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Business Organizations

Business Organizations






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    Business Organizations Business Organizations Presentation Transcript

    • Business Organizations
    • When I was your age……. In 1969……. New home $27,900 Cost of a stamp $0.06 Gal. of gas $0.35 Gal of milk $1.10 In 1979…… New home $71,800 Stamp $0.15 Gal. of gas $0.86 Gal. of milk $1.62 In 1989….. New home $148,800 Stamp $0.25 Gal. of gas $1.12 Gal. of milk $2.34 In 1999….. New home $195,800 Stamp $0.33 Gal. of gas $1.17 Gal. of milk $3.32
    • Now……
      • New home $234,600
      • Stamp $0.42
      • Gal of Gas $1.93
      • Gal of Milk $3.82
      • Why would the man not want govt. regulation?
      • What is the artist’s attitude towards wall street?
      • Is govt. regulation good for business or bad? Why?
    • Forms of Business Organization
      • What is sole proprietorship?
      • What are the advantages and disadvantages of the partnership?
      • Describe the structure and features of a corporation?
    • Proprietorships
      • Business owned by one person.
      • Most common form of business.
      • Advantages
        • Easy to start.
        • Easy management
        • Owner doesn’t have to share profits
        • Doesn’t have to pay separate taxes
        • Personal satisfaction
    • Disadvantages of Proprietorship
      • Owner is personally responsible for all losses and debts.
      • Difficulty in raising financial capital
      • Size and efficiency
      • Limited experience
      • Hard to find good help
      • Limited lifespan
    • Partnerships
      • Advantages
        • Easy to start
        • Easy to manage
        • Lack of special taxes on a partnership
        • Can attract more financial capital
        • Larger in size
        • Easy to attract top talent
      • Disadvantages
        • Each partner is responsible for the others.
        • Conflict-not everyone gets along with others.
    • Corporations
      • Form of business organization recognized by law as a separate legal entity having all the rights of an individual.
      • Count for about 20% of the firms in the U.S.
      • Very formal and legal arrangement.
      • Has charter, stockholders, and usually a board that makes decisions.
    • Stock
      • Common stock represents basic ownership in a corporation.
      • Preferred stock is a nonvoting share of the company. Receive dividends before common stockholders.
    • Advantages and Disadvantages
      • Advantages
        • Ease of raising financial capital.
        • Directors can hire professional managers
        • Provides limited liability for the owner.
        • Unlimited life
      • Disadvantages
        • Charters are expensive
        • Shareholders have little say in how the company should be run.
        • Double taxation of profits
        • Subject to more govt. regulation
    • Govt. Regulation
      • In theory, capitalism calls for less govt. intervention.
      • However, some regulation is necessary. Especially for businesses that control utilities such as gas, phone, power, etc.
      • Govts also play a part in attracting business.
      • What does the tourney bracket represent?
      • Why would the artist use the tourney bracket to describe the economic situation?
      • What is the artist trying to tell us about our economy?
    • Business Growth and Expansion
      • How do businesses reinvest their profits to grow?
      • What are the reasons that cause firms to merge?
      • What are the two types of mergers?
    • Growth
      • Companies grow by a number of ways.
      • Two major ways are reinvestment and mergers.
      • Mergers occur when two or more companies combine.
      • Reinvestment is where a company takes some of its revenue to upgrade technology, machinery, buy more property, etc.
    • Reinvestment
      • A company finds its net income by subtracting wages, interest payments, depreciation from its revenue.
      • The company comes up with the bottom line by adding all non-cash charges with net income.
      • Now it takes this cash flow and can purchase upgrades or find a more efficient way to produce.
    • Mergers
      • When a companies merge, one company has to give up a legal identity.
      • One reasons that mergers take place is the desire for growth and to be bigger.
      • Efficiency is another reason, the smaller company might have a management problem so they merger with a more efficient company.
      • Can you think of any mergers that have recently taken place?
    • Types of Mergers
      • Horizontal- two or more firms produce the same type of product and join forces.
      • Vertical- companies purchase companies that produce supplemental goods or capital goods.
    • Conglomerates vs. Multinationals
      • Conglomerates have at least four businesses that make unrelated products. This leads to diversification. Since the 1980’s many conglomerates have declined in the U.S.
      • Multinationals operate in a number of countries. This is a more common type of business. Some examples are UPS, Pepsi, Coca-Cola, etc.
      • What is this cartoon saying about our economy?
      • Do you think that fear is a factor in today’s economic world?
    • Other Organizations
      • What is a non-profit organization?
      • What role does government play in our economy?
      • What is a Co-op?
      • How do labor unions affect our economy?
    • Non Profits
      • Are designed to reap some other kind of reward.
      • Some examples are schools, adoption agencies, welfare, churches, hospitals (yeah, right!), etc.
    • Cooperatives
      • Voluntary association of people that carry out some kind of economic activity.
      • Consumer co-ops buy bulk amounts of a good on behalf of its members.
      • Service co-ops provide a service such as credit, insurance, etc.
      • Producer Co-ops sell their products to help promote its members.
    • Labor Unions and other Organizations
      • Labor unions are organized to benefit its members in employment activities. They served their purpose in the past, but are far more driven by political agendas now.
      • Professional Associations
      • Business Associations
    • Government’s role in economy
      • Direct
        • Produces goods/services to people
          • Ex. FDIC, TVA, Post Office
      • Indirect
        • Acts as a regulator to make sure that the economy operates efficiently.