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…… ...
Now…… <ul><li>New home $234,600 </li></ul><ul><li>Stamp $0.42 </li></ul><ul><li>Gal of Gas $1.93 </li></ul><ul><li>Gal of ...
<ul><li>Why would the man not want govt. regulation? </li></ul><ul><li>What is the artist’s attitude towards wall street? ...
Forms of Business Organization <ul><li>What is sole proprietorship? </li></ul><ul><li>What are the advantages and disadvan...
 
Proprietorships <ul><li>Business owned by one person. </li></ul><ul><li>Most common form of business. </li></ul><ul><li>Ad...
Disadvantages of Proprietorship <ul><li>Owner is personally responsible for all losses and debts. </li></ul><ul><li>Diffic...
Partnerships <ul><li>Advantages </li></ul><ul><ul><li>Easy to start </li></ul></ul><ul><ul><li>Easy to manage </li></ul></...
Corporations <ul><li>Form of business organization recognized by law as a separate legal entity having all the rights of a...
Stock <ul><li>Common stock  represents basic ownership in a corporation. </li></ul><ul><li>Preferred stock  is a nonvoting...
Advantages and Disadvantages <ul><li>Advantages </li></ul><ul><ul><li>Ease of raising financial capital. </li></ul></ul><u...
Govt. Regulation <ul><li>In theory, capitalism calls for less govt. intervention. </li></ul><ul><li>However, some regulati...
<ul><li>What does the tourney bracket represent? </li></ul><ul><li>Why would the artist use the tourney bracket to describ...
Business Growth and Expansion <ul><li>How do businesses reinvest their profits to grow? </li></ul><ul><li>What are the rea...
Growth <ul><li>Companies grow by a number of ways. </li></ul><ul><li>Two major ways are reinvestment and mergers. </li></u...
Reinvestment <ul><li>A company finds its net income by subtracting wages, interest payments, depreciation from its revenue...
Mergers <ul><li>When a companies merge, one company has to give up a legal identity. </li></ul><ul><li>One reasons that me...
Types of Mergers <ul><li>Horizontal- two or more firms produce the same type of product and join forces. </li></ul><ul><li...
Conglomerates vs. Multinationals <ul><li>Conglomerates have at least four businesses that make unrelated products. This le...
<ul><li>What is this cartoon saying about our economy? </li></ul><ul><li>Do you think that fear is a factor in today’s eco...
Other Organizations <ul><li>What is a non-profit organization? </li></ul><ul><li>What role does government play in our eco...
Non Profits <ul><li>Are designed to reap some other kind of reward. </li></ul><ul><li>Some examples are schools, adoption ...
Cooperatives <ul><li>Voluntary association of people that carry out some kind of economic activity. </li></ul><ul><li>Cons...
Labor Unions and other Organizations <ul><li>Labor unions are organized to benefit its members in employment activities.  ...
Government’s role in economy <ul><li>Direct </li></ul><ul><ul><li>Produces goods/services to people </li></ul></ul><ul><ul...
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Business Organizations

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Business Organizations

  1. 1. Business Organizations
  2. 2. 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
  3. 3. Now…… <ul><li>New home $234,600 </li></ul><ul><li>Stamp $0.42 </li></ul><ul><li>Gal of Gas $1.93 </li></ul><ul><li>Gal of Milk $3.82 </li></ul>
  4. 4. <ul><li>Why would the man not want govt. regulation? </li></ul><ul><li>What is the artist’s attitude towards wall street? </li></ul><ul><li>Is govt. regulation good for business or bad? Why? </li></ul>
  5. 5. Forms of Business Organization <ul><li>What is sole proprietorship? </li></ul><ul><li>What are the advantages and disadvantages of the partnership? </li></ul><ul><li>Describe the structure and features of a corporation? </li></ul>
  6. 7. Proprietorships <ul><li>Business owned by one person. </li></ul><ul><li>Most common form of business. </li></ul><ul><li>Advantages </li></ul><ul><ul><li>Easy to start. </li></ul></ul><ul><ul><li>Easy management </li></ul></ul><ul><ul><li>Owner doesn’t have to share profits </li></ul></ul><ul><ul><li>Doesn’t have to pay separate taxes </li></ul></ul><ul><ul><li>Personal satisfaction </li></ul></ul>
  7. 8. Disadvantages of Proprietorship <ul><li>Owner is personally responsible for all losses and debts. </li></ul><ul><li>Difficulty in raising financial capital </li></ul><ul><li>Size and efficiency </li></ul><ul><li>Limited experience </li></ul><ul><li>Hard to find good help </li></ul><ul><li>Limited lifespan </li></ul>
  8. 9. Partnerships <ul><li>Advantages </li></ul><ul><ul><li>Easy to start </li></ul></ul><ul><ul><li>Easy to manage </li></ul></ul><ul><ul><li>Lack of special taxes on a partnership </li></ul></ul><ul><ul><li>Can attract more financial capital </li></ul></ul><ul><ul><li>Larger in size </li></ul></ul><ul><ul><li>Easy to attract top talent </li></ul></ul><ul><li>Disadvantages </li></ul><ul><ul><li>Each partner is responsible for the others. </li></ul></ul><ul><ul><li>Conflict-not everyone gets along with others. </li></ul></ul>
  9. 10. Corporations <ul><li>Form of business organization recognized by law as a separate legal entity having all the rights of an individual. </li></ul><ul><li>Count for about 20% of the firms in the U.S. </li></ul><ul><li>Very formal and legal arrangement. </li></ul><ul><li>Has charter, stockholders, and usually a board that makes decisions. </li></ul>
  10. 11. Stock <ul><li>Common stock represents basic ownership in a corporation. </li></ul><ul><li>Preferred stock is a nonvoting share of the company. Receive dividends before common stockholders. </li></ul>
  11. 12. Advantages and Disadvantages <ul><li>Advantages </li></ul><ul><ul><li>Ease of raising financial capital. </li></ul></ul><ul><ul><li>Directors can hire professional managers </li></ul></ul><ul><ul><li>Provides limited liability for the owner. </li></ul></ul><ul><ul><li>Unlimited life </li></ul></ul><ul><li>Disadvantages </li></ul><ul><ul><li>Charters are expensive </li></ul></ul><ul><ul><li>Shareholders have little say in how the company should be run. </li></ul></ul><ul><ul><li>Double taxation of profits </li></ul></ul><ul><ul><li>Subject to more govt. regulation </li></ul></ul>
  12. 13. Govt. Regulation <ul><li>In theory, capitalism calls for less govt. intervention. </li></ul><ul><li>However, some regulation is necessary. Especially for businesses that control utilities such as gas, phone, power, etc. </li></ul><ul><li>Govts also play a part in attracting business. </li></ul>
  13. 14. <ul><li>What does the tourney bracket represent? </li></ul><ul><li>Why would the artist use the tourney bracket to describe the economic situation? </li></ul><ul><li>What is the artist trying to tell us about our economy? </li></ul>
  14. 15. Business Growth and Expansion <ul><li>How do businesses reinvest their profits to grow? </li></ul><ul><li>What are the reasons that cause firms to merge? </li></ul><ul><li>What are the two types of mergers? </li></ul>
  15. 16. Growth <ul><li>Companies grow by a number of ways. </li></ul><ul><li>Two major ways are reinvestment and mergers. </li></ul><ul><li>Mergers occur when two or more companies combine. </li></ul><ul><li>Reinvestment is where a company takes some of its revenue to upgrade technology, machinery, buy more property, etc. </li></ul>
  16. 17. Reinvestment <ul><li>A company finds its net income by subtracting wages, interest payments, depreciation from its revenue. </li></ul><ul><li>The company comes up with the bottom line by adding all non-cash charges with net income. </li></ul><ul><li>Now it takes this cash flow and can purchase upgrades or find a more efficient way to produce. </li></ul>
  17. 18. Mergers <ul><li>When a companies merge, one company has to give up a legal identity. </li></ul><ul><li>One reasons that mergers take place is the desire for growth and to be bigger. </li></ul><ul><li>Efficiency is another reason, the smaller company might have a management problem so they merger with a more efficient company. </li></ul><ul><li>Can you think of any mergers that have recently taken place? </li></ul>
  18. 19. Types of Mergers <ul><li>Horizontal- two or more firms produce the same type of product and join forces. </li></ul><ul><li>Vertical- companies purchase companies that produce supplemental goods or capital goods. </li></ul>
  19. 20. Conglomerates vs. Multinationals <ul><li>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. </li></ul><ul><li>Multinationals operate in a number of countries. This is a more common type of business. Some examples are UPS, Pepsi, Coca-Cola, etc. </li></ul>
  20. 21. <ul><li>What is this cartoon saying about our economy? </li></ul><ul><li>Do you think that fear is a factor in today’s economic world? </li></ul>
  21. 22. Other Organizations <ul><li>What is a non-profit organization? </li></ul><ul><li>What role does government play in our economy? </li></ul><ul><li>What is a Co-op? </li></ul><ul><li>How do labor unions affect our economy? </li></ul>
  22. 23. Non Profits <ul><li>Are designed to reap some other kind of reward. </li></ul><ul><li>Some examples are schools, adoption agencies, welfare, churches, hospitals (yeah, right!), etc. </li></ul>
  23. 24. Cooperatives <ul><li>Voluntary association of people that carry out some kind of economic activity. </li></ul><ul><li>Consumer co-ops buy bulk amounts of a good on behalf of its members. </li></ul><ul><li>Service co-ops provide a service such as credit, insurance, etc. </li></ul><ul><li>Producer Co-ops sell their products to help promote its members. </li></ul>
  24. 25. Labor Unions and other Organizations <ul><li>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. </li></ul><ul><li>Professional Associations </li></ul><ul><li>Business Associations </li></ul>
  25. 26. Government’s role in economy <ul><li>Direct </li></ul><ul><ul><li>Produces goods/services to people </li></ul></ul><ul><ul><ul><li>Ex. FDIC, TVA, Post Office </li></ul></ul></ul><ul><li>Indirect </li></ul><ul><ul><li>Acts as a regulator to make sure that the economy operates efficiently. </li></ul></ul>

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