Epf2d forms of business

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Epf2d forms of business

  1. 1. Role of Producers & Consumers<br /> in a Market Economy<br />EPF2d. Compare Forms of Business Ownership<br />
  2. 2. Essential question:<br />What Are the characteristics of each form of business organization?<br />2<br />
  3. 3. Forms of Ownership Facts:<br />5 Forms of Ownership:<br />Sole proprietorship<br />Partnership<br />Corporation<br />Cooperative<br />Franchise<br />Most businesses in the US are sole proprietorships<br />Corporations generate the most income<br />3<br />
  4. 4. Essential question:<br />What are the costs and benefits of each form of business?<br />4<br />
  5. 5. SOLE PROPRIETORSHIP<br />Benefits<br />The owner makes all the decisions<br />The owner keeps all the profits<br />Costs<br />The owner generally has limited financial resources<br />The owner faces unlimited liability, which means if the company fails, the owner can lose personal assets along with business assets.<br />5<br />
  6. 6. Partnership<br />Benefits<br />Owners make decisions <br />Owners keep profits<br />Owners share responsibilities – each has a unique set of skills and expertise<br />Costs<br />Owners face unlimited liability<br />Owners have limited financial resources<br />Potential conflict with partners<br />6<br />
  7. 7. Corporation<br />Benefits<br />Able to accumulate sufficient financial capital to make large-scale investments and achieve economies of scale (i.e. bringing down cost of production by producing in volume)<br />Have limited liability, meaning shareholder risk is limited to their share of ownership in the corporation<br />The corporation transcends the lives of those persons who created it.<br />Costs<br />Corporations face tax implications (e.g. double taxation – profits are taxes at the corporate level and again when distributed to shareholders as dividends)<br />Corporations are more expensive to establish<br />Corporations are governed by more regulations.<br />7<br />
  8. 8. COOPERATIVE<br />Benefits<br />Are members owned and operate for members benefit (e.g. credit unions)<br />Members enjoy discounted services and may receive refunds at the end of the year<br />Face no personal liability<br />Have a vote in how the business is run<br />Have interests similar to other members<br />Costs<br />Decisions made by the group may not suit all members<br />The decision make process may be more complex and slower than other organizations<br />8<br />
  9. 9. FRANCHISE<br />Benefits<br />Training and marketing is provided by the franchisor<br />The franchisee gains exclusive rights to sell in an area<br />Franchisee benefits from product development<br />Costs<br />The franchisee pays high franchise fees<br />There is a limited product line<br />Operates under strict guidelines and standards<br />9<br />

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