Ch05

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Ch05

  1. 1. Structures of International Business Organizations 5-1 Forms of Business Ownership 5-2 Operations of Global Businesses 5-3 Starting Global Business Activities CHAPTER 5
  2. 2. LESSON 5-1 Forms of Business Ownership <ul><li>GOALS </li></ul><ul><li>Describe the advantages and disadvantages of a sole proprietorship. </li></ul><ul><li>Describe the advantages and disadvantages of a partnership. </li></ul><ul><li>Explain the characteristics of a corporation. </li></ul><ul><li>Name other forms of business ownership. </li></ul>
  3. 3. Percentage of U.S. Businesses by Method of Organization <ul><li>Sole Proprietorships, 72% </li></ul><ul><li>Partnerships, 9% </li></ul><ul><li>Corporations, 19% </li></ul>
  4. 4. The Sole Proprietorship <ul><li>Advantages </li></ul><ul><ul><li>Ease of starting </li></ul></ul><ul><ul><li>Freedom to make business decisions </li></ul></ul><ul><ul><li>Owner keeps all profits </li></ul></ul><ul><ul><li>Pride of ownership </li></ul></ul><ul><li>Disadvantages </li></ul><ul><ul><li>Limited sources of funds </li></ul></ul><ul><ul><li>Long hours and hard work </li></ul></ul><ul><ul><li>Unlimited risks </li></ul></ul><ul><ul><li>Limited life of the business </li></ul></ul>
  5. 5. Partnership <ul><li>Advantages </li></ul><ul><ul><li>Ease of creation </li></ul></ul><ul><ul><li>Additional sources of funds </li></ul></ul><ul><ul><li>Availability of different talents </li></ul></ul><ul><li>Disadvantages </li></ul><ul><ul><li>Partners are liable </li></ul></ul><ul><ul><li>Profits are shared among several owners </li></ul></ul><ul><ul><li>Potential for disagreement among owners </li></ul></ul><ul><ul><li>Business can dissolve suddenly </li></ul></ul>
  6. 6. Corporation <ul><li>Advantages </li></ul><ul><ul><li>More sources of funds </li></ul></ul><ul><ul><li>Fixed financial liability of owners </li></ul></ul><ul><ul><li>Specialized management </li></ul></ul><ul><ul><li>Unlimited life of the company </li></ul></ul><ul><li>Disadvantages </li></ul><ul><ul><li>Difficult creation process </li></ul></ul><ul><ul><li>Owners have limited control </li></ul></ul><ul><ul><li>Double taxation </li></ul></ul>
  7. 7. Percentage of Sales by Method of Businesses Organization <ul><li>Sole Proprietorships, 4% </li></ul><ul><li>Partnerships, 13% </li></ul><ul><li>Corporations, 83% </li></ul>
  8. 8. Other Forms of Business Organization <ul><li>Municipal corporations </li></ul><ul><li>Nonprofit corporations </li></ul><ul><li>Cooperatives </li></ul>
  9. 9. LESSON 5-2 Operations of Global Businesses <ul><li>GOALS </li></ul><ul><li>Describe the activities and characteristics of multinational companies. </li></ul><ul><li>Identify concerns related to multinational companies. </li></ul>
  10. 10. Multinational Companies <ul><li>Multinational companies in operation </li></ul><ul><li>Characteristics of multinational companies </li></ul><ul><ul><li>Worldwide market view </li></ul></ul><ul><ul><li>Standardized product </li></ul></ul><ul><ul><li>Culturally-sensitive hiring </li></ul></ul><ul><ul><li>International and local perspective </li></ul></ul><ul><li>Concerns about multinational companies </li></ul>
  11. 11. LESSON 5-3 Starting Global Business Activities <ul><li>GOALS </li></ul><ul><li>Identify five low-risk methods for getting involved in international business. </li></ul><ul><li>Discuss higher-risk methods for getting involved in international business. </li></ul>
  12. 12. Methods for Getting Involved in International Business
  13. 13. Low-Risk Methods for Getting Involved in International Business <ul><li>Indirect exporting </li></ul><ul><li>Direct exporting </li></ul><ul><li>Management contracting </li></ul><ul><li>Licensing </li></ul><ul><li>Franchising </li></ul>
  14. 14. Higher-Risk Methods for Getting Involved in International Business <ul><li>Joint ventures </li></ul><ul><li>Turnkey project </li></ul><ul><li>Foreign direct investment </li></ul>

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