<p> Chapter Eight Business Organizations</p><p>Section One: Sole Proprietorships Business organization: an establishment formed to carry on commercial enterprises</p><p>What are sole proprietorships? A business owned and operated by a single individual</p><p>Advantages of Sole Proprietorships: Ease of start up[minimum requirements – business license needed, site permit if not housed in home, name – registered if not using their own] Relatively few regulations Sole receiver of profit – and no special taxes paid to government Full control & easy to discontinue</p><p>Disadvantages of sole proprietorships: Unlimited personal liability – legally bound to pay all debts Limited access to resources – limited money Lack of permanence – too easy to end, hard to find good workers</p><p>Section Two: Partnerships What are Partnerships? A business organization owned and operated by two or more individuals who agree on a specific divisions of responsibilities and profits</p><p>General Partnerships: partnership in which partners share equally in both responsibility and liability – many doctors’ offices, law offices, and construction companies</p><p>Limited Partnerships: partnership in which only one partner is required to be a general partner – other partners only contribute money and do not actively run the business</p><p>Limited Liability Partnerships: partnership in which all partners are limited partners – new form of partnership, protected from liability of another partners wrongdoing.</p><p>Advantages of Partnerships: Ease of startup [article of partnership – a partnership agreement suggested by not required] Shared decision making and specialization – wider pool of knowledge Larger pool of capital – more able to borrow money so more assets No special taxes to government</p><p>Disadvantages of Partnerships: Unlimited liability – you can loose everything Potential for conflict – if you don’t agree with other partners Section Three: Corporations, Mergers, and Multinationals What are corporations? A legal entity owned by individual stock holders</p><p>What are the different types of corporations? Closely held corporations [privately held corporations, publicly held corporation</p><p>Advantages of Incorporation: Limited liability for owners – not personally liable for debts Transferable ownership – can give or sell personal ownership easily Ability to attract capital – by selling stocks & bonds – more $$ is available Long life – can live longer than original ‘owners’</p><p>Disadvantages of Incorporation: expense and difficulty of start-up – must complete a charter which includes : corporate name, statement of purpose, length of time that the business will run, founders’ names and addresses, headquarters’ business address, method of fundraising, rules for corporation’s management Double taxation – the corporation is a legal entity, it must pay taxes on its income, and stockholders must also pay taxes on their dividends Potential loss of control by the founders: managers and boards of directors operate the business More legal requirements and regulation must hold annual meetings for shareholders and keep careful records of all business transactions</p><p>What are corporate combinations? horizontal mergers – the combination of two or more firms competing in the same market with the same good or service Chrysler Co. and Daimler - Benz</p><p> vertical mergers – the combination of two or more firms involved in different stages of producing the same good or service – Steel industry – mines, steel mills, shipping, etc.</p><p>Conglomerates - business combination merging more than three business that make unrelated products – toothpaste & brushes, cereal, house cleaners [SC Johnson]</p><p>Explain multinational corporations and give an example: Multinational Corporation – large corporation that produces and sells its goods and services throughout the world – Starbucks, Le Crueset, McDonalds</p><p>Advantages of Multinationals – providing jobs and products around the world, spread new technologies, and production methods across the world</p><p>Disadvantages of Multinationals – multinationals may unduly influence the culture and politics of other places Section Four: Other Organizations Name other types of businesses: Franchises, Cooperatives, and Nonprofits</p><p>What is a franchise? Give advantages and disadvantages:</p><p>What are cooperatives? Name and describe the different types.</p><p>What are Non-Profits? Name and describe the different types.</p>