Chapter 8/9
partnerships generate ___ of sales
5%
sole proprietorships generate _____ of U.S sales
6%
in the U.S. partnerships are about ___ of all businesses
7%
corporations generate about __ of the net income earned in the nation
70%
corporations sell about __ of all products
90%
limited partners
DO contribute money but DO NOT manage the business or have unlimited personal liability
Which of the following is an example of a merger?
On company combines with another company that supplies it with raw materials
cooperative
a business organization owned and operated by a group of individuals for their mutual benefit
partnership
a business organization owned by two or more people who agree on a specific division of responsibilities & profits
sole proprietorship
a business owned & managed by a single individual
stock
a certificate of ownership in a corporation
bond
a formal contract to repay borrowed money with interest at fixed intervals
in a publicly held corporation
a large number of stockholders can buy & sell stock
corporation
a legal entity owned by individual stockholder
articles of partnerships
a partnership agreement
what is a fringe benefit?
a payment other than wages or salaries
business franchise
a semi-independent business that pays fees to a parent company in return for the exclusive right to sell a certain product or service in a given area
people considered to be employed are
a) 16 y/o b) they worked at least 1 hour for pay within the past week c) worked 15+ hours w/o pay in a family business (ie: farm) d) held jobs, but did not work due to illnesses, vacations, labor disputes, or bad weather
advantages of franchises
a) built in reputation b) management training & support c) standardized quality d) national advertising programs e) financial assistance f) centralized buying power
advantages of partnerships
a) ease of start up b) shared decision making & specialization c) larger pool of capital d) taxation
in a limited liability partnership, all partners
are limited from personal liability in certain situations
examples of LLPs
attorneys, physicians, dentists, & accountants
business license
authorization to start a business issued by the local government
there are more women in the labor force
because women have increased their human capital
the most important decisions in a corporation are made by the
board of directors
corporate structures
board of directors, who appoints corporate officers, who hire managers/employees & work in various department
conglomerate
business combination merging more than three businesses that make unrelated products
your uncle owns a convenience store that branches nationwide. his store is an example of a
business franchise
a merger that combines more than three businesses that make unrelated products is called
conglomerate
which type of cooperative sells merchandise to its members at reduce prices?
consumer
which of the following is NOT a type of partnership?
cooperative
service cooperative
cooperative that provides a service, rather than a good
a corporation can offer as many shares of stocks as are allowed by the
corporate charter
which type of business organization has shareholders?
corporation
you are looking for a job with many fringe benefits. you would probably prefer to work at a
corporation
closely held corporation
corporation that issues stock to only a few people, often family members.. privately held corporations
publicly held corporation
corporation that sells stick on the open market
most large businesses are
corporations
advantages for corporation
growth potential & long life potential
possible corporate combinations
horizontal & vertical mergers, conglomerates
higher education has changed the labor force by
increasing human capital
nonprofit cooperative
institution that functions much like a business, but does not operate for the purpose of generating profits
what is an advantage of a sole proprietorship?
it is the least regulated form of business organizations
multinational corporation (MNC)
large corporation that produces & sells its goods & services throughout the world
zoning laws
law in a city or town that designates separate areas for residency and business
pros of a proprietorship
least regulated make own decisions no special/additional taxes to be paid
liability is the
legal obligation to pay debts
certificate of incorporation
license to form a corporation issued by state government
advantages for stockholders
limited liability & stocks can be sold
you decide to go to a consumer cooperative to buy supplies for your party. prices are cheaper there mainly because consumer cooperatives
make large purchases
assets
money and other valuables belonging to an individual or business
good wireless and better wireless merge to form best wireless. the federal government watches this merger carefully for evidence of a
monopoly
business association
nonprofit organization that promotes collective business interests for a city state, or other geographical area, or for a group of similar businesses
trade association
nonprofit organization that promotes the interests of a particular
professional organization
nonprofit organization that works to improve the image, working conditions, and skill levels of people in particular occupations
which of the following is an advantage of a sole proprietorship?
not highly regulated by the government
in a limited liability
only one partner is required to be a general partner
labor union
organized group of workers whose aim is to improve working conditions, hours, wages, & fringe benefits
limited liability partnership (LLP)
partnership in which all partners are limited partners
limited partnership
partnership in which only one partner is required to be a general partner
general partnership
partnership in which partners share equally in both responsibility & liability
fringe benefits
payments other than wages or salaries
the electronic boom of the mid 20th century
produced a new surge of factory jobs
almost all nonprofit organizations
provide services rather than goods
consumer cooperative
retail outlet owned and operated by consumers
a disadvantage of a franchise is that the franchise owner must
sacrifice some freedom in return for the parent company's guidance
in return for a fee to a franchiser, a business owner receives the right to
sell the franchiser's goods & services
one of the ways a corporation can raise money is by
selling stock on the stock market
royalty
share of earnings given as payment
the most common form of business organization is the
sole proprietorship
most common forms of business organizations are
sole proprietorships
examples of corporations
supermarkets, high tech companies, machinery manufacturers
horizontal merger
the combination of two or more firms competing in the same market with the same good or service
vertical merger
the combination of two or more firms involved in different stages of producing the same good or service
in the beginning of the 1970s
the invention of the computer chip created growth in computer-related jobs
liability
the legally bound obligation to pay debts
dividend
the portion of corporate profits paid out to stockholders
learning effect
the theory that education increases productivity & results in higher wages
screening effect
the theory that the completion of college indicates ti employers that a job applicant is intelligent & hardworking
people are considered unemployed if
they are temporarily out of work or are not working but have looked for jobs within the last 4 weeks
which of the following is NOT a government requirement when starting a sole proprietorship?
to give clients 90 days notice prior to shutting down operations
cons of proprietorship
unlimited liability (personal belongings at risk) business loses money not easy to borrow money from banks, etc
a partnership is a business organization owned by
2 or more individuals
corporations make up __ of all businesses in the US
20%
partnerships are __ of income
10%
advantages of a sole proprietorship
a) easy start up - small amount of paperwork, obtain a business license, obtain a certificate of occupancy if not working from home, register a business name if not using a personal name b) relatively few regulations - subject to zoning laws, which may prohibit sole proprietors from operating businesses out of their homes, face very few legal requirements c) sole receiver of profit - owner keeps all money after paying income taxes d) full control - can respond quickly to changes in the marketplace because business(es) can be ran as the proprietor wishes, e) easy to discontinue - other than debts & taxes, no legal obligations need to be met to stop the business
disadvantages of incorporation
a) expense & difficulty of start up - apply for state license (certificate of incorporation), receive charter from state b) double taxation - corporation pays taxes on income, stockholders pay taxes on dividends and capital gains c) potential loss of control by the founders - d) more legal requirements & regulations - annual shareholders meetings, careful record keeping, annual and quarterly reports to SEC
disadvantages of franchises
a) franchise owner must sacrifice some freedom in return for the parent company's guidance b) high franchising fees and royalties c) strict operating standards d) purchasing restrictions e) limited product line
advantages of incorporation
a) limited liability for owners b) transferable ownership c) ability to attract capital d) long life
disadvantages of partnerships
a) unlimited liability b) potential for conflict
disadvantages of sole proprietorships
a) unlimited personal liability - sole proprietors are fully & personally responsible for all their business debts b) limited access to resources - lack of human and physical capital c) lack of permanence - no one will maintain the business besides the sole proprietor; few employees due to lack of fringe benefits.
according to the Internal Revenue Service (IRS)
about 75% of businesses are sole proprietorships.. but most of them are small.
Uniform Partnership Act (UPA)
act ordering common ownership, interests, profit and loss sharing, and shared management responsibilities in a partnership
producer cooperative
agricultural marketing cooperative that helps members sell their products
labor force
all nonmilitary people who are employed or unemployed
if a general partnership fails, who is responsible for the debts?
all of the partners
business organization
an establishment, company or firm, formed to carry on commercial enterprise
examples of a general partnership
doctors, lawyers, accountants, small retail stores, farms, construction companies, family businesses
sole proprietors
earns all of the firm's profits & is responsible for the firm's debts
museums, public schools, and YMCAs are all
exempt from paying income taxes
