Chapter 3 Business Organizations

Essential Questions:

3-1 EQ: What are the characteristics each of the 3 forms of business organizations? 3-2 EQ: How can reinvestment help with a company’s economic growth? 3-3EQ: What is a non profit organization? Give an example.

3-1 Forms of Business Organizations

I. ______- A business run by one person

i. ______type of business organization in ______. ii. Typically the most numerous and______.

A. Advantages: i. Easy to ______. ii. Easy to ______. iii. ______gets all the profit iv. The business does not______, only the owner does v. Easy to ______the business

B. Disadvantages i. The owner has ______. ii. Difficult to raise financial______. iii. Owner may not be able to hire as many______necessary to reach maximum efficiency iv. Difficult to attract ______v. Owner may have limited ______experience

Individual Question Why do you think that so many business owners are sole proprietors despite the fact that they hold unlimited liability?

______

II. Partnerships 2. A partnership is a business jointly owned by ______persons. i. It is the ______among businesses ii. It has the 2nd smallest proportion of ______.

A. General partnerships are a type if business in which ______are involved in the management and finances

B. In a limited partnership, at ______partner is not involved in management.

C. Articles of the partnership document spell out how the partners divide up the ______. D. Advantages i. ______. ii. Ease of management iii. Easier to raise ______through bank loans or a new partner iv. Easier to attract skilled ______.

E. Disadvantages i. Partners are responsible for the acts of each and every partner ii. Limited life of a partnership ends if ______. iii. Potential for partner ______.

III. Corporations 3. A corporation is a ______recognized by law as a separate legal entity with all the rights of an individual i. They receive a charter to create a corp. which includes the details about ______. ii. Investors who buy ______in a corporation become owners of the firm

Advantages i. Ease of ______ii. Professionals may run the firm instead of the owners (shareholders) iii. Owners have ______iv. Business’s life is unlimited v. Easy to ______ownership

B. Disadvantages i. A charter is ______ii. Owners and managers are separate so shareholders have little say in running the business iii. Corporate income is ______vi. Subject to government______

Discussion Question Who really are the owners of a corporation?

______

VI. Government and Business Regulation

A. Federal and State Governments regulate ______and utility rates.

B. State governments may offer industrial development ______to help industries relocate or tax credits to draw investments

3-1 EQ What are the characteristics each of the 3 forms of business organizations?

______3-2 Business Growth and Expansion

I. Growth through Reinvestment

A. Business Revenue can be used to invest in factories, machinery or new ______

B. Before reinvesting, a business must estimate its ______.

Total Sale- (expenses + tax + depreciation) = net income

C. The depreciated value is added back to the net income to get the company’s cash flow (bottom line) which is the real ______.

D. Business owners can then decide whether part or all of the cash flow should be reinvested to generate additional sales and increased profit

II. Growth through Mergers A. When firms merge, one gives up its separate ______.

B. A company may merge to grow faster, become more efficient, acquire or deliver a better product, or ______.

C. A horizontal merger is the joining of firms that make the same product Example: ______

D. A vertical merger is the joining of firms involved in ______of manufacturing or marketing

E. A conglomerate is composed of four or more businesses each making unrelated products, none of which is responsible for a majority of its sales

F. A multinational is a corporation with manufacturing and service operations in______, which are subjected to each nation’s business regulations.

Discussion Question Why have some multinational companies been criticized?

______

3-2 EQ How can reinvestment help with a company’s economic growth?

______3-3 Other Organizations

I. Community and Civic Organizations A. A non-profit organization is in business to promote its members collective interests, ______.

B. Many non-profit organizations incorporate to take advantage of a corporation’s unlimited life and ______liability.

C. If it has money after it’s expenses are paid, its board of directors may apply the surplus to other projects that further the organization’ s ______.

II. Cooperatives A. A cooperative is a voluntary association of people who carry on an economic activity that ______its members.

B. Consumer cooperatives buy food and other necessities in bulk. Members donate______to the co-op and members pay lower prices for ______.

C. Service co-ops such as______, offer services to their members at lower rates.

D. Producer co-ops help members, ______, promote or sell their products

III. Labor, Professional, and Business Organizations A. ______represent workers’ interests and negotiate with management through collective bargaining.

B. ______set standards for those in the professional an influence govt. policies on issues concerning their member’s interests.

C. ______are industries or trade associations that represent specific kinds of businesses. Some also help to protect the consumer.

IV. Government A. The Government plays ______in the economy when its agencies produce and distribute goods and services to consumers.

B. Govt. corporations have board of directors, but Congress’s money rather than ______money, support their work.

C. The govt. plays an indirect role when it regulates ______or when it grants money to people in the form of social security and student ______.

3-3 EQ What is a non profit organization. Give an example. ______