College business unit 5

What are examples of corporations?

Private, public, nonprofit

What is an example of LLP?

The actual partnership of the limited partners

What is a franchisee example?

The person who buys the McDonald's franchise for their new territory

Franchise

The right to use a specific business's name and sell its products or services in a given territory

What is a leveraged buyout?

In 1986, Kohlberg Kravis Roberts completed a friendly LBO of Safeway for a total price of $5.5 billion. Safeway's board of directors gave consent to the buyout to avoid hostile takeovers from Herbert and Robert Haft of Dart Drug. The deal was funded mostly with debt, and Safeway had to divest some of its assets and close unprofitable stores. In 1990, Safeway was taken public again with improvements in its revenues and profitability metrics. KKR earned almost $7.2 billion on an initial investment of $129 million.

What is an example of an acquisition?

In 2017 Amazon bought Whole Foods which is a high-end organic grocery chain for $ 13.7 Billion. The acquisition provided Amazon with hundreds of physical stores and strong entry into the grocery business.

What is an example of conglomerate merger?

the Walt Disney Company and the (ABC) American Broadcasting Company.

conglomerate merger

the joining of firms in completely unrelated industries

horizontal merger

the joining of two firms in the same industry

unlimited liability

the responsibility of business owners for all of the debts of the business

General Partner

An owner (partner) who has unlimited liability and is active in managing the firm.

What is an example horizontal merger?

Facebook's acquisition of Instagram in 2012 for a reported $1 billion. Both Facebook and Instagram operated in the same industry (social media) and shared similar production stages in their photo-sharing services.

What is an example of a partnership?

Uber and Spotify legally agree to be co-owners of a business

limited partnership

A partnership with one or more general partners and one or more limited partners.

Franchisee

A person who buys a franchise

limited liability partnership (LLP)

A partnership that limits partners' risk of losing their personal assets to only their own acts and omissions and to the acts and omissions of people under their supervision.

Merger

the result of two firms forming one company

What is one reason mergers don't work?

1. Companies over pay to acquire 2. Companies overestimate cost savings 3. Management disagrees about integrating operations 4. Obsession with cost cutting hurts businesses, costing top employees and customers

What number (in %) of businesses ownerships are corporations? What number of sales?

20%, 81%

According to the how owners affect management divisions put these in order 1. Board or directors 2. Officers 3. Employees 4. Owners/stockholders 5. Managers

4, 1, 2, 5, 3

What is the number (in %) of sole Proprietorship ownership? What percent sales?

72%, 6%

What number (in %) of businesses are partnerships? What number of sales?

8%, 13%

What is an example of sole proprietorship?

A Kate's real food creates and sells energy bar. Kate owns and manages her company in her local town.

Cooperative

A business owned and controlled by the people who use it— producers, consumers, or workers with similar needs who pool their resources for mutual gain

Sole Proprietorship

A business that is owned, and usually managed, by one person.

Limited Liability Company (LLC)

A company similar to an S corporation but without the special eligibility requirements.

Franchisor

A company that develops a product concept and sells others the rights to make and sell the products.

What is an example of s corporation?

A corporation with a limited number of shareholders (100), more regulated stocks in the stock market, and permeant u.s citizens

What is a master limited partnership?

A master limited partnership is a partnership that acts like a corporation but is taxed like a partnership. Traded publicly too.

General partnership

A partnership in which all owners share in operating the business and in assuming liability for the business's debts.

Conventional (C) Corporation

A state-chartered legal entity with authority to act and have liability separate from its owners

S corporation

A unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships

Which of the following is not an example of partnership advantage? A. Longer survival of company B. Difficult to terminate C. No special taxes D. Shared management E. More financial resources

B. Difficult to terminate

What is an example of a merger?

Brisk and minute-maid joining companies

Which of the following is not a disadvantage of sole Proprietorship? A. Time commitment B. Limited growth C. Hard start and end D. Few fringe benefits E. Unlimited liability

C

What is an example of a cooperative? Not really an example

Cooperatives were useful for promoting the interests of the less powerful members of society. Farmers, producers, workers, and consumers found that they could accomplish more collectively than they could individually.

Which of the following is NOT an advantage of sole Proprietorship? A. Retain profit B. No special taxes C. Leave a legacy D. Unlimited liability

D

What is an example of general partner ?

For example, let's say that Fred and Melissa decide to open a baking store. The store is named F&M Bakery. By opening a store together, Fred and Melissa are both general partners in the business, F&M Bakery. It is important to note that each general partner must be involved in the business. For example, Fred takes care of logistics and purchasing orders while Melissa oversees the store operations. The income generated by the business is split between Fred and Melissa. At the same time, Fred and Melissa are equally responsible for any losses incurred by the store.

What is an example of franchisor?

McDonald's and Burger King selling their franchise to people

What is an example of a franchise?

McDonald's and subway

What is an example of a corporation?

Microsoft and fedex etc

What is a key trait private corporation?

Not traded on any stock exchange

acquisition

One company's purchase of the property and obligations of another company.

What is a passive investor?

One who does not participate in day to day decisions just the financial

What is an example of a vertical merger?

Pepsi's merger with restaurant chains that it supplies with beverages is a _____ merger

What is a key trait non-profit corporation?

Performs public service, has special tax, considerations to encourage formation

C Corp example?

Regular Corp like amazon

What is an example of limited liability?

Sam invested $100 in big apple. A year later the company got sued. When the company loss law suit and went bankrupt. Sam lost his $100 dollar investment. But no one can go after him and make him lose his house

What is a key trait public corporation?

Shares are traded on one or more stock exchanges

What is an example of a LLC?

Snap clips, no one can go after Martin because he's not the sole owner and he pays taxes and follows regulations

What is an example of a limited partner?

Ted, Greg, and Jeff decide to form the Brothers, LP. Jeff actively manages business and is deemed as the general partner. Neither Ted and Greg have active role so they are both_____ partners.

What is an example of a franchise agreement?

The actual paper doc. Of the agreement between McDonald's and the Indians who want to open it in Hyderabad, India to sell their good idea veggie burgers

vertical merger

The joining of two companies involved in different stages of related businesses

limited liability

The responsibility of a business's owners for loses only up to the amount they invest; limited partners and shareholders have limited liability

Corporation

a legal entity with authority to act and have liability apart from its owners

Partnership

a legal form of business with two or more owners

limited partner

an owner who invests money in the business but does not have any management responsibility or liability for losses beyond the investment

franchise agreement

an arrangement whereby someone with a good idea for a business sells the rights to use the business name and sell a product or service to others in a given territory

Leveraged Buyout (LBO)

an attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing

What is an example of unlimited liability?

an individual invests $50,000 in a sole proprietorship. The sole proprietorship then incurs $200,000 of debts.

What is an example of general partnership?

doctors and lawyers (law firms and medical practices)