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