Intro to Business Chapter 5 Study Guide

US news and world report best jobs

-Factors: salary, growth potential, work-life balance 5. orthodontist 4. statistician 3. physician assistant 2. nurse practitioner 1. dentist

C-Corporation

-most common form of ownership - limited liability -corporation and shareholders pay taxes on earnings -must file for articles of incorporation which is a legal authorization to organize the business as a corporation. It restricts what you can or can't do

3 types of businesses

-producers -intermediaries service business

General partnerships

-profits, liability, and management duties are divided equally -for unequal distribution, the percentages assigned to each partner stand in the partnership agreement

articles of incorporation

a written legal document that identifies ownership and operating procedures and conditions for a business

All of the following types of businesses are producers except a. extractors b. farmers c. retailers d. manufacturers

c. retailers

A temporary or _______________ worker is one who has no explicit or implicit contract for long-term employment

contingent

A special form of business organization that combines advantages of a corporation and a partnership is a a. franchise b. nonprofit corporation c. cooperative d. limited liability company

d. limited liability corporation

The operating procedures for a corporation.

corporate bylaw

authority

leadership/decision making

responsibility

obligation to complete tasks

contigent worker

one who has no explicit or implicit contract for long-term employment (temporary) (5%)

A business owned and controlled by at least two people who have entered into a written agreement.

partnership

Guidelines used in making consistent decisions.

policies

Descriptions of the way work is to be done.

procedures

Types of workers

*baby boomers are aging and retiring (1946-1964) -average age of US workers will be over 50 -increase in 20-30 yr olds in work force *percent of white non-hispanic workers declines -currently 68% will drop to 63% by 2020 *percent of women working continues to increase

joint ventures

-2 business work together on a project. could be a short-term arrangement or a permanent relationship -unique structure - resources are "pooled"

proprietorship

a business owned and controlled by just one person

corporation

a separate legal entity, formed by documents filed with the state, which is owned by one or more shareholders and managed by a board of directors

Partnerships

unincorporated business with 2 or more owners

procedures

descriptions of the way work is to be done

Best careers for the next 10 years

-App developer (22.7% job growth) -health care (nurse practitioner) -market research analyst

Pressure on Employees

-Balancing family issues and work has become increasingly difficult -Technology and globalization have changed jobs and companies to run "leaner" -downsizing has become popular -artificial intelligence is emerging and replacing people -technology has/will have a major impact on companies and future jobs

The changing US job market

-More focus on info/finance/tech/healthcare -less manufacturing -more education required

Nonprofit Corporations

-all profits must remain inside of the entity -pays no federal/state income tax on profits it makes from activities engaging in Categories: 1. Charity 2. religious groups 3. public benefit - foundations (advance science/education/arts) 4. Mutual benefit (trade associations, amateur sports, political groups)

Limited Partnerships (partnerships w limited liability)

-allow partners limited liability and limited input with management and decisions -limits depend on the extent of each partner's investment percent -attractive to investors of short-term projects

Cooperative (Co-op)

-business organization owned by and operated for the benefit of those using its services -utilizes economies of scale -profits and earnings are distributed among the members (user-owners) -common in healthcare, agriculture, art, and restaurant industries

Role of business and the impact on a community

-distribute goods and services -provide jobs = wages = spending -tax revenue (employees and business) -large companies attract additional businesses to that community

Service Business

-do not make any tangible products -doctors, accountants, lawyers -fastest growing segment of the economy -60% of all US employment in service -changing nature requiring technical skills and higher levels of education

Retail franchise

-granted by manufacturer - sold directly to end user (automobile dealership)

wholesale franchise

-granted by manufacturer - wholesaler manipulates appropriate resources and sells to retailers (coke/beer distributers brew, bottle, and distribute to retailers)

Jobs we'll lose to machines

-half of the jobs are at a high risk of being automated by machines -47% of jobs (70 million) will be gone in the US -machine learning is the most powerful form of artificial intelligence -any career or job that requires frequency (repetitive type analysis) will be replaced by machines -the area where machines can't replace us are at novel situations (creativity, innovation)

Harley Davidson and Wisconsin

-interview w keith wandell -Harley operates w union employees -collective bargaining agreement - restrictions they have w their employees -when the economy goes down, luxury items suffer -considering leaving WI -40% less sales in new bikes -must cut around fifty to sixty million dollars in expenses to remain profitable -They should start producing smaller, faster bikes as a younger audience will be more attracted to this type of motorcycle

service-sponsored franchise

-local business granted the right to provide specific services - fast food restaurants/gas stations -their #1 priority is making sure the brand is well known/liked -important to know what's in the franchise agreement and what your rights are -buying from the same supplier will bring down costs and to remain consistent -Franchises offer the independence of small business ownership supported by the benefits of a big business network. You don't necessarily need business experience to run a franchise

sole proprietorship

-owned and operated by 1 person -approximately 75% of all US businesses -most businesses begin as sole proprietorship -proprietorships change as they grow considerations: 1. How much liability protection is required? 2. Will the business need investment capital? 3. What will be the personal tax ramifications of this business? How to set up a sole -just set up a shop and doesn't need a name -if employees are hired, there must be an employer identification number (EIN) to track employee taxes -sales ID numbers is also required which is obtained from the department of revenue

Limited Liability Company (LLC)

-owners get some tax benefits and have limited liabilty -combines the advantages of a corporation and a partnership -avoid some restrictions of subchapters Benefits: 1. easier to set up than a corporation 2. allows for flexibility of partnership with limited liability of a corporation 3. not subject to double taxation - profits are taxed personally like a partnership 4. no limitations on the number of owners or their status -file articles of incorporation ($150) -registered agent ($40-60) -LLC operating agreement -annual report with secretary of state

Subchapter S Corporation

-taxed like a partnership -profits are taxed only once at stockholder's personal tax rate -cash businesses are well-suited (restaurants) Restrictions: -no more than 75 stockholders -all stockholders must be US citizens -only one class of stock -involved process to become one file articles of incorporation ($150) identify a registered agent ($40-60) elect directors issue stock certificates for the initial shareholders -corporate bi-laws -must complete form 2553 -any profits pass through your personal and you pay lower taxes

Business and the economy

-worldwide production of $77.6 trillion in goods and services in 2014 -US businesses make up 20% of production -27 million businesses produce this -78.26% of businesses are just the owner -19.41% have between 2-20 employees -1.93% (20-99 employees) -0.4% (100+ employees)

6 basic business activities

1. Generating ideas 2. Raising capital - $ for start-up and growth (owner investments/bank loans/ reinvested earnings) 3. Employing and training personnel 4. Buying goods and services to operate businesses efficiently 5. Marketing goods and services 6. Maintaining accurate business records (accounting records, customer info)

5 trends shaping the future of work

1. Globalization - allows companies to use ideas from people around the world 2. Mobility - allows us to work anywhere and communicate with people anytime/anywhere 3. Millenials are expected to make up 50% of work force by 2020, and 75% by 2025 4. New behaviors are rapidly entering our lives 5. Technology - collaboration platforms

Factors of the best cities to start a company

1. business environment 2. access to key resources 3. cost of doing business there (tax structure) 4. looked at business survival rate 5. average startup per capita 6. look at how many investors are available 7. cost of living Rank 1. Oklahoma City 2. Salt Lake City, UT 3. Charlotte, NC

partnership agreement

A partnership agreement is vital and legally binding. All should include: -percentage of ownership (detailled) -where the profits and losses are gonna go -who can bind the partnership? -decision making authority -death of a partner (who gets their ownership) -resolving disputes

C-Corporation Advantages/Disadvantages

Advantages 1. Easier to raise money - alternative methods 2. Limited liabilty - separate entity 3. unlimited life 4. specialized management 5. risks are shared Disadvantages 1. Difficult to start up - gov approval 2. less direct control - owners not involved in day to day activities 3. double taxation - profits are taxed, then dividends are taxed 4. limited activities - can only do what's in their charter

Partnership Advantages/Disadvantages

Advantages 1. Easy to start up 2. lower tax burden 3. limited government regulation 4. not as difficult to raise funds - additional borrowers 5. combination of skills - improved efficiency Disadvantages 1. Unlimited liabilty 2. profits are shared 3. limited life of business - assets are distributed if a partner dies 4. disagreements 5. laws of agency

Sole Proprietorship Advantages/Disadvantages

Advantages 1. easy to start up 2. limited government regulation 3. profits stay with the owner 4. pride of ownership 5. complete control 6. lower tax burden Disadvantages 1. UNlimited liabilty (you are held personally responsible and the gov can go after your personal assets) 2. Limited life - business stops when the owner dies or retires 3. difficult to raise capital 4. risk of loss is not shared

True or false. Service jobs are the lowest paying jobs in the U.S. economy.

False

True or false. The most important role of business is to provide employment for people.

False

True or false. The percentage of white workers in the US labor force is expected to increase greatly over the next 5 to 10 years.

False

True or false. There is no difference between policies and procedures.

False

True or false. Unity of command is the number of employees who are assigned to a particular work task and manager.

False

A written contract granting permission to operate a business.

Franchise

Intermediaries

Intermediaries focus on selling goods and services of producers to consumers and other businesses. Types: retailers (target) wholesalers (costco) specialized intermediaries (transportation, advertising, storage, data processing)

producers

Producers create products and services by using resources. Business activities begin with producers. Types: extractors - take resource from nature for direct use in developing other products (oil, coal, timber) farmers - cultivate land to grow crops manufacturers - convert supplies to products (automobiles)

True or false. All businesses buy goods and services.

True

True or false. All investors in a general partnership have full liability for the debts of the business

True

partnership

a business owned and controlled by two or more people who have entered into a written agreement

service business

a business that completes activities that are consumed by customers rather than offers products for sale

organization chart

a diagram that shows the structure of an organization, classifications of jobs, and the relationships

Setting direction (mission statement)

a formal, short, written statement of the purpose of any company or organization -should guide the actions of the organization -provides a sense of direction for customers and employees

partnership agreement

a written agreement among all owners that specifies the rules and procedures that guide ownership and operations

The direction for a business comes from its a. mission statement b. code of ethics c. corporate bylaws d. policy manual

a. mission statement

Which of the following is not one of the common activities of all businesses? a. producing goods and services b. employing and training personnel c. marketing goods and services d. maintaining business records

a. producing goods and services

The form of ownership most common among U.S. businesses is a. proprietorship b. corporation c. partnership d. nonprofit

a. proprietorship

The form of ownership that gives one person sole control over all business decisions is the a. proprietorship b. partnership c. corporation d. franchise

a. proprietorship

The _____________________ is a written legal document that defines ownership and operating procedures and conditions for a corporation

articles of incorporation

Baby boomers have dominated the U.S. labor market since they began working in the a. 1950s b. 1960s c. 1970s d. 1980s

b. 1960s

A retailer is an example of a(n) a. extractor b. producer c. intermediary d. service business

c. intermediary

Which of the following is not shown on an organizational chart? a. the structure of an organization b. work relationships c. job descriptions d. classification of jobs

c. job descriptions

A unique business organized by two or more other businesses to operate for a limited time and for a specific project is a a. franchise b. limited liability partnership c. joint venture d. limited liabilty company

c. joint venture

In a matrix organizational structure a. all employees with jobs related to the same function will work together b. specific tasks often become more important to workers than the business's overall success c. work is structured around particular projects, products, or customer groups d. people work with others who have the same skills

c. work is structured around particular projects, products, or customer groups

Franchise (3)

contract between the parent company (franchisor) and other business/person (franchisee) detailing how the business runs

Over the next ten years, the number of contingent workers in the United States is expected to a. decrease by half b. stay the same c. increase about 10 percent d. nearly double

d. nearly double

The largest number of the US businesses employ a. more than 100 people b. between 50 and 100 people c. between 10 and 20 people d. no employees other than the owner

d. no employees other than the owner

A partnership a. is the most common form of business organization in the United States b. limits the liabilty of the owners to the amount of money invested c. is funded through the sale of stock d. requires at least two owners

d. requires at least two owners

policies

guidelines used in making consistent decisions

A(n) ________________________ is a diagram that shows the structure of a business, classifications of work and jobs, and the relationships among those classifications

organization chart

policies and procedures

organizations should have policies and procedures in place

An automobile factory is this type of business.

producer

This type of business is owned and operated by only one person.

proprietorship

An internet service provider is this type of business.

service business

mission statement

a short, specific written statement of the reason a business exists

goal

a specific statement of results the business expects to achieve

franchise

a written contract granting permission to operate a business to sell products and services in a prescribed way

The obligation to complete specific work is a. responsibility b. authority c. accountability d.recognition

a. responsibility

Span of control

-represents the number of people per manager -balance is crucial, based on need -motivated and experienced employees need less control

The people who make the major policy and financial decisions for a corporation.

Board of directors

Types of organizations (3)

Entrepreneurs need to understand the details associated with the various forms of business ownership -tax structure, raising capital, liability -sole proprietorship, partnerships, corporations

True or false. A cooperative is a special type of corporation that allows all income to be passed through to owners based on their investment and is taxed on their individual tax returns.

False

True or false. Most states require proprietorships to register a business name.

False

True or false. Policies and procedures help provide direction for a business

False

True or false. A corporation's owners have access to profits only if the board of directors approves it.

True

True or false. A goal is a precise statement of results the business expects to achieve.

True

The people who make the major policy and financial decisions in a corporation are the a. investors b. board of directors c. managers d. owners

b. board of directors

The easiest form of businesses to start is the a. S corporation b. proprietorship c. partnership d. nonprofit corporation

b. proprietorship

The obligation to complete specific work is called a. accountability b. responsibility c. span of control d. authority

b. responsibility

Corporation (5)

business registered by a state and operates separate from its owners. Ownership may be reprsented by stock for publically held corporations

intermediaries

businesses involved in selling the goods and services of producers to consumers and other businesses

Unity of Command

clear reporting relationships throughout the organization -who is the leader? -how are decisions made?

organizational chart

diagram/chart showing a company's reporting structure with job descriptions -classifies how they are related

Designing an effective organization

effective organizations must operate with a clear purpose and application of key principles for organizing work

The six basic business activities are

generating ideas, raising capital, employing and training personnel, buying goods and services, marketing goods and services, and maintaining business records

A grocery store is this type of business.

intermediary

A __________________ partnership identifies some investors who cannot lose more than the amount of their investment, but they are not allowed to participate in the daily management of the business.

limited liability

accountability

taking responsibility for results