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BUS106 Forms of Business Ownership

BUS106 Forms of Business Ownership

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    Bus106 wk5 ch5 forms of business ownership Bus106 wk5 ch5 forms of business ownership Presentation Transcript

    • Week 5, Chapter 5Forms of Business Ownership
    • Figure 4.3 Ethical Orientation Questionnaire (see page 88)
    • What your score means (see page 89)
    • Ethical Dilemma?
      A disgruntled employee of your major competitor mails top‑secret information or new product samples to you. Do you begin to do a dance on your desktop or do you immediately mail the information back to your competitor? What would you do?
      Throw the plans or secrets away.
      Send them to your research department for analysis.
      Notify your competitor about what is going on.
      Call the RCMP.
    • What actually happened.
      It seems a 3M employee named Philip Stegora mailed samples he stole of a new casting tape to J&J and three other competitors. He offered to meet and explain the technology for a fee of $20,000.
      None of the contacted companies reported his scheme to 3M. Instead, an outside source contacted 3M who then turned the case over to the FBI. The case could have ended there but in patent‑infringement proceedings, 3M found that J&J had done chemical tests on the sample Stegora had sent. 3M sued and was awarded $116.3 million from J&J for infringing on its patent and misappropriating trade secrets. Sounds like someone should have sent the tape back to 3M in the first place.
      Image sources: http://solutions.3m.com ; http://www.jnjcanada.com/
    • Ethical Dilemma?
      You are the vice president of a beer company in a province which sets the legal drinking age at twenty‑one. Your boss asks you to organize a lobbying effort to have the drinking age reduced to eighteen.
    • Nineteen (it is eighteen in Alberta, Manitoba, and Quebec) to twenty-one year olds represent a huge market for liquor. But, again, the public reaction should be considered.
      Source: http://www.flickr.com/photos/criminalintent/
    • Learning Objectives
    • Figure 5.1 Basic Forms of Ownership
    • Sole Proprietorship
      One person owning and operating a business, without forming a corporation.
      In a sole proprietorship, the business and the owner are a single entity.
      As noted in Figure 5.1, almost 24% of all registered businesses in Canada fall under this form of ownership.
    • ME
      Sole Proprietorship
    • Liability - for a business, it includes the responsibility to pay all normal debts.
    • Unlimited Liability
      When you work for others, it is their problem if the business is not profitable.
      When you own your own business, you and the business are considered one. You have unlimited liability; that is, any debts or damages incurred by the business are your debts, and you must pay them.
    • Main types of partnerships
    • Partnership
    • Partnership
    • How to Form a Partnership
      Choose your partner carefully
      Get a partnership agreement in writing
    • Types of Partnerships
      General
      Limited
      Passive Investor
      Passive Investor
      Passive Investor
    • New Forms of Partnerships
      Master Limited Partnership
      traded publicly
      taxed as a partnership
      Limited Liability Partnership
    • Corporations
      Although the word corporation makes people think of big businesses such as the Bank of Montreal or Irving Oil, it is not necessary to be big to incorporate (i.e., start a corporation).
      Obviously, many corporations are big; however, incorporating may also be beneficial for small businesses.
    • Corporation
    • To raise money, a corporation can sell ownership (stock) to anyone who is interested. This means that thousands of people can own a part of major companies.
      Corporation – advantage: more money for investment
    • Types of Corporations
    • Other Types of Corporations
    • Figure 5.4 How Owners Affect Management
    • Canada’s Largest Corporations
    • Figure 5.5 Comparison of Forms of Ownership
    • Corporate Governance - the process and policies that determine how an organization interacts with its stakeholders, both internal and external.
      As a result of corporate scandals, board members are under increasing scrutiny to ensure that they are effectively fulfilling their roles and responsibilities to their stakeholders.
      Be aware that those who serve on boards (both for-profit and non-profit) may be held personally liable for the misconduct of the organization.
    • Business Regulations and Articles of Incorporation
      Image source: http://www.flickr.com/photos/34517490@N00/
    • Corporate Expansion: Mergers and Acquisitions
      A merger is the result of two firms forming one company.
      An acquisition is one company’s purchase of the property and obligations of another company.
    • Corporate Expansion: Mergers and Acquisitions
      A vertical merger is the joining of two firms involved in different stages of related businesses.
      A horizontal merger joins two firms in the same industry and allows them to diversify or expand their products.
      A conglomerate merger unites firms in completely unrelated industries.
    • Mergers
      Magna auto parts
      Delta auto parts
      Magna + Delta?
      Horizontal
      Ford auto mfg
      GM auto mfg
      Scarborough
      Ford/ Lincoln
      Auto dealership
      Markham
      Cadillac
      Auto dealership
    • Mergers
      Magna auto parts
      Delta auto parts
      Magna + the Scarborough dealership?
      Vertical
      Ford auto mfg
      GM auto mfg
      Scarborough
      Ford/ Lincoln
      Auto dealership
      Markham
      Cadillac
      Auto dealership
    • Mergers
      Magna auto parts
      Delta auto parts
      Scarborough + Ford?
      Vertical
      Ford auto mfg
      GM auto mfg
      Scarborough
      Ford/ Lincoln
      Auto dealership
      Markham
      Cadillac
      Auto dealership
    • Mergers – unrelated industries
      Magna auto parts
      Delta auto parts
      Henderson’s
      Appliances
      Delta + Henderson?
      Conglomerate
      Ford auto mfg
      GM auto mfg
      Scarborough
      Ford/ Lincoln
      Auto dealership
      Markham
      Cadillac
      Auto dealership
    • Why Mergers Don’t Work
      Companies overpay to acquire another firm
      Acquiring company overestimates cost savings and synergies
      After merger, managers disagree about integrating operations
      After merger, cost cutting obsession hurts business, costing top employees and customers
    • Leveraged Buyout - an attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing. The funds borrowed are used to buy out the stockholders in the company.
    • Leveraged Buyout
      Individual + Loan = Purchase of Company
      Purchase Loan
      Company = Collateral
    • Franchises
      Some people are not comfortable starting their own business from scratch. They would rather join a business with a proven track record through a franchise agreement.
      A franchise agreement is an arrangement whereby someone with a good idea for a business (the franchisor) sells the rights to use the business name and to sell a good or service (the franchise) to others (the franchisee) in a given territory.
      Ource: http://www.flickr.com/photos/nicktakespics/
    • Franchises
    • Franchise System
      Image sources: http://popseoul.files.wordpress.com/2009/03/hanyeseul-090309-20-281-29.jpg; http://www.seeklogo.com; http://www.fnp.in; http://timhortons.com
    • Figure 5.7 Canadian Franchisors
    • Franchise Contract
      Branded Product/Service
      Franchisor
      Performance
      Monitoring
      Franchisee
      $$$$$
    • Franchisor
    • Franchisee
      Pays upfront costs
      Makes monthly payment to franchisor
      Runs business by franchisor’s rules/procedures
      Buys materials from franchisor/approved supplier
    • How to Avoid a Franchise Lemon
      Research officers & their business experience
      Get summary of any bankruptcy & litigation
      Estimate all costs to set up franchise
      Review franchise contract and three most recent financial statements
      Image source: http://www.flickr.com/photos/ahinsajain/
    • Flexible work hours | Quality lifestyle Doing the work of your choice | Self-motivationOpportunity to expand using technology
      Benefits of a Home-Based Franchise
      .
      Image source: http://www.flickr.com/photos/yukonblizzard/
    • Franchising & E-Commerce
      Technology: faster customer service
      Access to international markets
    • Co-operatives
      Owned by the members
      Pay no income taxes
      Profits are shared amongst the members
      Co-workers, farmers, fishermen, consumers, etc. band together to form “co-ops”
    • Chapter Summary
    • Chapter Summary
    • Homework
      review
      for midterm
      read
      Chapter 6
      do quiz before
      Oct 10th
      54