1.02 Compare the main types of business organizations

Multinational Corporation

A corporation that has its facilities and other assets in at least one country other than its home country

Disadvantages-Partnership

Agreement needed to start, Might not get along, Share the profits

Advantages-Corporation

Can raise money by selling stock, continues when stockholders sell shares of stock, make money by selling more shares of stock

Examples-Multinational Corporation

Coca-Cola, Walmart, AOL, Toshiba, Honda

Franchise

Contractual agreement between the parent company and the business operator to sell a company's products or services in a specific geographic area

Advantages-Franchise

Easy to start, can rely on the good name and expertise of the parent company, can help from proven methods of the franchisor

Examples-Sole Proprietorship

Floral shops, bookstores, farms

Examples-Partnership

Law Firms, Medical Practices

Examples-Franchise

McDonalds, Taco Bell, Blockbuster

Examples-Corporation

Nike, IBM, Google

Disadvantages-sole proprietorship

Owner must pay for everything needed for the business, Difficult to obtain capital needed to start business, owner might lack business skills, unlimited liability

Advantages-Partnership

Relatively easy to start, easier to obtain capital, partners share different skills and talents, partners share risks of the business

Disadvantages-Franchise

Some are strict about how the business is run, limited in what products or services can be sold, must operate like every other franchise

Disadvantages-Corporation

Taxed on their profits, Government closely regulates corporations, more difficult to start because they must obtain a corporate charter from state in which headquarters is located

Corporation

business owned by many people (stockholders), but treated by law as one person (can own property, pay taxes, make contracts, etc)

Sole proprietorship

business owned by one person

Partnership

business owned by two or more people

Advantages-sole proprietorship

easy to start, owner is his/her own boss, owner keeps all profits