A Corporation is a business owned by stockholders and is recognized by laws as a separate entity.  You need a LICENSE to form a corporation.  Stockholders are the owners of a corporation. CORPORATION

8. ADVANTAGES  Corporations have a lot of money. ◦ 18.2% of all corporations profit more than $1 million/year Has professional leadership. –This allows for higher profits and greater growth.  Two other advantages are stable ownership and very responsible. Corporations

9. DISADVANTAGES  Corporations charters are hard to obtain because of START UP COSTS  Owners DO NOT have direct control over business decisions.  Corporations are subject to DOUBLE TAXATION!  Corporations are also subject to multiple REGULATIONS that smaller businesses are not. Corporations

10. A Franchise is a business that licenses the right to SELL ITS products in a given area. A franchisee is when a person buys the rights to sell the parent company’s products. Franchise

11. Businesses would merge for two reasons 1.The desire for the business to become bigger. 2.Efficiency - Economies of Scale: the cost of production falls as producer grows. Business Mergers

12.  A Horizontal Merger is combining two or more firms that produce the same kind of product or service.  A Vertical Merger is combining firms involved in different steps of manufacturing a good.

13. a firm that has at least four businesses, each making unrelated products. CONGLOMERATES GE

14.  – a large corporation with branches in several countries. ◦ Multinationals helped developing nations by… ◦ Multinationals hurt workers in the U.S. Multinational Corporations

15. A COOPERATIVE is a business operated for the shared benefit or the owners, who are also its customers. THREE TYPES OF CO-OPS: –Associated Press (News Co-Op) –Sunkist Growers (Farmers Co-Op) –BJ’s (Consumer Co-Op) Cooperative

16. Non-Profit Organizations acts like a business organization. It’s purpose is usually to BENEFIT SOCIETY. –Amnesty International –Red Cross –UNESCO –Salvation Army Non-Profit Organization

17. Government MonopolyTechnological Monopoly Natural MonopolyGeographic Monopoly TYPES OF MONOPOLIES When the costs of production are lowest if only one firm provides output. i.e. Water Companies When a firm controls a manufacturing method, invention or a type of technology. i.e. Apple® Patents When there are no other producers or sellers within a given region. i.e. Buffalo Sabres When the government either owns and runs the business or authorizes only one producer. i.e. the Post Office

18. There are five conditions: 1.MANY BUYERS & SELLERS - no one can dominate 2.STANDARDIZED PRODUCTS - no quality difference INDEPENDENT BUYERS/SELLERS - competition reduces prices 4. WELL INFORMED BUYERS/SELLERS - a weakness* 5. FREEDOM TO ENTER/EXIT THE MARKET - anyone can enter The closest example of perfect competition is FOOD. Pure/Perfect Competition

19. Monopolistic competition is different as it: OFFERS SIMILAR BUT NOT STANDARD PRODUCTS. Four ways monopolistic competition tries to gain business through non-price competition: –Many buyers and sellers –Similar but differentiated products –Limited control of prices –Freedom to enter/exit the market Uses DIFFERENTIATION to distinguish products. Monopolistic Competition

20. An oligopoly is where a few companies control a large portion of a market. Typically the four largest companies total 40% of a given industry. –Movies, Cereal, Cell Service Providers… Oligopoly

21.  A CARTEL is an organization of COMPANIES and COUNTRIES that agree to act together to set PRICES and limit PRODUCTION.  OPEC Cartel

22. Price Maker A business that can set prices without concern over competitors Barrier to Entry Keeps new businesses from entering a market