Economics chapter 7
Disadvantages
Unlimited liability Sole responsibility Limited growth potential Lack of longevity
Bond
Used to raise money Issued as certification in exchange for money
Advantages of organizing a corporation
Limited liability Seperation of ownership from mangagement Ease of raising capital Longevity
Non profit
Not focused on financial gain Income not taxed by government
Stock
Represent ownership of the firm's Issued as shares
Benefits to a franchise
Can reduce overall costs Some advertising may be laid for Can parent company's name
Advantages of partnership
Easy to form allow specialization Shares business loss Shares decision making
Sole proprietorship(advantages)
Easy to start up Full control goes to owner Exclusive rights to profit
Difference between General and limited partnership
General-partners have equal decision making authority, each partner has unlimited liability Limited- partners join as investors, have an inactive role in decision making, have limited liability
Vertical
Two or more accompanies involved in deifferent production phases of the same good or service
Horizontal
Two or more companies produce same good or service
Conglomerate
Two or more companies produce unrelated good or service
Cooperative
Jointly owned enterprise engaging in the production or distribution of goods or services, operated by it's numbers for their mutual benefit, typically organized by consumers or farmers
U.S chamber of Commerce
Largest business organization of the world
Characteristics of corporation
Legally distinct from owners Treated individually Can own property,hire workers,pay taxes, sue and be sued, make and sell products
Corporate structure
Sometimes used by shareholders Head by board of directors Run by corporate officers Made up of dept. Heads and other employees
Form a corporation
Submit application for articles of incorporation and obtain a corporate charter
Disadvantages
Unlimited liability Potential for conflict Lack of business longevity
